Federal Register Vol. 81, No.232,

Effective January 1, 2014, the Office of Personnel Management (OPM) published the “Federal Employees Health Benefits Program and Federal Employees Dental and Vision Insurance Program: Expanding Coverage of Children; Federal Flexible Benefits Plan: Pre-Tax Payment of Health Benefits Premiums: Conforming Amendments” final rule (78 FR 64873) to extend FEHB and FEDVIP coverage to children of same-sex domestic partners of Federal employees and annuitants who would marry their partners but live in states that do not allow same-sex couples to marry. As the result of the June 26, 2015, Supreme Court Obergefell v. Hodges decision, all U.S. states now allow same-sex couples to marry. Accordingly, as of January 2016, coverage of an enrollee's stepchild(ren) is only allowed if the couple is married.

This rule amends §§ 890.302 and 894.101 of title 5, Code of Federal Regulations. The amendments will allow an employing agency to request, and for OPM to grant, a continued coverage exception for children of an employee's same-sex domestic partner living outside the United States. Any coverage under such an exception will not extend beyond September 30, 2018. The OPM recognizes there are additional requirements placed on overseas employees that may not apply to other civilian employees with duty stations in the United States making it difficult to travel to the United States to marry same-sex partners. Therefore, OPM is creating the authority to allow an exception for Federal employees in a domestic partnership and living outside of the United States. If requested by an enrollees' agency, coverage of children of same-sex domestic partners can be continued under self and family or self plus one enrollment in the FEHB and FEDVIP Programs. This continued coverage exception will be available to overseas employees until September 30, 2018.

Under Section 553(b) of the Administrative Procedure Act (APA) (5 U.S.C. 551, et seq.) a general notice of proposed rulemaking is required unless an agency, for good cause, finds that notice and public comment thereon are impracticable, unnecessary, or contrary to the public interest. In addition, the APA exempts interpretative rules from proposed rulemaking procedures. This rule continues benefit eligibility past January 1, 2016, for children of same-sex domestic partners of employees living abroad, which require OPM to amend current regulations in an expeditious manner. Therefore, OPM has concluded that delaying implementation of this rule due to a full notice and public comment period would be impracticable and contrary to the public interest since the time it would have taken to issue proposed and final rules would have significantly delayed the implementation of this important regulatory change. For the foregoing reasons, OPM asserts that good cause exists to implement this rule as an interim rule under the APA, 5 U.S.C. 553(b) and accordingly, adopts this rule on that basis.

OPM has examined the impact of this rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review) and Executive Order 13563, which directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public, health, and safety effects, distributive impacts, and equity). A regulatory impact analysis must be prepared for major rules with economically significant effects of $100 million or more in any one year. This rule is not considered a major rule because OPM estimates there are a relatively small number of overseas enrollments that will be affected. Premium cost increases for this regulatory change will not equal or exceed $100 million.

This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13.

The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (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.” I certify that these regulations will not have a significant economic impact on a substantial number of small entities because they will apply only to overseas Federal employees, annuitants and their former spouses who are in same-sex domestic partnerships and are not married.

Accordingly, OPM is amending 5 CFR parts 890 and 894 as follows:

I. Introduction

The NRC is amending its regulations in parts 2, 10, 26, 30, 40, 50, 55, 61, 63, 70, 71, 72, 73, 74, and 100 of title 10 of the Code of Federal Regulations (10 CFR) to make miscellaneous corrections. The amendments include correcting a senior NRC management position title; correcting terminology for consistency in NRC regulations; and correcting contact information, references, typographical errors, and misspellings. This document is necessary to inform the public of these non-substantive amendments to the NRC's regulations.

Contact Information Correction. This final rule changes the facsimile number for service of documents made upon the NRC staff from “301-415-3725” to 301-415-3200.”

Position Title Correction. This final rule removes all references to the incorrect position title “Deputy Executive Director for Corporate Management and Chief Information Officer” and replaces them with the correct position title “Deputy Executive Director for Materials, Waste, Research, State, Tribal, Compliance, Administration, and Human Capital Programs.”

Correct Terminology. This final rule removes all references to “blind samples” and “blind performance specimens” and replaces them with “blind performance test samples.”

Correct Terminology. This final rule removes all references to “ground water” and “ground-water” and replaces them with “groundwater.”

Correct Reference. In § 50.23, this final rule removes the incorrect reference “§ 50.91” and replaces it with the correct reference “§ 50.92.”

Correct Typographical Error. In § 50.34(a)(3)(i), this final rule capitalizes “Appendix” at the beginning of the second sentence.

Correct Misspelling. In section IV of appendix C, this final rule removes the misspelled term “Commiasion” and replaces it with the correct term “Commission.”

Correct Reference. In section II.A of appendix J, this final rule removes the incorrect reference “§ 50.2(v)” and replaces it with the correct reference “§ 50.2.”

Correct Misspelling. In § 55.59(c)(3)(i)(G)(3), this final rule removes the misspelled term “lead-rate” and replaces it with the correct term “leak-rate.”

Correct Typographical Error. In § 71.71(c)(1), this final rule changes the second column heading in the table from “Total insolation for a 12-hour period (g cal/cm2” to “Total insolation for a 12-hour period (g cal/cm2).”

Correct Reference. In § 72.74(b), this final rule removes the incorrect reference “§ 73.21(g)(3)” and replaces it with the correct reference “§ 73.22(f)(3).”

Correct Misspelling. In § 73.56(o)(2)(i), this final rule removes the misspelled term “rtifying” and replaces it with the correct term “certifying.”

Correct Reference. In § 74.11(b), this final rule removes the incorrect reference “§ 73.21(g)(3)” and replaces it with the correct reference “§ 73.22(f)(3).”

Under the Administrative Procedure Act (5 U.S.C. 553(b)), an agency may waive publication in the Federal Register of a notice of proposed rulemaking and opportunity for comment requirements if it finds, for good cause, that they are impracticable, unnecessary, or contrary to the public interest. As authorized by 5 U.S.C. 553(b)(3)(B), the NRC finds good cause to waive notice and opportunity for comment on these amendments, because notice and opportunity for comment are unnecessary. The amendments will have no substantive impact and are of a minor and administrative nature dealing with corrections to certain CFR sections related only to management, organization, procedure, and practice. Specifically, the revisions include correcting a senior NRC management position title; correcting terminology for consistency in NRC regulations; and correcting contact information, references, typographical errors, and misspellings. The amendments do not require action by any person or entity regulated by the NRC, and do not change the substantive responsibilities of any person or entity regulated by the NRC.

The NRC has determined that this final rule is the type of action described in 10 CFR 51.22(c)(2), which categorically excludes from environmental review rules that are corrective or of a minor, nonpolicy nature and do not substantially modify existing regulations. Therefore, neither an environmental impact statement nor an environmental assessment has been prepared for this rule.

This final rule does not contain a collection of information as defined in the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) and, therefore, is not subject to the requirements of the Paperwork Reduction Act of 1995.

The NRC may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the document requesting or requiring the collection displays a currently valid OMB control number.

The Plain Writing Act of 2010 (Pub. L. 111-274) requires Federal agencies to write documents in a clear, concise, and well-organized manner. The NRC has written this document to be consistent with the Plain Writing Act as well as the Presidential Memorandum, “Plain Language in Government Writing,” published June 10, 1998 (63 FR 31883).

The NRC has determined that the amendments in this final rule do not constitute backfitting and are not inconsistent with any of the issue finality provisions in 10 CFR part 52. The amendments are non-substantive in nature, including correcting a senior NRC management position title; correcting terminology for consistency in NRC regulations; and correcting contact information, references, typographical errors, and misspellings. They impose no new requirements and make no substantive changes to the regulations. The amendments do not involve any provisions that would impose backfits as defined in 10 CFR chapter I, or would be inconsistent with the issue finality provisions in 10 CFR part 52. For these reasons, the issuance of the rule in final form would not constitute backfitting or represent a violation of any of the issue finality provisions in 10 CFR part 52. Therefore, the NRC has not prepared any additional documentation for this correction rulemaking addressing backfitting or issue finality.

For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended; the Energy Reorganization Act of 1974, as amended; and 5 U.S.C. 552 and 553, the NRC is adopting the following amendments to 10 CFR parts 2, 10, 26, 30, 40, 50, 55, 61, 63, 70, 71, 72, 73, 74, and 100:

The FAA has determined that the substance of these special conditions has been subject to the public comment process in several prior instances with no substantive comments received. The FAA therefore finds that good cause exists for making these special conditions effective upon publication in the Federal Register.

We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.

We will consider all comments we receive by the closing date for comments. We may change these special conditions based on the comments we receive.

On March 29, 2012, Gulfstream applied for a type certificate for their new Model GVII-G500 airplane. The Model GVII-G500 airplane will be a business jet capable of accommodating up to 19 passengers. It will incorporate a low, swept-wing design with winglets and a T-tail. The powerplant will consist of two aft-fuselage-mounted Pratt & Whitney turbofan engines.

Under Title 14, Code of Federal Regulations (14 CFR) 21.17, Gulfstream must show that the Model GVII-G500 airplane meets the applicable provisions of 14 CFR part 25, as amended by Amendments 25-1 through 25-129.

If the Administrator finds that the applicable airworthiness regulations (i.e., part 25) do not contain adequate or appropriate safety standards for the Model GVII-G500 airplane because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same or similar novel or unusual design feature, the special conditions would also apply to the other model under § 21.101.

In addition to the applicable airworthiness regulations and special conditions, Model GVII-G500 airplanes must comply with the fuel-vent and exhaust-emission requirements of 14 CFR part 34, and the noise-certification requirements of 14 CFR part 36. The FAA must issue a finding of regulatory adequacy under section 611 of Public Law 92-574, the “Noise Control Act of 1972.”

The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.17(a)(2).

The Model GVII-G500 airplane will incorporate the following novel or unusual design feature:

Electronic flight-control-system mode annunciation.

These special conditions for flight-control-system mode annunciation, applicable to the Gulfstream Model GVII-G500 airplane, require that suitable mode annunciation be provided to the flightcrew for events that significantly change the operating mode of the system but do not merit the classic “failure warning.”

These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.

As discussed above, these special conditions are applicable to the Gulfstream Model GVII-G500 airplane. Should Gulfstream apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to that model as well.

This action affects only a certain novel or unusual design feature on one model series of airplane. It is not a rule of general applicability.

The substance of these special conditions has been subjected to the notice and comment period in several prior instances and has been derived without substantive change from those previously issued. It is unlikely that prior public comment would result in a significant change from the substance contained herein. Therefore, the FAA has determined that prior public notice and comment is unnecessary, and good cause exists for adopting these special conditions upon publication in the Federal Register.

The FAA is requesting comments to allow interested persons to submit views that may not have been submitted in response to the prior opportunities for comment described above.

The authority citation for these special conditions is as follows:

Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for Gulfstream Model GVII-G500 airplanes:

If the design of the flight-control system has multiple modes of operation, a means must be provided to indicate to the flightcrew any mode that significantly changes or degrades the normal handling or operational characteristics of the airplane.

Discussion

We have received reports indicating that an FCM will reset if continuously powered on for 22 days. This condition, if not corrected, could result in simultaneous resets of all three FCMs, which could result in flight control surfaces not moving in response to flight crew inputs for a short time and consequent temporary loss of controllability. We are issuing this AD to correct the unsafe condition on these products.

We reviewed Boeing Alert Service Bulletin B787-81205-SB270040-00, Issue 001, dated November 25, 2016. The service information describes procedures for cycling the airplane electrical power and cycling power to the three FCMs. 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 are issuing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This AD requires accomplishing the actions specified in the service information described previously. For information on the procedures and compliance times, see this service information at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9436.

We consider this AD interim action. Boeing and its suppliers are developing a terminating solution to address the identified unsafe condition. Once this terminating solution is developed, approved, and available, we might consider additional rulemaking.

An unsafe condition exists that requires the immediate adoption of this AD. The FAA has found that the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because simultaneous resets of all three FCMs could result in flight control surfaces not moving in response to flight crew inputs for a short time and consequent temporary loss of controllability. Therefore, we find that notice and opportunity for prior public comment are impracticable and that good cause exists for making this amendment effective in less than 30 days.

This AD is a final rule that involves requirements affecting flight safety and was not preceded by notice and an opportunity for public comment. However, we invite you to send any written data, views, or arguments about this AD. Send your comments to an address listed under the ADDRESSES section. Include the docket number FAA-2016-9436 and Directorate Identifier 2016-NM-197-AD at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this AD. We will consider all comments received by the closing date and may amend this AD because of those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this AD.

We estimate that this AD affects 99 airplanes of U.S. registry. We estimate the following costs to comply with this AD:

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.

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

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

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

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

(3) Will not affect intrastate aviation in Alaska, 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:

I. The Fuel Rating Rule

The Rule provides procedures for determining, certifying, and posting, through fuel dispenser labels, a rating for automotive fuels intended for consumer sale. As originally published, the Rule required only an octane rating for automotive gasoline.1 Pursuant to section 1501 of the Energy Policy Act of 1992, 106 Stat. 2776, the Commission then amended the Rule in 1993 to require a rating disclosure for liquid alternative fuels, including gasoline-ethanol blends above 10 percent ethanol (“Ethanol Flex Fuels”).2 On January 14, 2016, the Commission established a new Ethanol Flex Fuel rating and label, effective July 14, 2016.3

Section 306.10 of the Rule requires that retailers post on automotive fuel dispensers a fuel rating label for each kind of automotive fuel sold from the dispenser. Retailers must post labels conspicuously on the dispenser in consumers' full view and as near as reasonably practical to the fuel price.

Section 306.12 of the Rule details label color scheme, shape, size, textual content, and font type and point size. Ethanol Flex Fuel labels must be orange, rectangular, and 3 inches (7.62 cm) wide x 2 1/2 inches (6.35 cm) long. In addition, the percentage of ethanol content must be printed in orange font within a 1 inch (2.54 cm) deep black band across the top of the label. Below the band, the label must state “Use Only in Flex Fuel Vehicles/May Harm Other Engines.”

In 1988 and 1995, the Commission granted Gilbarco partial exemptions to allow retailers to post octane labels smaller than required by the Rule. As here, Gilbarco requested the exemption to allow retailers to display the labels on the buttons consumers press to select a particular automotive fuel on multi-blend fuel dispensers (“button labels”).4 In those instances, the Commission exempted button labels that measured 3 inches (7.62 cm) wide x 2.3 inches (5.84 cm) long and 2.74 inches (6.96 cm) wide x 1.80 inches (4.57 cm) long. Furthermore, the font point size differed from Rule's requirements, and the exempted labels added the word “Press.”

Gibarco now requests an exemption for smaller label dimensions for Ethanol Flex Fuel button labels and to include the word “Press” in the label's black band. In addition, Gilbarco requests permission to post dome-shaped button labels in lieu of rectangular labels for certain dispenser designs. The proposed rectangular labels are 2.38 inches (6.05 cm) wide x 2.27 inches (5.77 cm) long, and the dome-shaped labels have an outside dimension of 2.378 inches (6.04 cm) wide x 2.717 (6.90 cm) inches long. In addition, the black band across the top of the dome-shaped label is 0.277 inches (0.70 cm) wider than specified in the Rule. The labels' background and text insertions otherwise comply with the Rule's color scheme, content, and font type and point size requirements.

The Commission reviewed mock-ups of the proposed rectangular and dome-shaped labels and concludes that the proposed labels adequately meet the Rule's labeling requirements by providing clear and conspicuous disclosure of all the required information and maintaining the Rule's color scheme and font type and point size requirements. Moreover, the Commission's experience with similar exemptions does not indicate that button labels confuse consumers or otherwise impede comprehension of the fuel rating. To the contrary, these labels may increase the likelihood that consumers see the fuel rating because they must choose and press the button before fueling.

Furthermore, pursuant to Rule 1.26, the Commission for good cause finds that notice and comment is unnecessary in this case because the exemption involves a technical and minor deviation from the Rule's labeling requirements and does not impose any new legal obligations on parties subject to the Rule.5 Moreover, the Commission has previously granted similar exemptions from the Rule's labeling requirements, and this exemption is consistent with those prior determinations.6

Therefore, the Commission grants Gilbarco and retailers permission to use the proposed rectangular and dome-shaped button labels on Ethanol Flex Fuel dispenser buttons, provided that Gilbarco and retailers comply with the Rule's specifications in all other respects.

Background

We are revising and making final the rule for evaluating HIV infection we proposed in a Notice of Proposed Rulemaking (NPRM) published in the Federal Register on February 26, 2014 (79 FR 10730), and a correction to the proposed rule on March 25, 2014 (79 FR 16250). Even though this rule will not go into effect until January 17, 2017, for clarity, we refer to it in this preamble as the “final” rule. We are making several changes in this final rule from the NPRM based upon some of the public comments we received. We are also making minor editorial changes throughout this final rule. We explain these changes below in the “Summary of Public Comments on the NPRM” section of this preamble.

The preamble to the NPRM provided an explanation of the changes from the current rules and our reasons for proposing those changes. To the extent that we are adopting the proposed rule as published, we are not repeating that information here. You can view the NPRM by visiting http://www.regulations.gov and searching for document SSA-2007-0082.

We are revising the listings for evaluating HIV infection to reflect our program experience and advances in medical knowledge since we last revised the listings related to HIV infection, recommendations from a commissioned report,1 and a number of public comments. We received comments from medical experts and the public at an outreach policy conference, in response to an Advance Notice of Proposed Rulemaking (ANPRM),2 and in response to the NPRM. Although we published final rules for immune system disorders on March 18, 2008, that included changes to listings 14.08 and 114.08,3 the criteria in the current HIV infection listings are not substantively different from the criteria in the final rules we published on July 2, 1993.4 We indicated in the preamble to those rules that we would carefully monitor these listings to ensure that they continue to meet program purposes, and that we would update them if warranted.

In the NPRM, we proposed to remove listing 114.08H for evaluating growth disturbance with an involuntary weight loss (or failure to gain weight at an appropriate rate for age) that meets specified criteria. We proposed instead to evaluate this impairment under a growth impairment listing in 100.00 or a digestive system listing in 105.00. On April 13, 2015, we published a final rule for growth disorders and weight loss in children in 100.00 that retained a listing in 114.00 for growth failure due to HIV immune suppression.5 We are repeating that listing here for clarity. We have redesignated the listing as 114.11I and the related introductory text as 114.00F7.

In the NPRM, we provided the public with a 60-day comment period, and we subsequently extended the comment period to May 27, 2014. We received 68 comments from 22 commenters. The commenters included advocacy groups, legal services organizations, State agencies, a national group representing disability examiners in State agencies that make disability determinations for us, medical organizations, and individual members of the public.

We carefully considered all of the comments relevant to this rulemaking. We have condensed and summarized the comments below. We present the commenters' concerns and suggestions, respond to all significant issues that are within the scope of this rule, and provide our reasons for adopting or not adopting the recommendations in our responses below.

We received several comments supporting our proposed changes. We appreciate those comments; however, we did not include them. Other comments were on subjects not related to the proposed rule. Although we read and considered these comments, we did not summarize or respond to them below because they are outside the scope of this rulemaking.

Comment: Several commenters disagreed with our proposal to remove guidance in the current introductory text that instructed our adjudicators how to consider documentation of HIV infection and manifestations of HIV infection that does not include the results of definitive laboratory testing. Two of these commenters urged us to retain language from the introductory text that explains that we will consider documentation of HIV infection and manifestations of HIV infection that is consistent with the prevailing state of medical knowledge and clinical practice. They also noted that one of the examples of a manifestation of HIV infection in 14.11I, lipodystrophy, is generally diagnosed by clinical observations instead of by a laboratory test. Another commenter requested clarification about making a disability determination when we cannot obtain definitive evidence or a persuasive report from a physician of a manifestation of an HIV infection.

Response: We agree with these comments and have retained the current language in the introductory text for non-definitive documentation of HIV infection and manifestations of HIV infection. This guidance is found in 14.00F1c(ii) and 114.00F1c(ii) for documentation of HIV infection, and 14.00F2c(ii) and 114.00F2c(ii) for manifestations of HIV infection. We have also noted in 14.00F3 and 114.00F3 that, to establish a diagnosis of the disorders that we discuss in the section, we will accept other generally acceptable methods that are consistent with the prevailing state of medical knowledge and clinical practice. Retaining this language provides adjudicators with the information needed to make a disability determination when we cannot obtain either definitive evidence or a persuasive report from a physician of HIV infection or a manifestation of HIV infection.

We have removed the statement “we will not purchase laboratory testing to establish whether you have HIV infection” from listing sections 14.00F1b and 114.00F1b, because it implies that we will never pay for diagnostic laboratory HIV testing. Instead, we have clarified that while we will not pay for diagnostic laboratory HIV testing as standard practice because our rules do not require claimants to have definitive laboratory testing documenting the existence of HIV to qualify for disability, we will purchase laboratory HIV testing under limited circumstances.

Specifically, if the existing evidence is not sufficient for us to make a disability determination decision, and no other acceptable documentation exists, we will purchase the examinations or laboratory tests necessary to make a determination in your claim. At times, a specific laboratory test may be necessary to make a determination in a claim, such as a CD4 count that helps to predict clinical outcomes for a person living with HIV.

Similarly, we removed the proposed language in 14.00F2b and 114.00F2b, and that indicated we would not purchase laboratory testing for manifestations of HIV infection. These sections now clarify we will purchase such laboratory tests when they are a necessary part of the disability determination process.

Comment: One commenter asked whether we will use the degree of viremia (the presence of viruses in the blood) for the HIV p24 antigen (p24Ag) test to assess the severity of infection.

Response: We did not make any changes in response to this comment. We cannot use HIV p24Ag to assess the severity of HIV infections because it is an inadequate indicator of immune suppression. In this final rule, we include criteria based on CD4 levels, which is a better measurement of immune suppression. However, we may accept a positive finding on HIV p24Ag testing as documentation of an HIV infection.

Comment: One commenter was concerned that we are making assumptions about individuals and their levels of function based on blood tests and counts.

Response: We have not made any changes in response to this comment. We do not, and will not, require blood tests in order for an HIV-related impairment to satisfy a listing or to find a person with an HIV infection to be disabled. Only listings 14.11F, 14.11G, 114.11F, and 114.11I require a CD4 count to meet the listing. We have set these criteria based on recommendations from experts in the field of HIV infection who believe that it would be appropriate to find people whose CD4 counts meet the requirements are disabled. However, these listings are not the only way that we may find a person with HIV infection to be disabled. If a person's impairment(s) does not meet or equal the severity of a listing, we may find that he or she is disabled at later steps of the sequential evaluation process.

Comment: One commenter noted that proposed listings 14.11A-E and 114.11A-E rely heavily on information located in the proposed introductory text for proper application and understanding. This commenter recommended we revise these listings to include this guidance. The commenter also provided language for these suggested revisions.

Response: We have adopted the commenter's suggested revisions. We have added the commenter's language to clarify that we only consider multicentric Castleman disease under 14.11A and 114.11A. In addition, we have also incorporated the commenter's suggestion to note that the values required by 14.11G do not have to be measured on the same date. We have also made appropriate conforming changes to the introductory text.

Comment: One commenter opined that our proposed revisions discriminate against the poor, as the criteria include medical tests, such as HIV nucleic acid tests by polymerase chain reaction and examination of cerebral spinal fluid, and hospitalizations that many individuals cannot afford and that we are not willing to purchase. The commenter notes that, “although some of the simpler tests may be available through public health departments and charity clinics, these organizations usually cannot afford to provide any of the more expensive tests and charity clinics are not . . . available in many areas.” The commenter also requests that we delete the hospitalization criterion from the proposed listings, as we will not pay for hospitalizations.

Response: We did not adopt this comment. The Social Security Act and our regulations require medical evidence to establish a medically determinable impairment. We use medical evidence generally accepted in the medical community and available in medical records to establish and evaluate an impairment. We look at all available evidence about all of the claimant's impairments, not just information about a particular allegation such as HIV infection. We may find a person disabled even if he or she does not have a medical diagnosis for his or her impairments when applying for benefits, as long as we are able to establish a medically determinable severe physical or mental impairment or combination of impairments that meets the duration requirement.

In response to public comments and as discussed above, we have retained the guidance in the introductory text that explains we will accept non-definitive evidence of HIV infection or manifestations of HIV infection. This will allow us to establish HIV infection and manifestations of HIV infection more easily without definitive tests. We will accept a persuasive report from a physician that a positive diagnosis of your HIV infection was confirmed by an appropriate laboratory test(s), such as those described in 14.00F1a. To be persuasive, this report must state that you had the appropriate definitive laboratory test(s) for diagnosing your HIV infection and provide the results. The report must also be consistent with the remaining evidence of record.

We may also document HIV infection by the medical history, clinical and laboratory findings, and diagnoses indicated in the medical evidence, provided that this documentation is consistent with the rest of the medical evidence and the prevailing state of medical knowledge and clinical practice. For example, we will accept a diagnosis of HIV infection without definitive laboratory evidence of the HIV infection if you have an opportunistic disease that is predictive of a defect in cell-mediated immunity (for example, toxoplasmosis of the brain or Pneumocystis pneumonia (PCP)), and there is no other known cause of diminished resistance to that disease (for example, long-term steroid treatment or lymphoma). In such cases, we will make every reasonable effort to obtain full details of the history, medical findings, and results of testing. In the NPRM, we had proposed to accept only definitive tests as evidence of HIV infection or manifestations of HIV infection. Many of the tests that the commenter specifically named were these definitive tests. Allowing adjudicators to establish HIV infection or manifestations of HIV infection without the requirement of a definitive test result helps to allay concerns about the accessibility of tests that we had proposed to require.

Furthermore, the hospitalization criterion is just one of multiple ways adjudicators can find a person is disabled in the sequential evaluation process.6 The hospitalization criterion is an advantage to a person who applies for disability benefits because it adds another way we may find him or her disabled at the third step of the sequential evaluation process, but it is not the only way we can find a person with HIV infection to be disabled. If a person with HIV infection meets our requirements for disability, but has not been hospitalized to the extent required by our listings, we can find that he or she is disabled based on a finding of medical equivalence, by meeting other listings, or at a later step in our adjudication process. These other mechanisms for finding a person is disabled help to account for the variation of claimants' access to medical treatment.

Comment: A number of commenters provided suggestions related to our use of CD4 counts versus CD4 percentages in the proposed listings. One commenter requested that we provide a CD4 percentage for 14.00F1 that would be equivalent to an absolute CD4 count of 50 cells/mm3 or less. Two commenters requested that we make changes to proposed 114.11F in order to have greater consistency between the childhood and adult HIV listings. These commenters stated that in the proposed listings, children from birth to the attainment of age 5 may rely on a CD4 percentage of less than 15 percent to establish disability under 114.11F1 or 114.11F2, while children age 5 to the attainment of age 18 may rely only on an absolute CD4 count of 50 cells/mm3 to meet the listing. The commenters stated that they believe that children ages 5 to 18 should be able to use CD4 percentage in order to be consistent with the adult listing.

Response: We will not add a CD4 percentage that is equivalent to an absolute CD4 count of 50 cells/mm3 or less, because there is no precise correlation between the two measurements. With regard to the commenters' concerns about consistency between the adult and childhood listings involving CD4 measurements, we believe that the commenter may have misread the proposed rule. We note that the criterion based on absolute CD4 measurement alone for adults, like that for children from age 5 to the attainment of age 18, does not include a CD4 percentage. The IOM indicated to us that CD4 levels in children correspond with adult levels by the age of 5 and that absolute CD4 count is generally the preferred metric for these age groups. Therefore, we believe that it is appropriate for the criterion for children in this older age group to mirror that for adults and require this type of measurement.

Furthermore, 14.11G for adults, which was the only current or proposed adult criterion that includes CD4 percentage, requires a CD4 measurement (either absolute count or percentage) in conjunction with either a BMI measurement of less than 18.5 or a hemoglobin measurement of less than 8.0 grams per deciliter. The final rule for evaluating growth disorders and weight loss in children, published April 13, 2015, made changes to the immune system listings, which were not in the NPRM.7 Under current listing 114.08H for immune suppression and growth failure, we may find a child to be disabled based on a combination of CD4 measurement and growth failure (based on weight-for-length percentiles or body mass index (BMI), depending on age). For children age 5 to the attainment of age 18, the CD4 measurement may be an absolute count or a CD4 percentage. In this final rule, that listing will become 114.11I. Although 14.11G and 114.11I are not analogous (as we do not evaluate adults under listings related to growth impairments), we point this out to show the commenter that there are listings for both adults and children in which we consider CD4 percentages.

Comment: Two commenters disagreed with our proposal to require a single CD4 measurement under proposed listings 14.11F and 14.11G. One commenter remarked that this proposal is different from other listings in which we require two measurements at least 60 days apart and is inconsistent with our durational requirements. The other commenter noted that “[a]dvances achieved with the availability of highly active antiretroviral therapy (HAART) have dramatically changed the prognosis and functional impact of HIV infection.” Two commenters expressed concerns about establishing a 12-month period of continuous disability based on one CD4 count alone, and one of the commenters suggested adding another CD4 count, hemoglobin level, or BMI assessment to the listing criteria.

One commenter also suggested that we provide specific guidance in relation to low CD4 counts for claimants who do not have access to medical care. The commenter noted that such claimants would be expected to have a more aggressive clinical course of infection. Three commenters stated that claimants may present for medical care with very low CD4 counts, at which point a diagnosis of HIV infection would be made and treatment initiated. With treatment, the claimant's CD4 count would be expected to rise due to the suppression of HIV infection.

Response: We have not adopted these comments. Anyone who meets the requirements in 14.11F or 14.11G occurring within the period that we are considering in connection with his or her application or continuing disability review, has an impairment of listing-level severity that will satisfy our duration requirement, whether or not he or she is receiving medical care. Even though a person's absolute CD4 count or percentage, BMI, or hemoglobin may increase with treatment, the person's immune deficiency will continue with an increased risk of morbidity and mortality for a continuous period of at least 12 months, which satisfies our duration requirement.

Comment: One commenter recommended that we explain in the introductory text that adjudicators can use the lowest values within the entire rating period for CD4 count and BMI or hemoglobin levels to evaluate an impairment. The commenter was concerned that adjudicators might misinterpret the listings to mean these findings must occur simultaneously.

Response: We adopted the comment by making changes to 14.00F5 to explain that the CD4 count and claimant BMI or hemoglobin levels evaluated under 14.11G do not have to be measured on the same date.

Comment: One commenter noted that proposed listings 14.11F and 14.11G use the lowest absolute CD4 count or CD4 percent as the basis for allowance. This commenter requested that we clarify the guidance in the proposed introductory text that these measurements “must occur within the period we are considering in connection with [the claimant's] application or continuing disability review.”

Response: We did not adopt this comment because it is already considered by our program rules. We are generally required to develop a complete medical history for at least 12 months preceding the month of the date of application. We will remind adjudicators about periods of consideration during our training on the HIV listings.

Comment: One commenter stated that “there are a number of HIV-infected individuals who have [a BMI of less than] 20 and are severely malnourished, but who fall short of the requirements under [proposed] 14.11G.” This commenter asked that we “consider adding a listing for [claimants] who have a BMI [greater than] 18.5 and [less than] 19, with a history of a documented current opportunistic infection and an absolute CD4 count of [less than] 200 in the [adjudicative timeframe].”

Response: We did not adopt the comment. The criteria in proposed 14.11G are appropriate for establishing listing-level severity when considering CD4 and BMI or hemoglobin measurements, as these data are highly predictive of an impairment that we consider disabling. We do not believe the findings proposed by the commenter will generally indicate an impairment that is severe enough to prevent an individual from doing any gainful activity. Moreover, we believe that the impact of adopting this comment would be negligible. Nevertheless, we may find that an individual who meets the criteria suggested by the commenter is disabled at steps 4 or 5 of our sequential evaluation process.

Comment: One commenter pointed out that after the publication of our NPRM, the Centers for Disease Control and Prevention (CDC) published a surveillance case definition that extended CD4 counts and percentages to children as well as adults and adolescents.8 This updated case definition “determines the stage of HIV infection in children age 6-12 years in the same way as adults and adolescents.” Additionally, the commenter stated that staging is primarily based on the CD4 count, which takes precedence over the CD4 percentages; the percentage is considered only if the count is missing. The commenter requested that we make conforming changes to all instances of the listings in which we refer to a CD4 count or percentage. The commenter also wished to note that the CD4 number is the most important measurement and that the CDC made changes for the percentage ranges for immunosuppression in all age groups.

Response: We did not adopt the comment. We use CD4 measurements for a different purpose than the CDC does in their surveillance case definition for HIV infection. The CDC provides surveillance case definitions only for public health surveillance purposes. We have provided CD4 counts in our listings to correspond to a specific level of impairment, which the CDC does not take into account in its surveillance case definitions. However, we have added CD4 counts in the final rule to HIV listings 114.11F1 for children from birth to attainment of age 1 and 114.11F2 for children from age 1 to attainment of age 5.

Comment: One commenter recommended that we “should not depend exclusively on CD4 count or [our] list of fatal or severely disabling HIV-related conditions” when determining eligibility for benefits.” The commenter noted that “some people that live with HIV/[acquired immunodeficiency syndrome] (AIDS) with CD4 counts above 50 are very ill and not able to seek gainful employment,” and asked that our “adjudicators take into account all fatal or very debilitating conditions when determining . . . eligibility for benefits.”

Response: Although we agree that we should not depend exclusively on CD4 count in order to determine eligibility for benefits, we did not make any changes to our listings and note that our regulations include criteria reaching beyond the stated value. At step 3 of our five-step disability determination process, we consider whether the claimant's impairment(s) meets (or medically equals) any of the listings. Many listing criteria do not require a specific diagnosis or laboratory level. For example, the criteria in 14.11I allow us to consider all manifestations of HIV infection that result in significant, documented signs and symptoms and marked limitation in function. If we do not find that a claimant is disabled at step 3, we must still consider whether he or she is disabled at steps 4 or 5 of our sequential evaluation process.9 We always consider all of a person's impairments when determining whether he or she is disabled, not just the impairments that are in our listings.

We published a final rule in the Federal Register of September 26, 2016 (81 FR 66137) titled, Revised Medical Criteria for Evaluating Mental Disorders. The final rule, among other things, amended 20 CFR part 404. We inadvertently included an amendatory instruction to appendix 1 to subpart P of 20 CFR part 404, removing section 114.00I and redesignating section 114.00J as section 114.00I. This document amends and corrects the final regulation.

In FR Doc. 2016-22908 appearing on page 66138 in the Federal Register of Monday, September 26, 2016, the following corrections are made:

Electronic Access and Filing

This document, the notice of proposed rulemaking (NPRM), and all comments received may be viewed online through the Federal eRulemaking portal at: http://www.regulations.gov. The Web site is available 24 hours each day, 365 days each year. Please follow the instructions. An electronic copy of this document may also be downloaded by accessing the Office of the Federal Register's home page at: http://www.archives.gov/federal-register/, or the Government Publishing Office's Web page at: http://www.thefederalregister.org/fdsys.

This regulatory action fulfills the statutory requirement in section 1303(b) of MAP-21 requiring the Secretary to promulgate a regulation to implement the CM/GC method of contracting. The CM/GC contracting method allows a contracting agency to use a single procurement to secure pre-construction and construction services. In the pre-construction services phase, a contracting agency procures the services of a construction contractor early in the design phase of a project in order to obtain the contractor's input on constructability issues that may be affected by the project design. If the contracting agency and the construction contractor reach agreement on price reasonableness, they enter into a contract for the construction of the project.

The CM/GC method has proven to be an effective method of project delivery through its limited deployment in the FHWA's Special Experimental Project Number 14 (SEP-14) Program. Utilizing the contractor's unique construction expertise in the design phase can recommend for the contracting agency's consideration innovative methods and industry best practices to accelerate project delivery and offer reduced costs and reduced schedule risks.

Section 1303 of MAP-21 amended 23 U.S.C. 112(b) by adding paragraph (4) to authorize the use of the CM/GC method of contracting. While the term CM/GC is not used in Section 1303 of MAP-21 to describe the contracting method, the statute allows contracting agencies to award a two-phase contract to a “construction manager or general contractor” for the provision of construction-related services during both the preconstruction and construction phases of a project. State statutes authorizing this method of contracting use different titles including: CM/GC, Construction Manager at-Risk, and General Contractor/Construction Manager. The FHWA has elected to use the term “construction manager/general contractor,” or “CM/GC,” in reference to two-phase contracts that provide for constructability input in the preconstruction phase followed by the construction phase of a project.

The CM/GC contracting method allows a contracting agency to receive a contractor's constructability recommendations during the design process. A number of States including Utah, Colorado, and Arizona, have used the CM/GC project delivery method on Federal-aid highway projects under FHWA's SEP-14 program with varying degrees of success. These projects have shown that early contractor involvement through the CM/GC method has the potential to improve the quality, performance, and cost of the project while ensuring that construction issues are addressed and resolved early in the project development process.

The CM/GC contractor's constructability input during the design process is used to supplement, but not replace or duplicate, the engineering or design services provided by the contracting agency or its consultant. A CM/GC contractor does not provide engineering services. More information about the CM/GC project delivery method can be found on the FHWA's Every Day Counts Web page at http://www.fhwa.dot.gov/everydaycounts/edctwo/2012/cmgc.cfm.

On June 29, 2015, FHWA published an NPRM in the Federal Register at 80 FR 36939 soliciting public comments on its proposal to adopt new regulations. Comments were submitted by nine State Transportation Agencies (STAs),1 six industry associations, and one private individual.

The following summarizes the comments submitted to the docket on the NPRM, notes where and why FHWA has made changes to the final rule, and explains why certain recommendations or suggestions have not been incorporated into the final rule.

Generally speaking, most commenters agreed that the proposed rule implements the statutory requirements. The majority of the comments related to requests for clarification or interpretation of various provisions in the proposed regulatory text. The FHWA has carefully reviewed and analyzed all comments and, where appropriate, made revisions to the rule.

The NYSDOT generally supported the proposed regulations and expressed an appreciation for the flexibility allowed by FHWA in various requirements, such as the method of selecting different project delivery methods, developing early work packages, establishing self-perform requirements, and other requirements related to the CM/GC contract method. The FHWA appreciates these comments and finds no substantive response is needed.

The American Association of State Highway and Transportation Officials (AASHTO) indicated the NPRM is consistent with State environmental requirements and protects the integrity of the National Environmental Policy Act (NEPA) decisionmaking process by including specific safeguards to ensure the NEPA decisionmaking process is not biased by the existence of a CM/GC contract and that all reasonable alternatives will be fairly considered when a project involves an Environmental Impact Statement (EIS) or Environmental Assessment (EA). The FHWA appreciates these comments and finds no substantive response is needed.

The Professional Engineers in California Government (PECG) expressed concerns that the CM/GC contracting method will result in non-competitive awards of construction contracts. The group stated the CM/GC contracting method may lead to situations where there is an inherent conflict of interest in having the contractor provide input during the design phase (e.g., a contractor's recommendation to use a specific material because it believes that there is more profitability with that material over another). The PECG believed that CM/GC contracting may result in situations where there is little cost competition because some contracting agencies may be subject to undue pressure to agree to proposed prices to avoid the risk of delaying important highway projects. In response, FHWA has no evidence of situations where a contracting agency was misled by a contractor's recommendation for materials or construction methods. Ultimately, the contracting agency is responsible for the design and material selection issues. Given this responsibility, it is unlikely that there would be an inherent conflict of interest in the design or material selection process. The FHWA acknowledges that some contracting agencies may experience schedule pressures, but all public agencies are responsible for cost, schedule, and quality issues in the development of their projects. The FHWA did not make any revisions to the proposed regulatory text as a result of this comment.

The Minnesota DOT indicated that the proposed provisions in this section would allow certain preconstruction services associated with preliminary design to be authorized but would not provide sufficient flexibility for other limited actions, such as the acquisition of long-lead-time materials, prior to completing NEPA, even at the STA's own risk. The Minnesota DOT stated that materials acquired solely with State funds would not be incorporated into the project until NEPA is complete and would follow FHWA's procurement requirements. The Minnesota DOT recommended that such at-risk work should be eligible for Federal participation once the NEPA evaluation process is completed, and FHWA authorizes construction.

In response, contracting agencies should be aware that 23 U.S.C. 112(b)(4) does not allow construction activities (even at-risk activities) before the conclusion of the NEPA process (and only allows for contracting agency final design activities on an at-risk basis). Title 23 U.S.C. 112(b)(4)(C)(ii) expressly prohibits a contracting agency from awarding the construction services phase of a contract, and from proceeding or permitting any consultant or contractor to proceed with construction until completion of the environmental review process. The FHWA considers the acquisition of materials, even on an at-risk basis, to be a “construction” activity. Even when performed on an at-risk basis, the early acquisition of materials is an indication that the contracting agency has made a commitment of resources—possibly prejudicing the selection of alternatives before making a final NEPA decision.

The NYSDOT stated that the regulation should provide for an exception to the limitation on final design activities for design elements that are necessary to complete the NEPA process (e.g., to secure environmental approval, an element of the project common to all alternatives may need to be completely designed). The FHWA appreciates this comment but believes that the definition of preliminary design (as contained in 23 CFR 636.103 and referenced in 23 CFR 635.502) is sufficiently broad to include such necessary design work so long as it does not materially affect the objective consideration of alternatives in the NEPA review process. In addition, 23 U.S.C. 139(f)(4)(D) provides authority for a higher level of design for the preferred alternative, subject to conditions in that provision.

In developing the provisions for at-risk activities in the rule, FHWA considered the MAP-21 revisions to 23 U.S.C. 112(b) that added two provisions relating to final design. Section 112(b)(4)(C)(ii) prohibits a contracting agency from proceeding, or permitting any consultant or contractor to proceed, with final design until completion of the NEPA process. Additionally, MAP-21 included language, codified at 23 U.S.C. 112(b)(4)(C)(iv)(I), providing that a contracting agency may proceed at its own expense with design activities at any level of detail for a project before completion of the NEPA process for the project without affecting subsequent approvals required for the project.2 As noted in the NPRM, FHWA considered these provisions together to determine whether it could give meaning to both. This is consistent with applicable conventions of statutory interpretation. The FHWA determined both provisions could be applied if they are interpreted to prohibit FHWA approval or authorization of financial support for final design work before the conclusion of NEPA, but to allow final design work by a contracting agency solely at its own risk.

Other NEPA requirements and policies, including 40 CFR 1506.1(a)-(b) and FHWA Order 6640.1A—FHWA Policy on Permissible Project Related Activities During the NEPA Process, limit agencies from taking actions that might limit the choice of reasonable alternatives in the NEPA review process. The FHWA has a responsibility to ensure compliance with all aspects of the NEPA review process in any federally assisted project, and thus it is important that States not take any actions that might be perceived as limiting the choice of reasonable alternatives—even if those actions are 100 percent State-funded actions taken at the State's financial risk. It is important for FHWA and its partners to be consistent with this issue on both a project-level and national-program basis.

Based on the comments from the Minnesota DOT, NYSDOT, and other commenters, FHWA believes further clarification of allowable at-risk construction activities on CM/GC projects is appropriate. As a result of these comments, we have provided appropriate revisions to the definition of `early work package' in sections 635.502 and 635.505(b), to clarify what constitutes an early work package and the timing limitations applicable to early work packages. See the discussion in this preamble for each of these sections.

The National Association of Surety Bond Producers (NASBP), the Surety & Fidelity Association of America (SFAA), and the American Subcontractors Association, Inc. (ASA) submitted combined comments. In part, their comments suggested that FHWA revise the appropriate sections of 23 CFR part 630 to clarify the applicability of part 630 to projects that are pursued as public private partnerships (PPP) and receive Federal credit or loan assistance. These associations expressed an interest in ensuring that all Federal assistance is reported for transparency and accountability for long-term PPP agreements. No revisions were made to the proposed regulatory text as these comments are outside of the scope of this rulemaking, and existing USDOT program regulations (49 CFR part 80) and guidance address accountability for Federal credit-based funding in PPP projects.

The NASBP, SFAA, and ASA recommended that FHWA require contracting agencies to follow the bonding requirements in 49 CFR 18.36—“Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments” (currently 2 CFR 200.325 in 2 CFR part 200—“Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards”). They also suggested that FHWA set appropriate minimum requirements for bonding and other procurement requirements for PPP projects. In response, we note FHWA's contracting regulations do not specify the process or provide requirements for furnishing performance bonds on Federal-aid projects. In general, the contracting agencies may use their own procedures and requirements for bonding, insurance, prequalification, qualification, or licensing of contractors on Federal-aid projects as long as those procedures do not restrict competition (23 CFR 635.110(b)). The revision to this section simply clarifies that this general requirement applies to CM/GC contracting. In general, the provisions of 2 CFR part 200 apply to all Federal assistance programs, except where an authorizing statute provides otherwise. For contracting under the Federal-aid highway program, 23 U.S.C. 112 provides the authority, and the regulations in 23 CFR part 635 implement specific requirements, for construction contracting, including performance bonding requirements. Therefore, the provisions of 23 CFR 635.110 are applicable to all Title 23 funded construction projects, and FHWA did not make any revisions to this section.

The AASHTO provided a recommendation to clarify this section to ensure that both CM/GC and design-build projects are subject to the contracting agency's own bonding, insurance, licensing, qualification, or prequalification procedures. The NPRM proposed to revise the first sentence of subsection (f) to make such clarification. The FHWA reviewed the proposed language and made minor clarifying edits to make it clear the provision applies to both design-build and CM/GC projects. The FHWA concluded the provision is otherwise clear as proposed and therefore made no further revision to the proposed language.

The Idaho Transportation Department (ITD) suggested that FHWA's approval of projects included on the Statewide Transportation Improvement Program (STIP) also serve as FHWA's approval of the project for advertising for bids and proposals. The ITD suggested that separate FHWA review and approvals would inevitably delay projects. In response, FHWA notes that the cost information typically available at the time the STIP is developed is preliminary in nature and does not provide sufficient information regarding the project scope and estimated cost for construction authorization purposes. Therefore, FHWA made no revisions to the proposed language.

The ITD suggested adding language to the rule that would require the use of low bid procedures if the contracting agency and the CM/GC contractor do not reach an agreed price for construction of the project. In response, FHWA does not want to limit contracting agencies to the use of competitive sealed bidding in circumstances where an agreed price is not reached with the CM/GC contractor. It is possible that another competitive delivery method (such as design-build) could be appropriate for unique projects. Given the need for flexibility in this area, FHWA made no revisions in response to this comment.

The Michigan DOT asked for clarification whether the solicitation document (early in the project development process) needs to specify the method for making construction phase payments. The Michigan DOT recommended that the final rule provide more flexibility to allow contracting agencies to determine the payment method later in the process as long as the method is clearly defined in the construction contract. The Michigan DOT stated that the payment mechanism is one area where risks can be mitigated and transferred effectively. The FHWA agrees with this comment and modified the provision to require the State Transportation Department (STD) to define its procedures for making construction phase progress payments in either the CM/GC solicitation document or the construction services contract documents.

The Colorado DOT commented on the preamble discussion for this section and asked if the contracting agency could negotiate the agreed price for construction with the CM/GC contractor before the NEPA review of the project is complete. In response, FHWA notes section 635.505(b) prohibits the contracting agency from awarding the construction services phase of a CM/GC contract before NEPA is complete. The regulation, however, does not prohibit the parties from undertaking the evaluation and negotiation processes that precede such award.

The Maryland State Highway Administration (SHA) asked for clarification whether the term “Request for Proposals document” in the proposed language for section 635.309(p)(1)(vi) was in reference to the initial solicitation document or a Request for Proposals for an agreed price for construction services. In response to this comment, FHWA clarifies the provision establishes requirements for design-build Request for Proposals and CM/GC initial solicitation documents. The FHWA edited the references in the provision to better reflect this intended meaning.

The AASHTO expressed a concern that, should the contracting agency desire to include a percent fee when compensating the contractor, it may not be included in the definition and, therefore, not allowed under the rule. The AASHTO suggested adding language to the definition that says the term includes all costs to supervise and administer physical construction work, including fees paid to the CM/GC contractor for project administration. The FHWA acknowledges that, in some instances, payment of a fee to a CM/GC contractor may be an eligible cost. However, after considering the comment, we concluded the eligibility of fees should be addressed on a contract-specific basis. In response to the comment, FHWA added language to the final rule definition that clarifies the term “construction services” includes all costs to perform, supervise, and administer physical construction work for the project.

The Connecticut DOT suggested adding the phrase “[f]or which this portion will be determined by the STA through consideration of the complexity and additional factors associated with each individual project” after the phrase “project or portion of the project.” The FHWA concluded, however, that it was not clear the addition would clarify the definition and therefore did not accept this proposed revision. The Delaware DOT suggested that the definition of “construction services” should be modified to account for the possibility that the construction manager does not perform the construction work because an agreed price cannot be negotiated. This possibility is addressed through the provisions in section 635.504(b)(6), and therefore, FHWA did not make this proposed revision to the definition.

Additionally, due to concerns raised by the Minnesota and Connecticut DOTs regarding the statutory requirement for FHWA approval of a price estimate for the entire project before authorizing construction activities (23 U.S.C. 112(b)(4)(C)(iii)(I)), FHWA reviewed the definition of “construction services” for clarity. The FHWA determined the last sentence in the proposed definition, concerning procurement and authorization procedures, could cause confusion and could be read as conflicting with requirements in section 635.506(d)(2) of the final rule. For these reasons, FHWA is removing the last sentence in the NPRM definition of “construction services.”

The Colorado DOT expressed a concern that the preamble language does not allow contracting agencies to perform long-lead time procurements for materials, equipment, and items at risk. The Minnesota DOT expressed a similar concern and suggested that contracting agencies be allowed to acquire long-lead time materials at their own risk, but not be allowed to install the material prior to the completion of the NEPA process.

For the reasons noted in the discussion for section 630.106, FHWA revised the definition of an early work package to include examples of early construction work, which may not be performed prior to the conclusion of NEPA, even on an at-risk basis (e.g., site preparation, structure demolition, hazardous material abatement/treatment/removal, early material acquisition/fabrication contracts, or any action that may materially affect the objective consideration of alternatives in the NEPA review process). Based on the concerns expressed by the Minnesota DOT and Colorado DOT, FHWA also added language in the definition of “preconstruction service” and in section 635.505(b) to clarify allowable preconstruction activities and emphasize that early construction packages are not allowed until NEPA is complete. In further response to comments questioning the clarity of the definition and the timing of early work package authorizations, FHWA added language to clarify two provisions in the definition that relate to pricing. First, FHWA clarified the type of risks (construction risks) that must be understood before the contracting agency and the CM/GC contractor can agree on a price. The FHWA also inserted into the definition an explicit reference to section 635.506(d)(2), to make it clear that FHWA approval of the price estimate for construction of the entire project must occur before it can authorize any early work package. In addition to the responses above, FHWA believes it is important to emphasize early work packages are for minor elements or stages of project construction that can be accomplished during the period after NEPA is complete and before design of the project is sufficient to permit the parties to reach an agreed price for construction of the project. Early work packages are not to be used to piecemeal construction of the project. Early work packages are intended to support the objective of the CM/GC contracting process, which is to expedite competitive procurement and improve project delivery through use of the two-stage contracting process.

The Michigan DOT requested clarification as to whether the proposed definition of preconstruction services prohibits a design firm from being on the CM/GC contractor's preconstruction team if the design firm is not providing the contracting agency with design/engineering services. In response to this request, the regulation does not prohibit a CM/GC contractor from hiring a design or engineering firm for consultation during preconstruction services. This consulting firm may assist the CM/GC contractor by providing incidental engineering related services typically performed by general construction contractors, such as the preparation of site plans or falsework plans. In order to avoid conflict of interest issues, the design-engineering firm hired by the CM/GC contractor may not be the same as, or affiliated with, the design-engineering firm under contract to the contracting agency for engineering services. The FHWA does not believe it is necessary to revise the regulatory language to address this comment.

The Minnesota DOT expressed concern that the proposed definition for “preconstruction services” appeared to disallow site work for testing and other field studies before NEPA completion. The Minnesota DOT suggested that FHWA modify the definition of “preconstruction services” to include site work for testing for the contracting agency's design team and other field studies to inform the environmental process. In response, FHWA agrees with this suggestion and revises the final sentence of the definition to expressly include on-site material sampling and data collection to assist the contracting agency's design team in its preliminary design work. The definition still excludes design and engineering-related services as defined in 23 CFR 172.3.

The Minnesota DOT also suggested that FHWA broaden the definition to allow the CM/GC contractor to perform engineering typically performed by the contractor (e.g., falsework plans, shop drawings) during the preconstruction phase of the project. A private individual raised similar concerns, indicating that incidental engineering related services were not within the definition of “construction” or the definition of “engineering” in 23 CFR 172.3. The private individual requested more specificity on the types of incidental engineering work that could be offered at the preconstruction services (for example, falsework studies, shop plans, formwork studies). The FHWA agrees that it may be appropriate for the CM/GC contractor to develop certain preliminary plans typically prepared by a construction contractor (such as falsework plans) to assist the contracting agency's design team during its preconstruction activities. Shop drawings or fabrication plans, however, are considered to be an element of final design, not preliminary design, and FHWA is precluded from approving or authorizing financial support for final design activities until the NEPA process is complete. In addition, shop drawings are typically developed by a fabricator or material supplier who is under contract with a construction contractor. Even on an at-risk basis, contracting for the acquisition or fabrication of materials is not allowed before the conclusion of the NEPA process. This is necessary to prevent the perception of bias and a commitment of resources to a particular NEPA alternative. The FHWA made modifications to the definition of “preconstruction services” to provide clarity on what preconstruction services are eligible and which of these services can or cannot be provided before the completion of the NEPA process.

The Minnesota DOT asked why the proposed rule was silent on the use of subcontractors for preconstruction services. The FHWA does not believe it is necessary to address subcontractors, as the regulation applies directly to Federal-aid recipients (contracting agencies) and indirectly to CM/GC firms. The CM/GC firm may have contractual relationships with subcontractors, lower-tier subcontractors, material suppliers, etc. in accordance with applicable Federal and State requirements. Therefore, no revisions are made to the regulatory language to address this comment.

The NYSDOT asked if guidance should be provided regarding design liability issues identified in Coghlin Electrical Contractors, Inc. v. Gilbane Bldg. Co. et al., 472 Mass. 549 (2015). The FHWA believes that providing guidance regarding the applicability of this case, or other liability cases, is beyond the scope of this rule.

The Greater Contractors Association of New York (GCA) supported the distinction in the definition between design services and constructability reviews. The GCA believed that the definition makes it clear that the CM/GC contractor is providing input on constructability, scheduling, risk identification, and cost-related issues only. The FHWA agrees with this comment and does not believe that the regulatory text requires further revisions.

The Maryland SHA expressed concern that the NRPM did not discuss allowable procurement practices (e.g., discussions, procedures for request for proposals, competitive ranges). It requested clarification that State procedures be allowable where FHWA's regulation is silent on an issue. The FHWA agrees with this comment and revises the regulatory text to allow for the use of applicable State or local procedures as long as these procedures do not restrict competition or conflict with Federal law or regulations. In considering this comment, FHWA also recognized the rule should be clearer that the use of State and local procedures is permissive, not mandatory. For this reason, FHWA replaced “shall” with “may” in the provision.

The ARTBA commented that it was pleased to see numerous references in the NPRM regarding the importance of open competition. At the same time, it was dismayed by the USDOT's promotion of local labor hiring preference provisions in the Federal-aid highway program and other USDOT assistance programs. It believed that such provisions are in conflict with the principles of open competition. This particular comment is outside of the scope of this rulemaking, and FHWA did not make changes in response to the comment. Local hiring preference is the subject of a separate rulemaking, “Geographic-Based Hiring Preferences in Administering Federal Awards” [Docket DOT-OST-2015-0013; RIN 2105-AE38], 80 FR 12092 (Mar. 6, 2016).

The AGC referenced the procurement requirements in this section of the NPRM and recommended that FHWA include a discussion of what is the expectation in the construction services portion of a contracting agency's solicitation. The AGC suggested that contracting agencies should clarify whether the CM/GC contractor's responsibilities are limited to providing constructability and material reviews, or whether the CM/GC contractor is expected to perform design services. The AGC referenced recent cases that showed a trend of liability and responsibility being assigned to CM/GC contractors related to the preconstruction phase of the contract for what have been considered professional services provided. The FHWA does not believe that the regulatory language requires clarifications. The definition of “preconstruction services” in section 635.502 specifically excludes design and engineering-related services as defined in 23 CFR part 172.

The ARTBA expressed several concerns regarding objectivity and transparency of the selection process for alternative contracting methods. The ARTBA agreed that the NPRM language is consistent with the provision in MAP-21 that gives flexibility to the contracting agency in determining factors for the selection of the CM/GC contractor, but wished to underscore the importance of certain procurement requirements (such as interviews) to ensure integrity and enlist the participation of the industry in CM/GC projects. The ARTBA highlighted the importance of clarity and disclosure in all procurement documents. The FHWA agrees with ARTBA's general comments that clarity and transparency are important in the procurement process. Section 635.504(b)(3)(ii) requires solicitation documents to list the evaluation factors and significant subfactors and their relative importance in evaluating proposals. This provision does not require contracting agencies to use any particular method of identifying relative importance. There are a number of ways to do so, such as by the assignment of specific weights or percentages to the factors, or by listing the evaluation criteria in descending order of importance. This decision about how to do the procurement rests with the contracting agency under 23 U.S.C. 112(b)(4)(B). Under section 635.504(b)(3)(ii), the contracting agency must disclose the evaluation criteria it will use, and the relative importance of the criteria, in the solicitation documents.

In connection with section 635.504(b)(3)(iv), Michigan DOT recommended that FHWA provide some flexibility in allowing the contracting agency to decide whether interviews would be necessary after the receipt of responses to the solicitation but before establishing a final rank. The Michigan DOT indicated that the contracting agency should have the flexibility to determine whether interviews are needed, based upon the strength of written responses to the solicitation document. The Michigan DOT indicated that in some cases, interviews might not be necessary if there were a significant separation between one team and all others. Similarly, the ITD commented that interviews should be conducted at the discretion of the State when the topped ranked firms are close in score, and the evaluation team should determine appropriate additional criteria to be evaluated in the interview. In response, FHWA believes Michigan DOT and ITD have raised valid points for those circumstances where it may not be necessary to interview firms before establishing the final rank. In the final rule, if interviews are used, the contracting agency must offer the opportunity for an interview to all short listed firms (or firms that submitted responsive proposals, if a short list is not used) as required by section 635.504(b)(4). In response to the comments, we have added a parenthetical to section 635.504(b)(3)(iv) so that the provision explicitly recognizes contracting agencies may reserve the right to make a final determination whether interviews are needed based on responses to the solicitation. The FHWA disagrees with ITD, however, about flexibility for the proposal evaluation team to establish additional criteria applicable to the interview process. The FHWA does not believe adding criteria not disclosed in the solicitation documents is conducive to open and transparent competition. For that reason, no change is made to the rule in response to this comment. Under section 635.504(b)(3)(ii), contracting agencies must identify in the solicitation documents their intent to use, or not use, interviews and the relative importance of the interviews as part of the evaluation criteria. The contracting agency must disclose in the solicitation documents any criteria specific to the interview phase, including its relative importance with respect to all evaluation factors.

The AGC suggested that FHWA encourage the use of interviews in the selection process and clarify what value (percent of selection ranking) will be given to the interview. The FHWA agrees that interviews are important element of the selection process, and if used, it is important for proposers to understand the value that contracting agencies will assign to the interview. Section 635.504(b)(3)(ii) requires inclusion in the solicitation documents of the relative importance of evaluation factors, and this requirement would apply to the use of interviews. For this reason, FHWA did not revise the rule in response to this comment.

The AGC also suggested that FHWA add a new section recommending the use of a short list process where only a limited number of firms are selected to proceed through the procurement process and that FHWA require the solicitation to identify the number of firms to be included on the short list. After considering the comment, FHWA concluded the use of shortlisting is a topic that normally would be included in contracting agencies' CM/GC procurement procedures. This procurement process detail is best left to the discretion of the contracting agency, consistent with 23 U.S.C. 112 (b)(4)(B). Those procedures are subject to FHWA approval under section 635.504(c), and will be publicly available. For these reasons, no changes are made to the NPRM language in response to these AGC comments.

The NYSDOT indicated that the NPRM was silent regarding best practices in the administration of CM/GC projects. As an example, it cited the practice of ensuring interaction and coordination between the contracting agency's design or engineering consultant (if out-sourced) and the CM/GC contractor. The NYSDOT suggested that FHWA consider the need for issuing guidance related to other best practices such as risk management plans. The FHWA agrees that coordination and interaction between the contracting agency's designer (if out-sourced) and the CM/GC contractor is desirable, but this is a matter of administrative practice best addressed by the contracting agency. The issuance of guidance on best practices related to the administration of CM/GC projects is outside of the scope of this rulemaking, and FHWA made no changes to the rule in response to these comments.

The ITD suggested that approvals by the FHWA Division Administrator be limited to approving changes to the approved State solicitation template documents. The FHWA's role in the CM/GC project approval and authorization process is described in section 635.506, and this comment is addressed in the discussion of that section. Therefore, FHWA did not make changes to this section.

The Minnesota DOT suggested allowing additional flexibility in situations where the contracting agency and CM/GC contractor are unable to reach agreement on price and schedule for construction services (including early work packages). In particular, the commenter suggested the rule expressly allow flexibility in such cases for the contracting agency to use design-build contracting for the project or individual work packages. The proposed rule suggested that the traditional competitive bidding process be used in these situations. In response, FHWA recognizes that there may be circumstances where it would be appropriate to have the option of using either competitive bidding (23 CFR 635.112) or another approved method, such as design-build contracting under 23 CFR part 636, for both early work packages and the main portion of project construction (i.e., project construction exclusive of any early work packages). The FHWA revised the first sentence of the paragraph by adding “or another approved method” at the end of the sentence. The FHWA also deleted the proposed language in the paragraph that would have prohibited the contracting agency, once it advertises for bids or proposals for the project or a portion of the project (early work packages), from using the CM/GC agreed price procedures. Under the final rule, when the contracting agency and the CM/GC contractor fail to agree on a price for an early work package, the contracting agency may perform that work itself under force account provisions, or may undertake a new procurement for that early work package, without affecting its ability to use CM/GC agreed price procedures for other early work packages and for construction services for the main portion of the project.

The AASHTO noted that the proposed provisions of this section (requiring a transition to competitive bidding if the contracting agency and CM/GC contractor are unwilling or unable to enter into a contract for construction services) create a potential conflict with the CM/GC laws of at least one State. Apparently, this unidentified State's statute allows the contracting agency to enter into negotiations with the next highest scored firm(s) until agreement is reached or the process is terminated. The AASHTO provided a recommended revision which would allow such a State to enter into negotiations with the highest ranked firm from the original solicitation for CM/GC services. From FHWA's perspective, the level of design would typically be 60 percent to 90 percent complete when final negotiations for construction services for the main portion of the project take place with the CM/GC contractor. If the contracting agency and the CM/GC contractor are not able to reach agreement regarding schedule and price, then it is in the public interest to transition to a new procurement and solicit competitive bids or proposals from all firms that might be interested in the construction services phase. It is not logical to enter into negotiations for construction services with a firm that was the next highest ranked firm for the preconstruction services because, at this point in the project delivery process, a large portion of the advisory services provided by the CM/GC firm for the preconstruction phase have been completed. In addition, the importance the contracting agency places on various qualifications and contractor experience may be different when it is seeking only construction services, as compared to seeking a combination of preconstruction and construction services. Thus, it does not make sense to enter into negotiations with the second highest scoring CM/GC firm merely for the sake of finalizing input and obtaining construction pricing. Where the contracting agency and CM/GC contractor are unwilling or unable to enter into a contract for construction services, it is appropriate to require either competitive sealed bidding (23 CFR 635.112) or a transition to another approved contracting method, such as design-build contracting under 23 CFR part 636. Therefore, FHWA is not adopting AASHTO's recommendation.

The Connecticut DOT suggested that the requirement in this section for FHWA approval before advertising for construction bids or proposals be removed. The Connecticut DOT believed that an additional round of FHWA approvals would be more cumbersome than beneficial. The FHWA does not agree with this recommendation. In situations where the contracting agency and CM/GC contractor are unwilling or unable to enter into a contract for construction services, it is appropriate that the contracting agency notify the FHWA Division Administrator of this decision and request FHWA's concurrence before advertising for construction bids or proposals in accordance with 23 CFR 635.112 (bid-build) or 23 CFR part 636 (design-build). The reason is that contracting agency is effectively converting from a CM/GC contracting process to a non-CM/GC process subject to separate bidding requirements under title 23 (e.g., bid-build or design-build). In such case, FHWA approval provisions applicable to those procedures will apply. In considering the comments, however, FHWA recognizes there is potential for confusion due to the use of the term “notification” in the proposed rule language. In the final rule, FHWA has substituted the term “concurrence” for “notification” in the first sentence of paragraph (6). This change better reflects FHWA's intent, which is that the contracting agency will follow appropriate procedures for required FHWA approvals prior to issuing new bid/proposal documents. The change makes the rule more consistent with the concurrence concepts used in 23 CFR 635.114(h) and 636.109(c). The concurrence point will help to ensure that FHWA's requirements are being met for before a new solicitation starts.

The ITD suggested using the term “competitive advantage” or better defining the term “conflict of interest.” The Delaware DOT suggested a clarification of the terms in this section to say that “. . . the contracting agency may prohibit the CM/GC contractor from submitting competitive bids during the construction phase of the contract if the contracting agency determines that the inclusion of the CM/GC contractor may inhibit fair and open competition among the bidders.” The FHWA generally agrees with these comments. The final rule permits the contracting agency to exclude the CM/GC contractor from bidding on construction of the project if the contracting agency determines the CM/GC contractor is likely to have a competitive advantage that could adversely affect fair and open competition.

The ARTBA commented that the contracting agency's ability to preclude a CM/GC contractor from bidding on the construction services contract if the agency and firm have been unable to agree on a price will be a risk allocation factor affecting the price of CM/GC proposals. The commenter stated this type of provision should be clearly delineated in the initial CM/GC procurement documents and elsewhere. The GCA raised similar concerns. It suggested that the contracting agency's original solicitation must outline the process for how the project will be handled if the agency and the CM/GC contractor cannot reach agreement on a final contract. The GCA noted that the NPRM allows the contracting agency the option of allowing or preventing the CM/GC contractor from bidding on the construction in the event a final contract is not negotiated. The GCA believed that this is not acceptable because it exposes the CM/GC contactor to the risk that an agency will simply refuse to negotiate a reasonable price and thereby gain the advantage of the CM/GC's proposal without entering into a contract.

In response, FHWA recognizes that the possibility of contract termination for failure to agree on price for construction creates some risk to the CM/GC contractor when performing preconstruction services. FHWA decided not to revise the rule in response to these comments, however. First, the authority for such termination appears in the rule, which places potential CM/GC contractors on notice of the risk. We also expect contracting agencies to include this termination authority in their CM/GC contract documents. Under section 635.504(b)(3)(v), the solicitation documents must include or reference sample contract forms. Second, a decision to preclude the CM/GC contractor from bidding on construction (including an early work package where the parties failed to reach an agreed price) under a new procurement will be a very fact-specific determination that depends on the circumstances of the particular project. Facts relevant to the decision about a real or apparent competitive advantage often will not be fully available until well after the solicitation process has resulted in the selection of a CM/GC contractor. This would make it difficult for a contracting agency to make that decision at the time the CM/GC solicitation document is developed. The FHWA concluded it is important to provide contracting agencies with flexibility in timing their determination whether the CM/GC contractor has a competitive advantage that could adversely affect fair and open competition for the work in question. That said, we believe contracting agencies need to be consistent with their State policies related to competition (and apparent competitive advantage). The contracting industry appropriately expects fairness and transparency in an owner's procurement process—including any notices to the industry in the solicitation process. Both the owner and the industry rightfully expect good faith negotiations regarding scope, schedule, and price for construction.

The FHWA received some comments on this section that relate to the relationship between CM/GC provisions and FHWA's Risk-Based Stewardship and Oversight (RSBO) Program. The FHWA's RSBO Program is meant to optimize the successful delivery of programs and projects and ensure compliance with Federal requirements. This risk-based program involves three main avenues: (1) Project approval actions, (2) data-driven compliance assurance, and (3) risk-based stewardship and oversight involvement in Projects of Division Interest (PoDIs) and Projects of Corporate Interest (PoCIs). The FHWA Division Offices are required to execute a Stewardship and Oversight agreement with their respective STA for the oversight of Federal-aid projects, including PoDI and PoCI projects. This agreement establishes the roles and responsibilities for project actions that require FHWA approval.

The Michigan DOT suggested that FHWA's review and approval of a State's procurement document should constitute FHWA's approval to use the CM/GC contracting method for all Federal-aid projects except those where full oversight is needed (e.g., PoDIs or PoCIs). The Michigan DOT indicated that for non-PoDI or non-PoCI projects, FHWA's involvement could be designated in the STA's approved CM/GC procurement procedures, and therefore, the Michigan DOT recommended that FHWA revise numerous sections in part 635 to eliminate the requirement for FHWA approvals for non-PoCI and non-PoDI projects. The FHWA does not agree with this suggestion. Given the differences in FHWA's Stewardship and Oversight Agreements from State-to-State, it is not appropriate to implement a change that would eliminate FHWA Division Office review/approval requirements in our regulations. The FHWA Division Offices have the authority to assess program risks in their States and come to an agreement with their respective States regarding the stewardship of the Federal-aid program. Section 635.506(a) provides a discussion of the flexibilities that are available for States in assuming certain FHWA responsibilities for project approval actions. The Stewardship and Oversight Agreement will formalize these responsibilities in each State. It is expected that the State's assumption of FHWA responsibilities will vary from State-to-State (even on PoDI and PoCI projects), and therefore, no revisions are made in section 635.504(c) related to this recommendation.

Two commenters on this section, Minnesota DOT and Connecticut DOT, suggested clarification of the terms used and requirements included in this section. The Minnesota DOT indicated that the NPRM appeared to require each construction services contract (i.e., each work package) to include a minimum 30 percent self-performance requirement. The Minnesota DOT said that the application of the self-performance requirement might not be appropriate for particular work packages, such as supplying long lead time materials. The Minnesota DOT suggested that the rule specifically exclude providing materials from the self-performance requirement. They also suggested that the 30 percent self-performance requirement apply to the project overall and not to each individual work package. The Connecticut DOT suggested that the application of the 30 percent self-performance requirement be left to the discretion of the contracting agency, which would allow the use of the Construction Manager-at-Risk concept where the CM/GC contractor serves totally as a construction manager and does not perform any construction during the construction services phase of the project.

The three contracting associations providing comments on this section strongly supported the use of self-performance requirements; however, they differed in their recommended revisions to the NPRM. The AGC supported the use of the traditional 30 percent self-performance minimum requirement and suggested that the rule point out that States are free to use a higher self-performance requirement if they so desire or are mandated under State law. The AGC suggested that the regulation should clarify that there is no upper limit on self-performed work and that the “total cost of construction services” should be inclusive of any early work packages and/or task orders. The AGC took exception to the sentence that would allow States to require the CM/GC contractor to competitively let and award subcontracts for construction services to the lowest responsive bidder if required by State law. The AGC believed that it is imperative that the CM/GC contractor have control over the solicitation, selection, and administration of subcontractors in much the same way as subcontractors are selected through the traditional design-bid-build process.

The GCA had similar concerns. It indicated that it is critical to assure taxpayers that the contractor awarded the contract is the entity responsible for building the project and meeting all obligations. The GCA contended that contracting agencies must ensure that the CM/GC contractor has the same contractual responsibilities as a general contractor during the construction services phase of the project by ensuring that the CM/GC contractor has full control of the subcontractor selection process and is contractually and financially liable for delivering the project on schedule and at a fixed price. The GCA noted that a self-performance requirement of 40-50 percent is common in the industry and recommended that the CM/GC model contain a self-performance requirement higher than the NPRM 30 percent minimum.

The ARTBA also noted the importance of recognizing the difference between CM/GC contracting as currently used by transportation agencies and its use in the “vertical” construction industry. The ARTBA noted that by maximizing self-performance, CM/GC contractors can maximize innovation and efficiency, and enhance the value for the project's owner-agency and the taxpayers. This process is in contrast to the customary practices in the vertical building industry, where the “construction manager” is often a broker of construction services by other firms.

In response, FHWA is not adopting the Connecticut DOT suggestion that the self-performance requirement be left to the contracting agency's discretion so that the CM/GC contractor can serve in a solely managerial capacity during the construction services phase of the project. The FHWA recognizes such practice occurs in vertical construction, but it is not authorized under 23 U.S.C. 112(b)(4), which requires the CM/GC contractor to be responsible for construction of the project where the parties reach an agreed price for construction services.

After considering the comments, FHWA is revising the rule to clarify that the 30 percent self-performance requirement applies to the total of all construction services performed under the CM/GC contract, not to each individual contract for early work packages and construction services for the main portion of the project. The CM/GC contractor should take steps to ensure its work meets this requirement, which may necessitate adjustments in work performance as the construction work progresses. The exception for specialty work is retained, but FHWA has not expanded the exception to materials. The NPRM language was clear that the 30 percent criteria is a minimum, and contracting agencies have the discretion to set higher threshold if provided for by State or local policy. The final rule retains that language. The FHWA is not revising the sentence that allows contracting agencies to require the CM/GC contractor to competitively let and award subcontracts for construction services to the lowest responsive bidder if required by State law, regulation, or administrative policy. The MAP-21 Section 1303 requirements did not address this issue, and FHWA believes that it is appropriate to allow States to develop their own policies.

Finally, it is important to note in this context that awards of subcontracts must be in accordance with the Disadvantaged Business Enterprise (DBE) regulations in 49 CFR part 26, including the good faith efforts requirements at 49 CFR 26.53 when a DBE contract goal has been set on the contract. Further discussion of FHWA's DBE requirements for CM/GC contracts is provided below in the response to comments on section 635.506(e).

The Connecticut DOT noted that this section allows for compensation based on actual costs and commented that the accompanying requirement of indirect cost determinations would render this an extremely burdensome option for the CM/GC contractor and contracting agency. The Connecticut DOT recommended that FHWA consider eliminating this option since actual costs are not defined and would probably need to be audited; indirect cost rates would also need to be negotiated, audited, and established. If this method were to remain an option, the Connecticut DOT recommended that the indirect cost be defined as a specific amount, such as 10 percent. The FHWA believes that the use of actual cost rates would be very rare; however, there may be specific circumstances where it might be advantageous for a contracting agency to do so. In these cases, it is important to give the contracting agencies the flexibility to do this. FHWA does not believe that limiting indirect costs to 10 percent of direct costs is appropriate and, therefore, did not adopt any limitations.

When reviewing this comment from Connecticut DOT, FHWA recognized the need for a correction in section 635.504(e). In the NPRM, language relating to indirect cost rates was mistakenly placed in paragraph 635.504(e)(3) rather than in paragraph (e)(2). The FHWA corrected this error in the final rule.

The Connecticut DOT requested that FHWA provide clarification for the basis for prohibiting the use of “cost plus a percentage of cost and percentage of construction cost methods” as methods of payment for preconstruction services. In response, FHWA notes that under these payment methods, there is a potential conflict of interest between the contractor's professional responsibility to the contracting agency and the contractor's financial interest in maximizing revenues. This is inherent in cost plus percentage of cost compensation, creating little incentive for the contractor to control its administrative costs or provide recommendations that would result in a more cost effective project. Furthermore, the use of the cost plus a percentage of cost and percentage of construction cost methods of contracting is prohibited in the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200.323(d)). The FHWA made no revisions to the regulatory text in response to this comment. In reviewing the comment from Connecticut DOT on this topic, however, FHWA determined that including a similar sentence in paragraph (e)(3) (method of payment for construction services) would eliminate any confusion to the applicability of 2 CFR 200.323(d) for construction services payment methods.

As is evident from this preamble's discussion of individual sections of the rule, there is some uncertainty among stakeholders about the types of CM/GC contractor activities allowed before the completion of the NEPA review for the project. The FHWA believes it may be useful to summarize how CM/GC contractor services can be used before the conclusion of NEPA under this rule as well as applicable NEPA requirements. This summary consolidates, and expands on, FHWA's responses to specific comments on section 635.505.

• The FHWA may approve and authorize financial support for necessary and reasonable CM/GC contractor costs related to preconstruction activities including but not limited to: Cost estimating, scheduling; constructability reviews/recommendations; risk analysis; development of implementation plans as required by the contracting agency (safety plans, environmental compliance plans, quality control plans, hazardous material plans, etc.); field studies that assist with preliminary design, including site coring and sampling; site studies; and other activities that do not materially affect the objective consideration of NEPA alternatives;

• The FHWA cannot approve or authorize financial support for final design or construction activities such as: Site preparation, structure demolition, hazardous material removal/treatment/abatement, preparation of shop drawings, early material acquisition contracts (regardless of lead time), or material fabrication contracts (e.g., structural steel, precast concrete members, etc.);

• On an at-risk basis, the contracting agency may perform at-risk final design activities at any level of detail and may contract with the CM/GC firm to perform preconstruction services related to final design if the contracting agency has a procedure for segregating the costs of the CM/GC contractor's at-risk work from the CM/GC contractor's preconstruction services eligible for reimbursement during the NEPA process; and

• Even on an at-risk basis, the contracting agency must not contract for (or direct the CM/GC contractor to perform) construction activities before the completion of NEPA review, including the following activities: Site preparation, demolition, hazardous material treatment/removal, materials acquisition (regardless of lead time), and fabrication of materials or other activities that would adversely affect the objective consideration of NEPA alternatives. Plans or submittals that require an agreement/contract with a supplier or fabricator, such as shop drawings or fabrication plans, are not allowed, even on an at-risk basis prior to the completion of the NEPA review process.

The Colorado DOT noted that the preamble discussion for this section prohibits contracting agencies from awarding early work packages (such as advanced material acquisition) before the NEPA review process is complete. The Colorado DOT stated that contracting agencies need an exception for long lead time procurements for advanced materials procured at their own risk. The Minnesota DOT stated that the NPRM provides for very limited pre-NEPA activities, and it specifically prohibits advanced material acquisition. The Minnesota DOT recommended that the regulations allow contracting agencies to perform limited construction services, such as procuring materials on an at-risk basis before completing the NEPA review process. The Minnesota DOT suggested that these materials would not be incorporated into the work until NEPA is complete and would follow Federal procurement rules. The Minnesota DOT also suggested that this at-risk work should be eligible for Federal reimbursement once NEPA is completed and the project is authorized.

As noted in the discussion of section 630.106, the advanced acquisition of materials, even on at-risk basis, is an early construction activity which 23 U.S.C. 112(b)(4)(C)(ii) prohibits. That provision provides that contracting agencies may not with the award of the construction services phase before the completion of the NEPA review process. The FHWA acknowledges additional clarification regarding this issue is appropriate, and therefore, we have revised paragraph (b) to prohibit the contracting agency from initiating construction activities or allowing such activities to proceed, even on an at-risk basis, prior to the completion of the NEPA process. The prohibition includes construction work self-performed by the contracting agency and contracts let by the contracting agency for construction services (including construction services under a CM/GC contract such as early work packages for advanced material acquisition or site preparation work).

The ITD commented that it is not readily apparent why the CM/GC contractor needs to know the NEPA alternatives, as they are only responsible for implementing the preferred alternative identified in the environmental decision. In response, while it is true that the CM/GC contractor will only be responsible for implementing the selected alternative identified in the NEPA process, the CM/GC contractor may provide technical information to the contracting agency during the preconstruction phase for use in the NEPA evaluation for the project. Issues such as constructability and cost often are relevant to the comparison of alternatives. The FHWA and the State are responsible for ensuring a fair and objective comparative evaluation of reasonable alternatives for the project under 40 CFR 1502.14. This includes an analysis of the proposed action and alternatives to it in a substantially similar manner, using consistent criteria for evaluating and screening. See Question and Answer 5b, “Forty Most Asked Questions Concerning CEQ's National Environmental Policy Act Regulations,” Council on Environmental Quality (46 FR 18026 (March 23, 1981)), as amended (available online at https://ceq.doe.gov/nepa/regs/40/40P1.HTM). For these reasons, it is incumbent on the contracting agency to ensure it will have access to comparable data for the evaluation of the reasonable alternatives for the project. To the extent the contracting agency wishes to use data provided by the CM/GC contractor, this means the contracting agency should include provisions in its CM/GC bid and contract documents that permit it to obtain such data from the CM/GC contractor as needed. After considering the comments, FHWA agrees with the commenter that the language proposed in the NPRM did not fully capture the intended meaning. To better capture the scope of the responsibility, this section was revised to place the responsibility on the contracting agency for ensuring its CM/GC contract gives it the ability to obtain, as needed, technical information needed for a fair and objective comparative evaluation of reasonable alternatives for the project.

The NPRM proposed a requirement that the CM/GC contract include provisions ensuring no commitments are made to any alternative during the NEPA process, and that the comparative merits of all alternatives identified and considered during the NEPA process, including the no-build alternative, will be evaluated and fairly considered. The ITD indicated that the provisions of this section are design functions, not functions of the CM/GC contractor. In response to this comment, FHWA agrees that the NEPA requirements reflected in this section have direct applicability to the contracting agency, but they have implications for the contracting agency's consultants as well. The proposed language, which is similar to language in the design-build regulations (23 CFR 636.109(b)(4)), is intended to ensure NEPA requirements for an independent and non-biased evaluation of project alternatives are satisfied. The provision will help contracting agencies and prospective CM/GC contractors understand the issues related to the NEPA review process, the need for the CM/GC contractor to be unbiased in the advice given to the contracting agency about alternatives, and the contracting agency's role in implementing these requirements during design development. After considering the comment, FHWA concluded the provision is important to maintain the integrity of the NEPA process, and FHWA is not revising the regulatory text.

The Minnesota DOT noted a concern with the requirement for each construction services contract to include a provision ensuring that the CM/GC contractor will meet all environmental and mitigation measures committed to in the NEPA document. The Minnesota DOT said that in many situations, the NEPA document has mitigation measures beyond the control of the CM/GC contractor. The Minnesota DOT suggested modifying the clause to require the STA to include “applicable” commitments in each contract and deleting the “and” in the phrase “environmental and mitigation” as unnecessary. The proposed language is consistent with a provision in the design-build regulations at 23 CFR 636.109(b)(5), and FHWA believes that consistency should be maintained in the rule. FHWA agrees the provision would benefit from a clarification to address the concern that the CM/GC contractor ought not to be held responsible for environmental and mitigation work that is not part of the CM/GC contract scope of work. The FHWA revised this section to provide an exception for measures the contracting agency expressly describes in the CM/GC contract as excluded because they are the responsibility of others.

The AGC noted that the proposed FHWA review and approval requirements in this section showed a trend away from the past several years during which FHWA has given more flexibility and authority to the States in managing their Federal-aid projects. The ARTBA expressed a similar concern noting that some of the requirements for FHWA review were based on the MAP-21 provisions, while others originated from FHWA's customary stewardship practices. The AGC expressed the concern that such involvement may unnecessarily delay project activities and suggested that, if FHWA believed such reviews were necessary, FHWA should also include timeframes for approval period as to not delay the start of the work. As noted in the discussion of section 635.504(b)(5), the ITD suggested that approvals by the FHWA Division Administrator be limited to only approving changes to the approved State solicitation template documents.

In response to these comments, it should be noted that 23 U.S.C. 112(b)(4)(C)(iii) explicitly requires FHWA's review and approval of the following: (a) The price estimate of the contracting agency for the entire project and (b) any price agreement with the CM/GC contractor for the project or a portion of the project. Other proposed approvals in the NPRM are consistent with oversight provisions found in other title 23 procurement regulations, such as the design-build regulations in 23 CFR part 636. In drafting the proposed rule, FHWA believed it was appropriate to include decision points, designed to ensure the integrity of the Federal-aid Highway Program, but also to make clear which decisions may be assigned by FHWA to the STAs under the authority of 23 U.S.C. 106(c).

Under 23 U.S.C. 106(c), the States may assume certain FHWA responsibilities for project design, plans, specifications, estimates, contract awards, and inspections on the National Highway System (NHS), including projects on the Interstate System, and must assume such responsibilities off the NHS unless the State determines such assumption is inappropriate. After considering the comments, FHWA revised the regulatory text for section 635.506(a) to specify which FHWA review and approval activities in subpart E may, and which may not, be assumed by the STAs. In the final rule, section 635.506(a)(2) provides that STA's may not assume the FHWA review or approval responsibilities for section 635.504(c) and 635.506(c). The approval of procurement procedures required by section 635.504(c) is not a project specific action and cannot be delegated or assigned to the STA. The section 635.506(c) approval of at-risk preconstruction costs for eligibility after the completion of the NEPA process is a Federal-aid eligibility determination and cannot be delegated or assigned to the STA under 23 U.S.C. 106(c). In situations where the State is directly responsible for NEPA compliance (either under an assignment of environmental responsibilities pursuant to 23 U.S.C. 326 or 327, or under a programmatic categorical exclusion agreement as authorized by section 1318(d) of MAP-21), the Division Administrator may rely on a State certification indicating the NEPA-related conditions are satisfied. New section 635.506(a)(3) lists the subpart E project-related FHWA approval responsibilities that are subject to State assumption. In addition to the listed subpart E approvals, the approval of advertising under 23 CFR 635.112(j) is subject to State assumption pursuant to 23 U.S.C. 106(c). None of these approvals involve financial authorization or eligibility determinations, both of which remain solely FHWA functions. When a State first undertakes CM/GC contracting, the FHWA Division should work with the State on implementation of the requirements of this rule so that both parties can develop an understanding of which approvals the State should assume. As contracting agencies become more familiar with CM/GC contracting, it is likely that States will assume FHWA responsibilities for CM/GC project approvals listed in section 636.506(a)(3), and the risk of related delays will be minimal.

The Connecticut DOT recommended deleting NPRM section 635.506(a)(2), which would require FHWA approval of project-specific solicitation documents. The Connecticut DOT commented that its interpretation of this requirement is that it would require FHWA approval of Requests for Qualifications and Requests for Proposals documents. The Connecticut DOT noted that for larger, more complex, projects these documents can be extremely large and would require longer than ideal review/approval periods, which would introduce additional risk to on-time project delivery. The Connecticut DOT noted that section 635.504(c) requires the submission of CM/GC procurement procedures to FHWA for approval. In response, FHWA agrees with this comment. With other methods of procurement, FHWA has no role in approving the contracting agency's procurement procedures. The requirement for FHWA to review and approve a contracting agency's CM/GC procurement procedures (including changes), combined with FHWA compliance oversight in accordance with FHWA's RSBO Program, should be sufficient to satisfy FHWA's interest. It should not be necessary for FHWA to review and approve individual solicitation documents. Therefore, FHWA removed proposed paragraph 635.506(a)(2) from the final rule. That said, FHWA emphasizes it expects all contracting agencies to follow their approved procurement procedures, and to provide for transparency and fairness in the solicitation process.

The Michigan DOT requested clarification regarding the language and intent of this provision, which requires a contracting agency to request authorization of preliminary engineering before incurring such costs. The Michigan DOT asked if the contracting agency needs to have funds obligated before incurring costs. In response, the requirements of this section are consistent with 23 CFR 1.9(a), which requires an FHWA funding authorization through an approved project agreement before costs are incurred. However, after the comment period on the NPRM closed, Congress enacted the FAST Act, which included an uncodified provision in section 1440 relating to reimbursement, under specified conditions, of preliminary engineering costs incurred prior to authorization. The FHWA revised the final rule language to recognize the enactment of section 1440.

The Minnesota DOT asked for clarification regarding the requirement for FHWA's Division Administrator review and approval of a cost or price analysis for every procurement before authorizing pre-construction services. The Minnesota DOT asked if the phrase “every procurement” pertains to just the pre-construction services or also construction services contracts. The Minnesota DOT also said that it was not clear if the requirement applies only when the contracting agency is requesting Federal-aid funding in preconstruction service contracts or in all situations. The FHWA agrees with the need for clarification. It is anticipated that there will be a single procurement for CM/GC preconstruction services. The requirement for a cost or price analysis would apply to that agreement and to any modifications of that agreement, when the contracting agency is requesting (or, under FAST Act section 1440, may request in the future) Federal-aid funding for the cost of preconstruction services. The FHWA revised the language of the rule to explicitly state the requirement applies to preconstruction services procurements when Federal-aid funding is involved in the preconstruction services contract. The NPRM language is further clarified by replacing the phrase “currently $150,000” with a reference to the simplified acquisition threshold in 2 CFR 200.88. This change avoids the need for amending the regulation in the event the simplified acquisition threshold changes in the future.

The Michigan DOT asked if the language of this section requires the contracting agency to have funds obligated before incurring costs. In response to this inquiry, consistent with 23 CFR 1.9(a) and as discussed in FHWA's response to a similar comment on section 635.506(b)(1), the contracting agency must request FHWA's construction authorization through an approved project agreement before incurring any costs if Federal assistance is being requested. The FHWA made no revisions to the regulatory text.

The Minnesota DOT and the Connecticut DOT noted that the requirement for FHWA approval of a price estimate for the entire project prior to authorizing construction activities may be problematic when early work packages are involved. The Minnesota DOT said that in these cases, it may not be possible to provide a very accurate estimate, depending on how far the design has progressed. The FHWA recognizes the Minnesota DOT's concern; however, the requirement for FHWA to approve a price estimate for the entire project is a statutory requirement (23 U.S.C. 112(b)(4)(C)(iii)). In addition, the authorization of CM/GC construction services occurs only after completion of the NEPA review, which typically includes preliminary design work that reaches (and sometimes exceeds) 80 percent. After considering the comments, FHWA concluded the contracting agency should have sufficient data available at the time of a request for construction services authorization to provide a good faith estimate of the price for the entire project. The FHWA understands that when a contracting agency is using early work packages, the level of final design for the entire project (i.e., final construction plans and detailed specifications) may not be at an advanced stage, and thus, the price estimate for the entire project at this point in the design process may not be as accurate as a detailed engineer's estimate later in the design phase. The FHWA believes, however, the contracting agencies can provide a sound enough price estimate to meet the statutory requirement. This requirement applies to the first request for an authorization for activities meeting the definition of “construction services.” Where a contracting agency requests construction authorization for only a portion of the project (e.g., early work packages), the contracting agency may submit a revised price estimate once final design is complete if such revision is needed to support subsequent authorization requests. The FHWA made no revisions in response to these comments.

The GCA noted the need for openness and transparency in the CM/GC procurement process and the need for FHWA to conduct its review and approval in a timely and reasonable manner. In response, we agree with openness and transparency are important in these procurements, but have concluded no revision is needed. We believe this rule and other applicable Federal laws (including regulations) already foster open and transparent procurement practices. In addition, States must act in accordance with State procurement integrity and other requirements. The FHWA fully appreciates the need for time and reasonable decisions on price estimates, but does not believe there is a need to establish standards in the regulation.

As noted in the above in the discussion for section 635.506(b)(2), the use of the phrase “currently $150,000” in this section is replaced with a reference to the simplified acquisition threshold in 2 CFR 200.88. This change will avoid the need to amend this rule each time the simplified acquisition threshold is adjusted.

The GCA believed that the CM/GC rule should clarify that CM/GC is similar to design-build with respect to the use of DBE program requirements. The GCA believed that design-build and CM/GC are similar in that it is difficult to identify specific DBE commitments up front as part of the bid documents. The GCA stated that the CM/GC contractor should only be required to put forth the list of the DBEs to be used for work in the first year of the project, or for early work items, and, for work that will be performed in later years, to list the categories of work that will be available for DBE participation. The ARTBA noted that the DBE program requirements are still geared toward the traditional design-bid-build delivery process and that the increased use of alternative contracting techniques has precipitated apparent compliance gaps in the DBE program. The ARTBA stated that it is critical that FHWA provide clarity in exactly how DBE program compliance is to be harmonized with the CM/GC process as the latter evolves in use. The ARTBA indicated that uncertainty in this regard merely invites various agencies, or individual officials, to inject their own, unrelated policy priorities into the procurement process. As it relates to DBE compliance, the GCA and ARTBA believed that CM/GC projects should be treated like design-build projects where the contractor has some flexibility in identifying DBE commitments when submitting its technical and price proposals.

In response, FHWA agrees that CM/GC contracting presents a variation from the DBE selection process used in traditional design-bid-build projects. The FHWA recognizes ARTBA's concerns regarding potential DBE implementation issues on alternative contracting projects, but DBE policy revisions are best made through the rulemaking process for the DBE program. The FHWA believes that it is possible for the CM/GC contractor to provide the DBE documentation required by 49 CFR 26.53(b)(2) when the CM/GC contractor is providing its initial proposal for the construction services. There may be situations, however, where at this stage there is not sufficient detail (such as price, scope, and schedule) to provide the required DBE information. The FHWA has added language to the rule that will allow the CM/GC contractor to provide a contractually binding commitment at the time of initial proposal that will commit the contractor to meet the DBE contract goal if the contractor is awarded the construction services contract. This would give the CM/GC contractor time to provide the information required by 49 CFR 26.53(b)(2) before the contracting agency awards the contract. For example, CM/GC contractors may be able to gather and provide the required DBE documentation when the contracting agency and the CM/GC contractor enter into final price discussions because the level of design would be relatively high, and the scope and schedule would be defined so that risk and price can be assigned. This allowance is consistent with 49 CFR 26.53.(b)(3)(ii) for negotiated procurement situations.

The ITD stated that it is critical to use the term “agreement” when discussing preconstruction services and the term “contract” for the construction services. The FHWA appreciates this comment regarding Idaho's policy; however, we believe that the terms “agreement” and “contract” are used interchangeably for professional services. In addition, FHWA's regulations on “Procurement, Management, and Administration of Engineering and Design Related Services” (23 CFR 172) define a contract as a written procurement contract or agreement. For clarity, the terms “preconstruction services contract” and “construction services contact” will be used throughout this subpart. The term “agreement” will be reserved for agreements between FHWA and the STA.

The Connecticut DOT requested clarification of the requirement for FHWA approval of price estimates and project schedules for the entire project before authorization of construction services. The commenter expressed specific concern about situations which need to begin early work activities, such as building of temporary facilities and utility relocations, while the project's cost and/or schedule are still being refined. The commenter noted that, if the final rule retained the requirement as proposed, FHWA should appreciate that project costs and/or schedules may evolve and warrant subsequent review(s)/approval(s). In response, to the extent this comment relates to approval of a price estimate for the entire project before beginning construction services, FHWA addressed this issue in the discussion for section 635.506(d)(2). The requirement for FHWA to approve a price estimate for the entire project is a statutory requirement (23 U.S.C. 112 (b)(4)(C)(iii)). The references to agreed price, scope, and schedule in section 635.506(e) relate to the approval of those elements for each individual contract awarded as part of the overall CM/CG contract. Award approval reflects an underlying determination that procurement requirements, such price reasonableness, are satisfied and it is reasonable to award of the contract.

The Colorado DOT asked if the indirect cost rate provisions of section 635.507(b) applied to both preconstruction and construction contracts, and if the requirement applies to any other contracts besides cost-reimbursement contracts (e.g., lump sum, unit price, etc.).

In response, the requirement to use an approved indirect cost rate applies where payments for preconstruction services are based on actual costs (cost reimbursement contracts). Indirect cost rates do not apply in the construction services context, where actual cost work required due to unforeseen conditions is subject to applicable force account provisions.

The Michigan DOT noted that most construction contractors do not have an approved indirect cost rate. The Michigan DOT recommended, in the absence of an official indirect cost rate, a documented industry standard be used (e.g., a rate in the STA's Standard Specifications). The FHWA appreciates and understands the Michigan DOT comment, and the extent of the issue within the highway contracting community; however, if a contracting agency elects to use a payment method based on actual costs for preconstruction services, then it is necessary to ensure that the indirect cost rates comply with the Federal cost principles in 2 CFR 200 Subpart E.

The Connecticut DOT questioned the applicability of 2 CFR 200, Subpart E to CM/GC projects. The Connecticut DOT questioned the meaning and intent of the term “individual elements of costs” and asked for clarification if extra work is negotiated and an agreed upon price or cost plus is determined, could this extra work be seen as “negotiated based on individual elements of costs” and therefore also require indirect cost rates be established as part of its negotiations.

In response, the provisions of 2 CFR 200 apply to all Federal assistance programs such as the Federal-aid Highway Program. Unless there is a specific statutory exception, the requirements of 2 CFR 200 apply, including the “Cost Allowability” provisions of Subpart E. Regarding the use of the term “individual elements of costs,” the FHWA agrees that this term is not clear. The requirement for the use of indirect cost rates applies in cost-reimbursement type contracts. We agree that the NPRM language would benefit from a revision. We have changed the first sentence of section 635.507(b) to require the CM/GC contractor to provide an indirect cost rate established in accordance with the Federal cost principles when preconstruction service payments are based on actual costs. The FHWA notes that requirement is not applicable to competitive sealed bidding contracts that are typically bid on a lump sum or unit price basis. For competitive sealed bid contracts, the determination of price reasonableness is based on a price analysis (a comparison with the engineer's estimate or an independent cost estimate). For construction change order situations, where as a last resort, it is necessary to perform the construction work on an actual cost basis, the contracting agency may use its force account specifications as the basis for payment (23 CFR 635.120(d)).

Finally, as it relates to cost eligibility, the NYSDOT referenced two recent National Cooperative Highway Research Program studies that cited the use of an independent third party to prepare cost estimates for the purpose of evaluating the acceptability of the engineer estimate and CM/GC price proposals.3 The NYSDOT suggested that costs associated with the use of an independent estimator should be eligible for participation. The FHWA agrees. The use of an independent cost estimate is mentioned in section 635.506(d)(3) as an allowable activity. Experience to date has shown the independent cost estimate has been helpful in verifying price reasonableness. The preparation of an independent cost estimate falls within the statutory definition of “construction” in 23 U.S.C. 101(a)(4) as a preliminary engineering activity. The FHWA Division Office has the authority to make all decisions regarding cost eligibility based on whether a cost is necessary, reasonable, and allocable to a Federal-aid project consistent with the Cost Principals in 2 CFR part 200, subpart E. Given the contracting agency's objectives of verifying price reasonableness in the price analysis required by section 635.506(d)(3), the costs associated with the independent cost estimate are eligible for participation.

The FHWA considered all comments received before the close of business on the comment closing date indicated above, and the comments are available for examination in the docket (FHWA-2015-0009) at Regulations.gov. The FHWA also considered comments received after the comment closing date and filed in the docket prior to this final rule.

The FHWA determined that this rule does not constitute a significant regulatory action within the meaning of Executive Order 12866 or within the meaning of DOT regulatory policies and procedures. The amendments clarify and revise requirements for the procurement, management, and administration of engineering and design related services using Federal-Aid Highway Program (FAHP) funding and directly related to a construction project. Additionally, this action complies with the principles of Executive Order 13563. The changes to parts 630 and 635 provide additional clarification, guidance, and flexibility to stakeholders implementing these regulations. This rule is not anticipated to adversely affect, in any material way, any sector of the economy. In addition, these changes will not create a serious inconsistency with any other agency's action or materially alter the budgetary impact of any entitlements, grants, user fees, or loan programs. After evaluating the costs and benefits of these amendments, FHWA anticipates that the economic impact of this rule will be minimal; therefore, a full regulatory evaluation is not necessary.

In compliance with the Regulatory Flexibility Act (Public Law 96-354, 5 U.S.C. 601-612), FHWA evaluated the effects of this rule on small entities, such as local governments and businesses. The FHWA determined that this action would not have a significant economic impact on a substantial number of small entities. The amendments clarify and revise requirements for the procurement, management, and administration of engineering and design related services using FAHP funding and directly related to a construction project. After evaluating the cost of these proposed amendments, as required by changes in authorizing legislation, other applicable regulations, and industry practices, FHWA has determined the projected impact upon small entities which utilize FAHP funding for consultant engineering and design related services would be negligible. Therefore, FHWA certifies that the rule would not have a significant economic impact on a substantial number of small entities.

This final rule does not impose unfunded mandates as defined by the Unfunded Mandates Reform Act of 1995 (Public Law 104-4, March 22, 1995, 109 Stat. 48). Furthermore, in compliance with the Unfunded Mandates Reform Act of 1995, FHWA evaluated this rule to assess the effects on State, local, and tribal governments and the private sector. This rule does not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $156 million or more in any one year (2 U.S.C. 1532). Additionally, the definition of “Federal Mandate” in the Unfunded Mandates Reform Act excludes financial assistance of the type in which State, local, or tribal governments have authority to adjust their participation in the program in accordance with changes made in the program by the Federal Government. The FAHP permits this type of flexibility.

This rule was analyzed in accordance with the principles and criteria contained in Executive Order 13132, dated August 4, 1999, and it was determined that this rule does not have a substantial direct effect or sufficient federalism implications on States that would limit the policymaking discretion of the States. Nothing in this rule directly preempts any State law or regulation or affects the States' ability to discharge traditional State governmental functions.

Federal agencies must obtain approval from the Office of Management and Budget for each collection of information they conduct, sponsor, or require through regulations. This rule does not contain a collection of information requirement for the purpose of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501, et seq.).

Agencies must adopt implementing procedures for NEPA that establish specific criteria for, and identification of, three classes of actions: Those that normally require preparation of an EIS; those that normally require preparation of an EA; and those that are categorically excluded from further NEPA review (40 CFR 1507.3(b)). This action qualifies for an FHWA categorical exclusion under 23 CFR 771.117(c)(20) (promulgation of rules, regulations, and directives). The FHWA has evaluated whether the action would involve unusual circumstances or extraordinary circumstances and has determined that this action would not involve such circumstances. As a result, FHWA finds that this rule would not result in significant impacts on the human environment.

Executive Order 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, and DOT Order 5610.2(a) (the DOT Order), 91 FR 27534, May 10, 2012 (available at www.fhwa.dot.gov/enviornment/environmental_justice/ej_at_dot/order_56102a/index.cfm), require DOT agencies to achieve environmental justice (EJ) as part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects, including interrelated social and economic effects, of their programs, policies, and activities on minority populations and low-income populations in the United States. The DOT Order requires DOT agencies to address compliance with Executive Order 12898 and the DOT Order in all rulemaking activities. In addition, FHWA has issued additional documents relating to administration of Executive Order 12898 and the DOT Order. On June 14, 2012, FHWA issued an update to its EJ order, FHWA Order 6640.23A, FHWA Actions to Address Environmental Justice in Minority Populations and Low Income Populations (the FHWA Order) (available at www.fhwa.dot.gov/legsregs/directives/orders/664023a.htm).

The FHWA has evaluated this rule under the Executive Order, the DOT Order, and the FHWA Order and has determined that this rule would not cause disproportionately high and adverse human health and environmental effects on minority or low income populations.

The FHWA analyzed this rule under Executive Order 13175, dated November 6, 2000, and believes that this rule would not have substantial direct effects on one or more Indian tribes, would not impose substantial direct compliance costs on Indian tribal governments, and would not preempt tribal law. This rule establishes the requirements for the procurement, management, and administration of engineering and design related services using FAHP funding and directly related to a construction project. As such, this rule would not impose any direct compliance requirements on Indian tribal governments nor would it have any economic or other impacts on the viability of Indian tribes. Therefore, a tribal summary impact statement is not required.

The FHWA analyzed this rule under Executive Order 13211, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use. We determined that this rule would not be a significant energy action under that order because any action contemplated would not be likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, FHWA certifies that a Statement of Energy Effects under Executive Order 13211 is not required.

The FHWA analyzed this rule and determined that this rule would not affect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

This action meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

The FHWA analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks, and certifies that this action would not cause an environmental risk to health or safety that may disproportionately affect children.

A regulation identifier number (RIN) is assigned to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. The RIN number contained in the heading of this document can be used to cross-reference this action with the Unified Agenda.

In consideration of the foregoing, FHWA amends title 23, Code of Federal Regulations, parts 630 and 635 as follows:

I. Background

Section 218(g) of the National Affordable Housing Act of 1990 (NAHA), as amended, requires that participating jurisdictions place Home Investment Partnerships Program (HOME) funds under binding commitment within 24 months after the last day of the month in which HUD made the funds available (i.e., obligated the grant by executing the HOME grant agreement). This section of NAHA further states that a participating jurisdiction loses the right to draw any funds that are not placed under binding commitment by that date and that HUD shall reduce the participating jurisdiction's line of credit by the expiring amount.

To date, HUD has measured compliance with the HOME program 24-month requirement for committing funds using a cumulative methodology. Because HUD's Integrated Disbursement and Information System (IDIS) committed and disbursed funds on a first-in, first-out basis through participating jurisdictions' FY 2014 HOME grants, participating jurisdictions did not have the ability to designate funds from a specific allocation when committing HOME funds to a project. Consequently, HUD implemented the commitment requirement through a cumulative methodology under which HUD determined a participating jurisdiction's compliance with the 24-month deadline by determining whether the total amount committed by the participating jurisdiction from all HOME grants it had received was equal to or greater than the participating jurisdiction's cumulative commitment requirement for all grants that had been obligated for 24 months or longer. This methodology has been described in the HOME program regulations since 1997.

HUD will begin using a grant-specific method of determining compliance with the 24-month commitment deadline, beginning with FY 2015 HOME grants. HUD has made changes to IDIS so that, beginning with FY 2015 grants, the participating jurisdiction will select the grant year's funds that will be committed to a specific project or activity. When the participating jurisdiction requests a draw of grant funds for that project or activity, HUD, through IDIS, will disburse the funds committed to that project or activity, rather than the oldest funds available.

As mentioned above, prior to this change, IDIS did not permit participating jurisdictions to specify which grant years' funds they were committing to a specific project. This system change makes it possible for participating jurisdictions to commit funds and for HUD to assess commitment deadline compliance on a grant-specific basis, beginning with FY 2015 HOME grants.

HOME program regulatory changes are also needed to address the timely commitment and expenditure of program income, repaid funds, recaptured funds, and funds committed for programs to be administered by State recipients and subrecipients. Conforming changes to the consolidated plan regulations with respect to program income, repaid funds, and recaptured funds are also made.

The following section of this preamble provides a section-by-section overview of the interim regulatory changes.

HUD has revised the regulations governing the HOME program components of the action plans for local governments (§ 91.220) and States (§ 91.320). Specifically, this rule revises sections § 91.220(l)(2)(i) and § 91.320(k)(2)(i) to require the participating jurisdiction to include uncommitted program income, repayments, and recaptured funds that it has received during the previous year in the resources it describes in its annual action plan. The rule gives participating jurisdictions the option to include program income, repayments, or recaptures expected to be received during the program year in the summary of anticipated Federal resources described in their annual action plan. Participating jurisdictions are not required to include these anticipated funds in their action plan, because doing so would result in them having a period of less than 24 months to commit these funds. However, if a participating jurisdiction did not include anticipated program income, repayments, or recaptured funds in the annual action plan and later wished to commit such funds to a HOME project or activity, it would be required to amend its annual action plan, in accordance with the provisions of § 91.505.

This rule eliminates reference to an agreement with a contractor from the definition of “commitment” in § 92.2. Unlike State recipients and subrecipients, which design programs and develop policies and procedures to administer those programs, contractors that administer HOME-funded programs carry out the participating jurisdiction's policies and procedures. When a participating jurisdiction carries out HOME activities using its own employees, HOME funds are committed when the participating jurisdiction executes an agreement with a project owner to assist a specific project. When a participating jurisdiction uses contractors in place of its own employees to carry out activities, the agreement with those contractors should not constitute a commitment.

HUD has added language to the definition clarifying that community housing development organization (CHDO) operating expense funds, CHDO capacity building funds, and CHDO project-specific technical assistance and site control loans are considered committed when the participating jurisdiction executes a legally binding agreement for the use of the funds. Similarly, the rule includes language clarifying that administrative and planning cost funds are considered committed based on the amount set aside for such purposes in IDIS. These revisions reflect HUD's longstanding practice of considering these three types of CHDO funds, each of which is designated as a unique fund type in IDIS, as committed based upon legally binding written agreements for the activities and make the regulatory definition of “commitment” comprehensive.

This rule revises § 92.500(d). Currently, 24 CFR 92.500(d)(1) describes the requirements for reducing a participating jurisdiction's grant for failure to meet the 24-month commitment deadline, the 24-month deadline for committing 15 percent of a HOME allocation for CHDO set-aside projects, and the 5-year deadline for expending HOME funds. Section 92.500(d)(2) then describes the cumulative method for determining compliance with the deadlines outlined in paragraph (d)(1) of § 92.500. This rule reorganizes these paragraphs so that § 92.500(d)(1) addresses commitment, CHDO set-aside commitment, and expenditure requirements for FY 2015 and subsequent-year HOME allocations and § 92.500(d)(2) addresses these requirements for FY 2014 and prior-year HOME allocations.

At § 92.500(d)(1)(i), this rule requires that HUD recapture any funds (including funds for CHDOs under § 92.300) from a specific grant allocation that are in the participating jurisdiction's United States Treasury Account and are not committed within 24 months of the last day of the month in which HUD notifies the participating jurisdiction of HUD's execution of the HOME Investment Partnership Agreement for the specific fiscal year allocation. Participating jurisdictions will no longer have flexibility to meet the requirement that 15 percent of its HOME allocation be used for housing owned, developed, or sponsored by CHDOs on a cumulative basis (e.g., committing less than 15 percent to CHDOs in some years and more than 15 percent to CHDOs in others, but maintaining compliance by ensuring that 15 percent of cumulative HOME allocations are used for CHDO projects). Each participating jurisdiction is now required to commit a minimum of 15 percent of each year's allocation or HUD will recapture the funds.

The rule at § 92.500(d)(1)(ii) establishes a new deadline to ensure that funds that have been committed to State recipients or subrecipients are subsequently committed timely to a specific local project. HOME funds that a participating jurisdiction committed to a State recipient or subrecipient must be committed to a specific local project within 36 months after the last day of the month in which HUD notified the participating jurisdiction of HUD's execution of its HOME Investment Partnership Agreement for the specific fiscal year allocation. HUD has established this deadline because, with the elimination of the 5-year expenditure deadline described below, HOME funds committed to a State recipient or subrecipient could remain uncommitted to a project until the expiration of the funds at the end of 9 years, at which point they would be recaptured. The additional deadline is necessary to ensure that HOME funds that have been committed to State recipients or subrecipients are committed to projects within a reasonable period of time.

For FY 2014 and previous grants, HUD will continue using the cumulative method for determining compliance with the commitment deadline. Participating jurisdictions have relied on the existing HOME regulations at § 92.500(d)(2) and the HOME Deadline Compliance reports that HUD has posted monthly on its HOME program Web site 1 since 2005, which describe and implement the cumulative method of determining compliance with the HOME commitment, CHDO commitment, and expenditure deadlines. However, HUD has eliminated the existing § 92.500(d)(2) and added new text to fully explain the cumulative methodology that will continue to apply to FY 2014 and previous grants. A new paragraph (d)(2)(i)(A) in § 92.500 establishes the 24-month commitment requirement for FY 2014 and previous HOME allocations, including the 15 percent CHDO reservation requirement. New paragraph (d)(2)(i)(B) describes the cumulative method that HUD will continue to use to measure compliance with the 24-month commitment deadlines for these grants. New paragraph (d)(2)(i)(C) retains existing regulatory language stating that HUD may recapture HOME funds for any penalties assessed by HUD under § 92.552 (Sanctions).

New paragraph § 92.500(d)(2)(iii) requires FY 2014 and previous allocations to be committed by the participating jurisdiction's deadline for FY 2015 allocations. For deadlines occurring in 2016 for FY 2014 HOME allocations, HUD is following the existing regulation and using the cumulative method for determining compliance with the 24-month commitment requirement. As a result, it was necessary to include commitments from FY 2015 allocations in the cumulative calculation of commitments, creating a situation in which FY 2014 and earlier funds would not be separately subject to any commitment requirement.

In this rule, HUD has eliminated the 5-year deadline for expenditure of HOME funds appropriated for FY 2015 and subsequent years. This regulatory deadline was established in the December 16, 1991, interim rule (56 FR 65313) issued to implement the HOME statute. At that time, funds appropriated for the HOME program were available until expended and HUD determined that it was necessary to establish a deadline to ensure that HOME funds were expended expeditiously to develop affordable housing. Beginning with the FY 2002 HOME appropriation, and for all subsequent appropriations, funds appropriated for the HOME program are available for obligation to participating jurisdictions for 3 years after the first day of the fiscal year for which they were appropriated and expire 5 years after the period of obligation (i.e., at the end of the eighth year). Expired funds are recaptured by the United States Treasury. HUD's FY 2015 and FY 2016 appropriations laws have extended the period of obligation of HOME funds to 4 years; the funds expire 5 years after the period of obligation (i.e., at the end of the ninth year). In addition, in 2013, HUD established a 4-year deadline for completing projects assisted with HOME funds in § 92.205(e)(2). Because of these new deadlines for expiration of appropriated funds and completion of projects, HUD believes that the 5-year expenditure deadline is duplicative and creates an unnecessary burden on participating jurisdictions. Thus, the deadline is eliminated.

This rule also eliminates the separate 5-year deadline for expenditure of CHDO set-aside funds appropriated for FY 2015 and subsequent years. In its 2013 HOME rulemaking, HUD determined that a separate examination of CHDO expenditures was necessary because, under the cumulative method of determining compliance with the 5-year expenditure requirement, rapid expenditure of other HOME funds frequently shielded older, unexpended CHDO funds from deobligation. This separate deadline is no longer necessary and this rule eliminates both the overall and the CHDO-specific 5-year deadlines for expending HOME funds.

For clarity, HUD has included the 9-year deadline for the expiration of HOME funds in § 92.500(d)(2)(iii)(C). The new provision states that HUD will recapture funds from a specific fiscal year allocation that are in the United States Treasury account and are not expended by the end of the fifth year after the period of availability for obligation by HUD. These funds will be deobligated from the participating jurisdiction and returned to the United States Treasury.

This rule eliminates § 92.502(b)(2), which contained two provisions related to HUD cancellation of projects. The first provision stated that HUD's information system could cancel a project for which project set-up information was not completed within 20 days. This provision is not necessary, because IDIS does not permit project set up to occur until all required information has been entered. The second provision permitted HUD to automatically cancel projects that had been committed in IDIS for 12 months without an initial disbursement of funds. HUD will continue to monitor projects for timely initial disbursement of funds. However, the automatic cancellation of projects by IDIS is no longer appropriate because it may result in the loss of funds that become uncommitted after the 24-month commitment deadline irrespective of the nature and extent of any project delay.

The rule revises § 92.502(c)(3) to add language stating that, beginning with FY 2015 allocations, the specific funds that are committed to a project will be disbursed for that project. This provision is necessary because, beginning with FY 2015 HOME grants, IDIS no longer disburses funds on a first-in, first-out basis. HUD also adds language to this paragraph stating that if funds in both the HOME local account and in the United States Treasury account are committed to a HOME project, the funds in the local account must be disbursed before the participating jurisdiction requests that HOME funds be disbursed from the United States Treasury account. This provision ensures that program income and other HOME funds in the local account are disbursed before HOME funds are drawn from the Treasury.

HUD has revised paragraphs § 92.503(b)(2) and (3) so that participating jurisdictions that must repay HOME funds for any reason must seek HUD's instructions with respect to the account to which the HOME funds must be repaid. By providing specific instructions on a case-by-case basis, HUD can avoid situations in which a participating jurisdiction repays funds to a Federal HOME account after the 24-month deadline and loses access to the funds as a result.

Under the first-in, first-out method of disbursing funds, it was generally not necessary for participating jurisdictions to commit program income and other funds in the local HOME account through IDIS prior to expending the funds. When a participating jurisdiction had program income on hand, it, generally, disbursed program income for the next HOME cost. Since 2007, HUD has excluded expended HOME program income from the calculation of total commitments or expenditures for determining compliance with the 24-month commitment and the 5-year expenditure deadlines.

This rule changes the manner in which program income and other funds in the local HOME account are treated. Otherwise, a participating jurisdiction would be required to uncommit appropriated HOME funds from a specific project each time it disbursed program income for that project. This would then subject the newly uncommitted HOME funds to recapture by HUD if the 24-month commitment deadline for those funds had passed. To avoid unnecessary loss of funds, HUD has determined that participating jurisdictions should be permitted to accumulate program income, repayments, and recaptured funds during a program year and that a deadline for committing HOME funds should be applied to those funds in the local account. Although participating jurisdictions are required to include program income expected to be received in their consolidated plan or annual action plans, HUD recognizes that participating jurisdictions cannot always accurately estimate the amount and timing of program income, recaptures, or repaid funds that they may receive. Consequently, to accommodate the unpredictability associated with the receipt of program income, HUD has established special provisions with respect to program income.

The rule adds a new § 92.503(d) to establish a deadline for committing funds deposited in a participating jurisdiction's local HOME account. These funds include program income as defined at § 92.2, repayments of HOME funds pursuant to § 92.503(b), and recaptured funds as described in § 92.503(c). HUD has determined it is necessary to establish this deadline because, under the new requirements for committing funds from specific allocations, funds in the local account will have to be committed to specific projects before they can be expended. The deadline for committing program income, repayments, and recaptured funds received during a program year is the same as the commitment deadline for the HOME grant allocation for the subsequent program year. HUD has determined that this approach is appropriate because: (1) The deadline for committing program income should not be shorter than for appropriated funds, and, unlike appropriated funds, program income, repayments, and recaptured funds are received sporadically throughout the year; and (2) it would be administratively burdensome for participating jurisdictions to track and comply with two separate deadlines each year for committing their HOME allocation and funds in their local account. Further, while the amount and approximate date of receipt for program income can often be estimated by a participating jurisdiction, repaid funds and recaptured funds generally cannot be anticipated in advance.

This rule adds new paragraphs at § 92.504(c)(7) and (8) to establish the requirements for written agreements for CHDO project-specific technical assistance, site control loans, project-specific seed money loans, and community development capacity building activities. These provisions are added to correspond to the addition of these agreements to the definition of “commitment” at § 92.2.

HUD generally publishes rules for advance public comment in accordance with its rule on rulemaking at 24 CFR part 10. However, under 24 CFR 10.1, HUD may omit prior public notice and comment if it is “impracticable, unnecessary, or contrary to the public interest.” In this instance, HUD has determined that it is unnecessary to delay the effectiveness of this rule for advance public comment.

The HOME statute requires that HOME funds be placed under legally binding agreement within 24 months of HUD's obligation of the HOME grant to the participating jurisdiction. As described in the HOME regulations at 24 CFR 92.500(d)(2), since 1997 HUD has determined compliance with the commitment requirement by comparing cumulative commitments through the deadline date to the cumulative amount of HOME funds required to have been committed as of that date.

Beginning in 2013, HUD has frequently discussed with HOME participating jurisdictions the planned change from the cumulative method of measuring commitment compliance to a grant-specific method as part of HUD's transition to grant-based accounting for its formula grant programs. HUD notified all HOME participating jurisdictions of the planned IDIS programming changes to implement grant-specific commitment deadline compliance for FY 2015 HOME grants.2

HUD has also conducted webinars to explain the pending changes in the method for determining compliance with the commitment deadline beginning with FY 2015 HOME grants.3 During 2015 and 2016, HUD provided HOME grant-based accounting training at numerous HOME conferences sponsored by membership associations for HOME participating jurisdictions and at meetings hosted by HUD field offices across the country.

The scope of the rule amendments is limited to this change and to other changes that: (1) Conform the regulations to the new method or make minor corrections and clarifications of provisions relating to commitments and the written agreements through which HOME funds are committed; (2) eliminate the expenditure deadline and automatic project cancellation provisions that are no longer required under the grant-specific method of committing and expending funds, or which may otherwise help to minimize undue risk of HOME funding deobligations; and (3) establish a project commitment deadline for funds provided to State recipients and subrecipients to ensure timely deployment of funds for affordable housing projects.

With the exception of the new requirements related to program income, this rule does not establish new and unfamiliar requirements for HOME participating jurisdictions. Moreover, if HUD were to issue this rule without adjusting the program income requirements, HOME participating jurisdictions could potentially lose millions of dollars of appropriated HOME funds each time they expended program income while HUD conducted proposed and final rulemaking processes. Consequently, the program income changes are included in the rule because they help to avert the loss of large amounts of HOME funds by the communities and beneficiaries for which they were appropriated.

Although HUD has determined that good cause exists to publish this rule for effect without prior solicitation of public comment, HUD recognizes the value and importance of public input in the rulemaking process. Accordingly, HUD is issuing these regulatory amendments on an interim basis and providing a 60-day public comment period. HUD is specifically soliciting comment on the best way to treat program income to avoid loss of appropriated HOME funds. All comments will be considered in the development of the final rule.

In accordance with the Paperwork Reduction Act, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid Office of Management and Budget (OMB) control number. The information collection requirements contained in this rule have been submitted to OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB control number 2506-0171.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. This rule will not impose any Federal mandates on any State, local, or tribal governments or the private sector within the meaning of UMRA.

A Finding of No Significant Impact (FONSI) with respect to the environment has been made in accordance with HUD regulations in 24 CFR part 50 that implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The FONSI is available for public inspection during regular business hours in the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410-0500, and is also available to view on www.regulations.gov. Due to security measures at the HUD Headquarters building, please schedule an appointment to review the FONSI by calling the Regulations Division at (202) 708-3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number via TTY by calling the Federal Relay Service at (800) 877-8339 (this is a toll-free number).

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. As discussed, this regulation changes the manner in which HUD measures compliance with the statutory 24-month commitment deadline in the HOME program and does not alter the manner in which participating jurisdictions administer their HOME programs. Given this fact, HUD anticipates the regulatory changes will have minimal, or no, economic impacts.

Therefore, the undersigned certifies that this rule will not have a significant impact on a substantial number of small entities.

Notwithstanding HUD's belief that this rule will not have a significant effect on a substantial number of small entities, HUD specifically invites comments regarding any less burdensome alternatives to this rule that will meet HUD's objectives as described in this preamble.

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

The Catalog of Federal Domestic Assistance number applicable to the program that would be affected by this rule is 14.239.

Accordingly, for the reasons stated in the preamble, HUD amends 24 CFR parts 91 and 92 as follows:

On June 30, 2016, the Department published an interim final rule (81 FR 42478) to adjust the level of civil monetary penalties contained in Indian Affairs regulations with an initial “catch-up” adjustment under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 and OMB guidance.

The Department received no comments on the rule. Consequently, the Department did not make any change to the interim final rule. For these reasons, the Department adopts the interim rule published June 30, 2016 (81 FR 42478), as final without change.

Background

Section 6018(a) requires executors to file federal estate tax returns with respect to (1) certain estates of citizens or residents of the United States and (2) certain estates of nonresidents that are not citizens of the United States. If an executor is unable to make a complete federal estate tax return as to any property that is a part of a decedent's gross estate, section 6018(b) requires every person or beneficiary holding such property, upon notice from the Secretary, to make a federal estate tax return as to such part of the gross estate.

On July 31, 2015, the President of the United States signed into law H.R. 3236, The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, Public Law 114-41, 129 Stat. 443 (Act). Section 2004 of the Act added new section 6035.

Section 6035 imposes reporting requirements with regard to the value of property included in a decedent's gross estate for federal estate tax purposes. Section 6035(a)(1) provides that the executor of any estate required to file a return under section 6018(a) must file with the Secretary and furnish to the person acquiring any interest in property included in the decedent's gross estate, a statement identifying the value of each interest in such property as reported on such return and such other information with respect to such interest as the Secretary may prescribe.

Section 6035(a)(2) provides that each other person required to file a return under section 6018(b) must file with the Secretary and furnish to each person who holds a legal or beneficial interest in the property to which such return relates, a statement identifying the same information described in section 6035(a)(1).

Section 6035(a)(3)(A) provides that each statement required to be filed or furnished under section 6035(a)(1) or (2) is to be filed or furnished at such time as the Secretary may prescribe, but in no case at a time later than the earlier of (i) the date that is 30 days after the date on which the return under section 6018 was required to be filed (including extensions actually granted, if any) or (ii) the date which is 30 days after the date such return is filed.

On August 21, 2015, the Treasury Department and the IRS issued Notice 2015-57, 2015-36 IRB 294. That notice delayed until February 29, 2016, the due date for any statements required by section 6035.

On February 11, 2016, the Treasury Department and the IRS issued Notice 2016-19, 2016-09 IRB 362. That notice provided that executors or other persons required to file or furnish a statement under section 6035(a)(1) or (2) before March 31, 2016, need not have done so until March 31, 2016.

On March 4, 2016, the Treasury Department and the IRS published temporary regulations (TD 9757) in the Federal Register (81 FR 11431-01) providing transition relief under § 1.6035-2T. The temporary regulations extended the due date for statements required by section 6035 to March 31, 2016, as provided in Notice 2016-19.

Also on March 4, 2016, the Treasury Department and the IRS published in the Federal Register (81 FR 11486-01) proposed regulations (REG-127923-15). The text of TD 9757 served as the text of the proposed regulations regarding the transition relief provided under § 1.6035-2T.

On March 23, 2016, the Treasury Department and the IRS issued Notice 2016-27, 2016-15 IRB 576. That notice provided that executors or other persons required to file or furnish a statement under section 6035(a)(1) or (2) before June 30, 2016, need not have done so until June 30, 2016.

On June 27, 2016, the Treasury Department and the IRS held a public hearing on the proposed regulations. In addition to the comments received at the hearing, the Treasury Department and the IRS received numerous written comments. Both at the hearing and in written comments, commenters commented favorably on the transition relief providing extensions of time to file and furnish the statements required by section 6035(a)(1) or (2) that the Treasury Department and the IRS had granted in TD 9757 and the notices (including Notice 2016-27 issued after TD 9757 was published in the Federal Register).

These final regulations reiterate the statement in Notice 2016-27 and provide that executors or other persons required to file or furnish a statement under section 6035(a)(1) or (2) before June 30, 2016, need not have done so until June 30, 2016. These final regulations are issued within 18 months of the date of the enactment of the statutory provisions to which the final regulations relate and, as authorized by section 7805(b)(2), are applicable to executors and other persons who file a return required by section 6018(a) or (b) after July 31, 2015.

IRS Revenue Procedures, Revenue Rulings, notices, and other guidance cited in this preamble are published in the Internal Revenue Bulletin (or Cumulative Bulletin) and are available from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402, or by visiting the IRS Web site at http://www.irs.gov.

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

In addition, section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) did not apply to TD 9757 because TD 9757 was excepted from the notice and comment requirements of section 553(b) and (c) of the Administrative Procedure Act under the interpretative rule and good cause exceptions provided by section 553(b)(3)(A) and (B). The Act included an immediate effective date, thus making the first required statements due 30 days after enactment. It was necessary to provide more time to provide the statements required by section 6035(a), to allow the Treasury Department and the IRS sufficient time to issue both substantive and procedural guidance on how to comply with the section 6035(a) requirement, and to provide executors and other affected persons the opportunity to review this guidance before preparing the required statements. TD 9757 reiterated the relief in Notice 2016-19 and, because of the immediate need to provide relief, notice and public comment pursuant to 5 U.S.C. 553(b) and (c) was impracticable, unnecessary, and contrary to the public interest. Public comment, however, was received on TD 9757 and all the notices, including Notice 2016-27, at the public hearing held on June 27, 2016, and in written comments submitted on the proposed regulations that cross-referenced and included the text of TD 9757.

It has been certified that the collection of information in these final regulations will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that this rule primarily affects individuals (or their estates) and trusts, which are not small entities as defined by the Regulatory Flexibility Act (5 U.S.C. 601). Although it is anticipated that there may be an incremental economic impact on executors that are small entities, including entities that provide tax and legal services that assist individuals in preparing tax returns, any impact would not be significant and would not affect a substantial number of small entities. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required.

Pursuant to section 7805(f) of the Code, TD 9757 and notice of the proposed rulemaking that cross-referenced and included the text of TD 9757 was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. No comments were received.

The principal author of these final regulations is Theresa Melchiorre, Office of the Associate Chief Counsel (Passthroughs and Special Industries). Other personnel from the Treasury Department and the IRS participated in their development.

Accordingly, 26 CFR part 1 is amended as follows:

Background and Explanation of Provisions

This document contains amendments to the User Fee Regulations under 26 CFR part 300. On August 22, 2016, the Treasury Department and the IRS published in the Federal Register (81 FR 56550) a notice of proposed rulemaking (REG-108792-16) relating to the user fees charged for entering into and reinstating and restructuring installment agreements. The Independent Offices Appropriations Act of 1952 (IOAA), which is codified at 31 U.S.C. 9701, authorizes agencies to prescribe regulations establishing user fees for services provided by the agency. Regulations prescribing user fees are subject to the policies of the President, which are currently set forth in the Office of Management and Budget Circular A-25 (the OMB Circular), 58 FR 38142 (July 15, 1993). The OMB Circular allows agencies to impose user fees for services that confer a special benefit to identifiable recipients beyond those accruing to the general public. The agency must calculate the full cost of providing those benefits, and, in general, the amount of a user fee should recover the full cost of providing the service, unless the Office of Management and Budget (OMB) grants an exception under the OMB Circular.

The notice of proposed rulemaking proposed to increase the user fees under § 300.1 for entering into an installment agreement from $120 to $225 and for entering into a direct debit installment agreement from $52 to $107. The notice of proposed rulemaking proposed to increase the user fee under § 300.2 for restructuring or reinstating an installment agreement from $50 to $89. The notice of proposed rulemaking proposed the introduction of two new types of online installment agreements under § 300.1, each subject to a separate user fee: (1) An online payment agreement with a fee of $149 and (2) a direct debit online payment agreement with a fee of $31. Under the notice of proposed rulemaking, the user fee for low-income taxpayers, as defined in § 300.1(b)(3), would continue to be $43 for entering into a new installment agreement, except that the lower fee of $31 for a direct debit online payment agreement would apply to all taxpayers. Under § 300.2(b), the fee for low-income taxpayers restructuring or reinstating an installment agreement would be reduced to $43 from $50. The new user fee rates were proposed to be effective beginning on January 1, 2017. As explained in the notice of proposed rulemaking, the proposed fees bring user fee rates for installment agreements in line with the full cost to the IRS of providing these taxpayer-specific services. In particular, the new user fee structure offers taxpayers more tailored installment agreement options, including a $31 user fee for direct debit online payment agreements, which ensures that taxpayers are not charged more for their chosen installment agreement option than the actual cost incurred by the IRS in providing the type of installment agreement selected by taxpayers. Because OMB has granted an exception to the full cost requirement for low-income taxpayers, low-income taxpayers would continue to pay the reduced fee of $43 for any new installment agreement, except where they request a $31 direct debit online payment agreement, and would pay the reduced $43 fee for restructuring or reinstating an installment agreement.

No public hearing on the notice of proposed rulemaking was held because one was not requested. Five comments were received. After careful consideration of the comments, this Treasury Decision adopts the proposed regulations without change.

The first comment suggested that filing a tax return and requesting an installment agreement should not be a two-step process and that taxpayers requesting an installment agreement with the filing of their returns should not be subject to a higher user fee. The comment expressed concern with tying eligibility for the $31 user fee to submitting a request for a direct debit online payment agreement. The comment also noted the length of time it takes the IRS to initiate direct debit installment agreement payments. The comment asserted that taxpayers requesting installment agreements with the filing of their tax returns and paying via direct debit should be entitled to the $31 user fee.

These regulations deal with only the user fees for installment agreements and not the administration of the installment agreement program generally, and so this comment is addressed only to the extent it relates to user fees for installment agreements. As explained in the notice of proposed rulemaking, agencies are required to set user fees at an amount that recovers the full cost of providing the service unless an agency requests, and the OMB grants, an exception to the full cost requirement. The proposed installment agreement fees are structured to reflect the full cost to the IRS to establish and monitor the different types of installment agreements associated with each user fee. The costs to the IRS for installment agreements are the same to the IRS whether the taxpayer requests an installment agreement at the same or a different time from filing its tax return. The regulations now offer taxpayers additional types of installment agreements to choose from, including a low-cost user fee of $31 for a direct debit online payment agreement. A taxpayer may file a return and then request a direct debit online payment agreement and would be charged a fee of only $31. As discussed in the notice of proposed rulemaking, the IRS incurs higher costs in establishing and monitoring all other forms of installment agreements. If a taxpayer chooses to request an installment agreement other than a direct debit online payment agreement, that taxpayer must pay the full cost of that user fee unless the taxpayer qualifies as a low-income taxpayer. The length of time required to establish direct debit installment agreements that the comment described is due to IRS budget cuts in recent years that have resulted in lower staffing levels combined with increased workloads. During peak times of the year, the IRS has more installment agreements to process than available staff to process them and backlogs occur. In addition, there are Federal e-pay requirements that also add time in processing installment agreements paid by direct debit. However, taxpayers using the online payment agreement service receive immediate confirmation of direct debit online payment agreements. Taxpayers requesting installment agreements via a Form 9465 when e-filing are not entitled to the lower $31 user fee under the proposed regulations because the costs associated with processing the Form 9465 are greater than those incurred for taxpayers using the online payment agreement service. At the time taxpayers submit Form 9465 with their e-filed returns, the IRS has no way of determining whether the taxpayers qualify for an installment agreement or whether the payment proposal meets streamlined processing criteria. While the IRS continues to explore ways to make this process completely automated, at this time the process to review a regular installment agreement request requires IRS staff involvement that direct debit online payment agreements do not.

The second comment expressed concern that the proposed increase in user fees was too high and asked whether “any consideration [has] been given to increasing the time frame for an exten[s]ion [from] 120[]days to 180[]days.” It appears that the latter part of this comment is referring to the full pay agreement that has no user fee but requires the taxpayer to full pay within 120 days. The extension of the time period for full pay agreements is unrelated to the proposed increase in the user fees for installment agreements. With regard to the increase in fee, the fee increase is consistent with the requirement under the OMB Circular that agencies that confer special benefits on identifiable recipients beyond those accruing to the general public are to establish user fees that recover the full cost of providing those services. In the notice of proposed rulemaking, the IRS provided a detailed analysis of how it calculated the full cost of this service and the fee is consistent with the full cost of the particular service.

The third comment provided examples of taxpayers with varying circumstances and opined that increasing the user fee for installment agreements would be unfair to taxpayers who are so situated. For taxpayers whose income falls at or below 250 percent of the poverty level as established by the U.S. Department of Health and Human Services and updated annually, the proposed regulations continue to offer a reduced fee for low-income taxpayers of $43, and extend the $43 fee to low-income taxpayers restructuring or reinstating installment agreements. In addition, the proposed regulations establish a lower fee of $31 for online direct debit installment agreements that is available to all taxpayers. Thus, even if taxpayers do not qualify for the reduced low-income taxpayer fee, the proposed regulations permit all taxpayers the option to pay the lower $31 fee by establishing direct debit online payment agreements.

The fourth comment had four main concerns and additional concerns with respect to each of these main concerns.

The fourth comment's first main concern challenged the IRS's application of the OMB Circular. The comment opined that an installment agreement is not a special benefit as provided under the OMB Circular for several reasons. Specifically, the comment noted that if a taxpayer does not have assets to levy, then relief of levy is not a benefit to that taxpayer. The comment suggested that the IRS receives a benefit when a taxpayer enters into an installment agreement and as a result, the installment agreement does not provide a special benefit for purposes of the OMB Circular. The comment questioned how many installment agreements resulted in payments that the IRS would not have otherwise received. The comment also questioned whether installment agreement income is a benefit to the fisc or whether the IRS could use levies to secure the same amount of payment. The comment stated that the IRS is required to enter into certain installment agreements pursuant to section 6159(c) and questioned how a statutory requirement could be considered a special benefit. The comment quoted Section 6(1)(4) of the OMB Circular, which provides that “[n]o charge should be made for a service when the identification of the specific beneficiary is obscure, and the service can be considered primarily as benefiting broadly the general public.” The comment opined that because the IRS may receive some benefit, the specific beneficiary of an installment agreement is incompletely identified. Finally, the comment noted that the OMB Circular allows for exceptions to charging full cost and questioned whether it is good public policy to increase the user fee considering that some installment agreements are statutorily required and help bring noncompliant taxpayers into compliance.

As described in the preamble to the proposed regulations, each taxpayer entering into an installment agreement receives the special benefit of paying an outstanding tax obligation over time rather than immediately. This special benefit does not accrue to the general public because taxpayers are otherwise obligated to pay any outstanding taxes immediately when due. The taxpayer receives this special benefit regardless of whether the taxpayer has any assets on which the IRS could levy. In addition to paying an outstanding tax obligation over time rather than immediately, there are also the special benefits of avoiding enforcement action generally and, for timely filed returns, a reduction of the section 6651 failure to pay penalty to 0.25 percent during any month during which an installment agreement is in effect. The enforcement actions that are put on hold during the pendency of an installment agreement include wage garnishments, the filing of notices of federal tax liens, and the making of levies. Even if it is argued that the government derives some general benefit from collecting outstanding tax liabilities to which it is inarguably entitled, it is still appropriate under the OMB Circular to charge a user fee for entering into, reinstating, or restructuring an installment agreement because installment agreements provide “specific services to specific individuals.” Seafarers Int'l Union of N. Am. v. U.S. Coast Guard, 81 F.3d 179, 183 (D.C. Cir. 1996). The benefit to the government generally of collecting on outstanding tax liabilities is a benefit that accrues to the public generally and does not diminish the special benefit provided to an identifiable taxpayer who requests an installment agreement. As noted in the notice of proposed rulemaking, the IOAA permits the IRS to charge a user fee for providing a “service or thing of value.” 31 U.S.C. 9701(b). A government activity constitutes a “service or thing of value” when it provides “special benefits to an identifiable recipient beyond those that accrue to the general public.” See the OMB Circular Section 6(a)(1). Among other things, a “special benefit” exists when a government service is performed at the request of a taxpayer and is beyond the services regularly received by other members of the same group or the general public. See OMB Circular Section 6(a)(1)(c). Under the IOAA, agencies may impose “specific charges for specific services to specific individuals or companies.” See Fed. Power Comm'n v. New England Power Co., 415 U.S. 345, 349 (1974); see also Seafarers, 81 F.3d at 182-83 (D.C. Cir. 1996) (“[A] user fee will be justified under the IOAA if there is a sufficient nexus between the agency service for which the fee is charged and the individuals who are assessed.”).

Section 6(a)(3) of the OMB Circular explains that “when the public obtains benefits as a necessary consequence of an agency's provision of special benefits to an identifiable recipient (i.e., the public benefits are not independent of, but merely incidental to, the special benefits), an agency need not allocate any costs to the public and should seek to recover from the identifiable recipient either the full cost to the Federal Government of providing the special benefit or the market price, whichever applies.” While it is true that installment agreements benefit tax administration and collection, and by extension the public fisc, the benefit is incidental to the special benefits of allowing taxpayers to satisfy their Federal tax liabilities over time rather than when due as required by the Code and avoiding enforcement actions.

By the very nature of government action, the general public will almost always experience some benefit from an activity that is subject to a user fee. See, e.g., Seafarers, 81 F.3d at 184-85 (D.C. Cir. 1996). However, as long as the activity confers a specific benefit upon an identifiable beneficiary, it is permissible for the agency to charge the beneficiary a fee even though the public will also experience an incidental benefit. See Engine Mfrs. Ass'n v. E.P.A., 20 F.3d 1177, 1180 (D.C. Cir. 1994) (“If the agency does confer a specific benefit upon an identifiable beneficiary . . . then it is of no moment that the service may incidentally confer a benefit upon the general public as well.”) citing Nat'l Cable Television Ass'n v. FCC, 554 F.2d 1094, at 1103 (D.C. Cir. 1976). It is permissible for a service for which a user fee is charged to generate an “incidental public benefit,” and there is no requirement that the agency weigh this public benefit against the specific benefit to the identifiable recipient. Seafarers, 81 F.3d at 183-84 (D.C. Cir. 1996). Furthermore, the benefit to the fisc of collecting outstanding taxes is not an additional benefit to the government because the IRS would collect those amounts through other means absent the installment agreement. Even so, an agency is still entitled to charge for services that assist a person in complying with her statutory duties. See In Elec. Indus Ass'n v. FCC, 554 F.2d 1109, 1115 (D.C. Cir. 1976).

While the IRS is required to enter into certain installment agreements pursuant to section 6159(c), the IRS may still charge a fee for providing that service. In fact, under the OMB Circular, there are several examples of special benefits (e.g., passport, visa, patent) for which the issuing agency may charge a fee even though the agency is required to issue such benefit if the individual meets certain statutory or regulatory requirements. In addition, a taxpayer meeting the criteria in section 6159(c) must still submit a request for an installment agreement before one is established. Section 6159(c) requires that the IRS enter into the installment agreement provided that the taxpayer establishes its eligibility for such an agreement. In that situation, the IRS incurs the costs of establishing and monitoring these installment agreements as with any other installment agreement. Therefore, it is proper under the OMB Circular to charge a user fee for providing this service.

The IRS has taken public policy into consideration and is providing multiple user fee options to tailor the user fees to the specific IRS costs in establishing and monitoring the installment agreements. As a result, the IRS has introduced a reduced fee of $31 for direct debit online payment agreements. This $31 reduced fee is available to all taxpayers choosing to obtain the special benefits of installment agreements by using this service. The $31 reduced fee reflects the substantially lower costs the IRS incurs for establishing and monitoring direct debit online payment agreements. Thus, the installment agreement user fee structure now more closely reflects the full cost of processing each specific type of installment agreement.

The fourth comment's second main concern was that the IRS charges user fees inconsistently because, for example, the IRS does not charge user fees for toll-free telephone service, estimated income tax payments, walk-in service, notice letters, annual filing season program record of completion, and administrative appeals within the IRS.

The IRS's user fee policies are consistent with the OMB Circular. The IOAA authorizes agencies to prescribe regulations that establish charges for services provided by the agency, that is, user fees that “are subject to policies prescribed by the President. . . .” One of the OMB Circular's stated objectives is to “ensure that each service . . . provided by an agency to specific recipients be self-sustaining.” OMB Circular Section 5(a). The General Policy of the OMB Circular states that “a user charge . . . will be assessed against each identifiable recipient for special benefits derived from Federal activities beyond those received by the general public.” OMB Circular Section 6. The presumption under the OMB Circular is that agencies are encouraged, but not mandated, to charge user fees where special benefits are provided to identifiable individuals. Installment agreements are such special benefits. For purposes of these regulations, the IRS need only take into consideration comments relating to the installment agreement user fees and need not address comments relating to other services for which no fee is charged. With respect to installment agreement user fees, the IRS has charged fees since 1995 in accordance with the OMB Circular that requires full cost unless an exception is granted. The OMB Circular requires the IRS to review the user fees it charges for special services biennially to ensure that the fees are adjusted for cost. See OMB Circular Section 8(e). The new installment agreement user fee structure is consistent with that requirement.

The fourth comment's third main concern questioned the “optics” of increasing installment agreement user fees because of IRS budget constraints. As discussed in this Summary of Comments, the IRS has determined that the proposed installment agreement user fees are appropriate and consistent with the OMB Circular, and the question of “optics” raised in this comment is not relevant in this analysis. Section 6(a)(2)(a) of the OMB Circular provides that user fees will be sufficient to recover the full cost to the Government of providing the service except as provided in Section 6(c) of the OMB Circular. The exceptions in Section 6(c)(2) of the OMB Circular provide that agency heads may recommend to the OMB that exceptions to the full cost requirement be made when either (1) the cost of collecting the user fee would represent an unduly large part of the fee or (2) any other condition exists that, in the opinion of the agency head, justifies an exception. The cost of collecting the proposed user fees for the various types of installment agreements will not represent an unduly large part of the fee for the activity because it occurs automatically with the first installment payment. As noted above, Section 6(a)(2)(a) of the OMB Circular requires that user fees recover the full cost to the government of providing the service and nothing in the OMB Circular mandates agency heads to seek an exception to the full cost requirement. Nonetheless, the Commissioner of Internal Revenue has determined that there is a compelling tax administration reason for seeking an exception to the full cost requirement for low-income taxpayers.

The fourth comment's fourth main concern focused on the overall amount of the proposed user fees and included a number of related comments on the size of the fees, the agency's methodology in calculating the fees, and the efforts the IRS has taken to minimize the costs of providing these services. The comment questioned why the IRS decided not to change the $43 user fee for low-income taxpayers. The comment asked why the increase in costs of these services exceeded the rate of inflation during the past two years. The comment also questioned the IRS's efficiency in providing this special benefit and the IRS's concern in ensuring that its costs are driven down when providing this service. The comment expressed concern that if installment agreement volumes remained the same, the agency would increase its user fee receipts by tens of millions of dollars. Finally, the comment noted that the user fees do not depend on the balance due under an installment agreement and questioned why the user fee is taken from the first payments due under the installment agreement.

Contrary to what the comment asserted, the per-unit cost of the installment agreement program has not generally increased, rather it has generally decreased. In the 2013 biennial review, the IRS determined that the full cost of an installment agreement was $282, the full cost of an installment agreement paid by way of direct debit was $122, and the full cost of restructuring and reinstating an installment agreement was $85. See 78 FR 53702 (2013 Regulations). In connection with the 2013 biennial review and the 2013 Regulations, the IRS had requested and received an exception to the full cost requirement under the OMB Circular for the installment agreement user fees. As a result, the 2013 Regulations did not charge full cost for any of the installment agreement options. Requesting an exception to the full cost requirement of the OMB Circular is within the discretion of the agency head and must be approved by the Office of Management and Budget. In the 2015 biennial review, the IRS determined that the full cost of an installment agreement is $225, the full cost of an installment agreement paid by way of direct debit is $107, and the full cost of restructuring and reinstating an installment agreement is $89. Thus, contrary to the comment's assertion, the cost of the installment agreement program has generally decreased rather than generally increased during the span of two years. Furthermore, the IRS always strives to make its services cost-effective. The decrease in the installment agreement costs since 2013 demonstrates one of the ways the IRS seeks to make its services most cost effective for the public. The IRS also seeks new ways to makes its services more accessible to taxpayers. The IRS has worked to improve the usability of the online payment agreement application that provides for significantly lower costs. The user fee for the online payment agreement is $149, and if the installment agreement is paid by way of direct debit, is only $31. Practitioners can submit an online payment agreement application on behalf of their clients to secure lower fees. For smaller tax liabilities, the IRS has established procedures for setting up installment agreements utilizing guaranteed, streamlined, or in-business express criteria that are quicker to process and do not require securing a collection of information statement. See I.R.M. 5.14.5. The IRS has never based its user fee on the amount of liability due under the agreement, which would be inconsistent with the full cost requirement under the OMB Circular. The IRS, however, has provided taxpayers the option to pay their liability in full over 120 days without being charged any user fee. Furthermore, under the new fee structure, taxpayers choose a specific installment agreement service and pay the cost of the service. For example, a taxpayer may choose a direct debit online payment agreement and pay only $31 or a taxpayer may choose a regular installment agreement and pay $225. With regard to the user fee being taken from the first payments due under the installment agreement, this is not relevant for purposes of the regulations as this is not addressed in the regulations. Regardless, the OMB Circular requires user fees to be “collected in advance of, or simultaneously with, the rendering of services unless appropriations and authority are provided in advance to allow reimbursable services.” Section 6(a)(2)(C) of the OMB Circular. Instead of requiring the taxpayer to pay the entire fee in advance of the IRS entering into the installment agreement, the IRS allows the taxpayer to pay the fee with the first installment agreement payments, thereby lessening the burden on the taxpayer and making installment agreements more accessible to taxpayers.

The fifth comment had three suggestions: (1) Eliminate installment agreement user fees for low-income taxpayers, (2) revise internal guidelines to place less emphasis on speedy collection practices and more emphasis on viable collection practices, and (3) increase the transparency of the installment agreement user fees in publications.

The fifth comment's first suggestion was that the IRS should waive the entire user fee for low-income taxpayers and thereby incentivize them to enter into installment agreements instead of being placed in currently not collectible status or entering into an offer in compromise. According to the comment, this would increase the amount of revenue that the IRS collects and encourage taxpayers to enter into compliance. The comment pointed out that there is no user fee for a low-income taxpayer entering an offer in compromise. The IRS's response to a similar comment made to the installment agreement fee increase proposed in the 2013 notice of proposed rulemaking pointed out that the offer in compromise fee is charged for mere consideration of the offer and is not refunded if it is not accepted. The comment claimed that the IRS contradicted itself by further responding that the purpose of a user fee is to recover the cost to the government for a particular service to the recipient.

The comment opined that by waiving the low-income taxpayer user fee entirely, the number of low-income taxpayers making payments on their tax liabilities could increase. By way of example, the comment posited the possibility of a low-income taxpayer submitting an offer in compromise, paying no fee, and the IRS ultimately collecting less than it would have if it had allowed the low-income taxpayer to enter into an installment agreement with a complete fee waiver. According to the comment, if a low-income taxpayer enters into currently not collectible status and makes voluntary payments, those payments will be sporadic and less than would be collected from an installment agreement since the taxpayer would not receive monthly reminders. The comment referenced the IRS's response to a similar comment made to the installment agreement fee increase proposed in the 2013 notice of proposed rulemaking, to which the IRS responded that generally taxpayers who have the ability to pay their tax liability over time (and thus are eligible for installment agreements) will not qualify for currently not collectible status. In response, the comment suggested that many taxpayers that qualify for currently not collectible status may be mistakenly placed into installment agreements because the taxpayers may feel pressured to make payments, the taxpayers misstate their expenses and income, or the taxpayers are willing to cut back on their monthly living expenses. The comment provided examples to show how the $43 fee created disincentives for low-income taxpayers to enter into installment agreements in cases where the liability was relatively small. The comment requested that the IRS clarify that the user fee does not have to be paid up front but may be paid in installments if the taxpayer's monthly installment payment is less than the user fee.

The IRS considered the effect of the user fee on low-income taxpayers in 2006 and 2013 when the installment agreement user fees were updated. Both times, the IRS determined that the user fee should remain $43 for low-income taxpayers. The IRS again has determined that the user fee for installment agreements (other than for a direct debit online payment agreement) should remain at $43 for low-income taxpayers, both because requiring the full rate would be financially burdensome to low-income taxpayers and because waiving the fee entirely is not fiscally sustainable for the IRS given the constraints on its resources for tax administration. Typically, a taxpayer that is able to pay in full the liability under an installment agreement is not eligible to enter into an offer in compromise. As discussed in the preamble to T.D. 9647, 78 FR 72016-01, a taxpayer that is in currently not collectible status is typically not eligible to enter into an installment agreement. The low-income taxpayers that enter into installment agreements described in the examples the comment presented do so as a result of the taxpayers' choices or erroneous submissions of information to the IRS. Thus, the comment's hypothetical low-income taxpayer is the exception not the general rule. To ensure that low-income taxpayers are more aware of the fee options for the various types of installment agreements, the IRS will be revising its publications to make them consistent with the final regulations.

The fifth comment's second main concern was that low-income taxpayers are not always aware of the availability of the reduced fee and as a consequence some low-income taxpayers pay the regular fee. The comment suggested that IRS employees could do more to make low-income taxpayers aware of their options. The comment also asserted that installment agreements are set up not to allow low-income taxpayers to modify payments based on unforeseen changes in economic circumstances. The comment stated this can result in low-income taxpayers defaulting and either become subject to collection action or subject to the installment agreement reinstatement fee of $89 under the proposed regulations.

The comment requested that the IRS revise its procedures in the Internal Revenue Manual to place less emphasis on timely collection practices and more emphasis on viable collection practices.

The fifth comment's concerns about tax administration are generally beyond the scope of these regulations. However, for purposes of clarification, under the proposed regulations the user fee for reinstating an installment agreement for a low-income taxpayer would be $43, not $89. Furthermore, while these concerns do not affect the content of these final regulations, the IRS will consider these comments when updating the procedures in the Internal Revenue Manual for entering into installment agreements.

The fifth comment's third suggestion was for the IRS to clearly communicate to the public both through the internet and in hard copy publications the revised fee schedule so that taxpayers may make informed decisions when deciding the manner of setting up an installment agreement. The comment suggested that taxpayers who lack access to the internet, lack computer efficiency, lack a bank account, or have other disabilities or barriers should not be subjected to the higher user fees.

The IRS will be updating its electronic and hard copy publications to reflect the user fees in the final regulations. As explained in the proposed notice of rulemaking and in this Summary of Comments, the purpose of the user fees for installment agreements is to recover the full cost to the IRS of providing this special benefit to specific beneficiaries and the user fees in these final regulations are in accordance with the OMB Circular.

Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. It is hereby certified that these regulations will not have a significant economic impact on a substantial number of small entities. This certification is based on the information that follows. The economic impact of these regulations on any small entity would result from the entity being required to pay a fee prescribed by these regulations in order to obtain a particular service. The dollar amount of the fee is not, however, substantial enough to have a significant economic impact on any entity subject to the fee. Low-income taxpayers and taxpayers entering into direct debit online payment agreements will be charged a lower fee, which lessens the economic impact of these regulations. Accordingly, a regulatory flexibility analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business and no comments were received.

The principal author of these regulations is Maria Del Pilar Austin of the Office of the Associate Chief Counsel (Procedure and Administration). Other personnel from the Treasury Department and the IRS participated in their development.

Accordingly, 26 CFR part 300 is amended as follows:

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

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

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

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2015-0560 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before January 31, 2017. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2015-0560, by one of the following methods:

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

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

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

In the Federal Register of October 21, 2015 (80 FR 63731) (FRL-9935-29), EPA issued a document pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 5F8374) by Syngenta Crop Protection, LLC., P.O. Box 18300, Greensboro, NC 27419. The petition requested that 40 CFR part 180.682 be amended by establishing tolerances for residues of the herbicide, bicyclopyrone: 4-hydroxy-3-{2-[(2-methoxyethoxy) methyl}-6-(trifluoromethyl)-3-pyridylcarbonyl} bicyclo oct-3-en-2-one, in or on the raw agricultural commodities: Barley, bran at 0.15 parts per million (ppm); barley, germ at 0.10 ppm; barley, grain, at 0.07 ppm; barley, hay at 0.3 ppm; barley, straw at 0.50 ppm; wheat, aspirated grain fractions at 0.50 ppm; wheat, bran at 0.15 ppm; wheat, forage at 0.50 ppm; wheat, germ at 0.10 ppm; wheat, grain, at 0.04 ppm; wheat, hay at 0.9 ppm; and wheat, straw at 0.50 ppm. That document referenced a summary of the petition prepared by Syngenta Crop Protection, LLC., the registrant, which is available in the docket, http://www.regulations.gov. There were no comments received in response to the notice of filing.

Based upon review of the data supporting the petition, EPA has revised the proposed tolerances to wheat, forage at 0.40 ppm; wheat, hay at 0.80 ppm; wheat, bran at 0.07 ppm; grain, aspirated fractions at 0.30 ppm; and barley, straw at 0.40 ppm. EPA has increased the existing tolerances to cattle, meat byproducts at 2.0 ppm; goat, meat byproducts at 2.0 ppm; sheep, meat byproducts at 2.0 ppm; horse, meat byproducts; at 2.0 ppm; and hog, meat byproducts at 0.40 ppm. EPA has determined that tolerances are not needed to be established for barley, germ and wheat, germ. The reason for these changes are explained in Unit IV.C.

Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”

Consistent with FFDCA section 408(b)(2)(D), and the factors specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for bicyclopyrone including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with bicyclopyrone follows.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

The effects of bicyclopyrone are indicative of inhibition of 4-hydroxyphenylpyruvate dioxygenase (HPPD). Plasma tyrosine levels were consistently elevated in rats, rabbits, and dogs (levels in mice were not tested). Consistent with these elevated tyrosine levels, ocular effects (corneal opacity, keratitis) were observed for subchronic and chronic durations through the oral and dermal routes in rats, which was the most sensitive species tested (minor instances in dogs). There were also increased incidences of thyroid follicular hyperplasia and a chronic progressive nephropathy.

While minor instances of ocular effects were observed in dogs, different toxicological effects were generally observed. For subchronic oral exposure, clinical signs (moderate hypoactivity, slightly unsteady gait, increased heart rate, regurgitation, and vomiting) were observed, and clinical pathological indicators of toxicity occurred in the eye and the thymus. Following chronic exposure, there was a dose-dependent increase in chromatolysis and swelling of selected neurons in the dorsal root ganglia, and degeneration of nerve fibers in the spinal nerve roots in both sexes. In one female dog at the high dose, corneal opacity and light sensitivity were observed.

Across the database, there were decreased absolute body weights (the only finding in mice for any duration) and food consumption. There were no signs of immunotoxicity or neurotoxicity in rodents.

Bicyclopyrone treatment resulted in developmental toxicity in both rats and rabbits, and there was an increased quantitative fetal susceptibility in both species tested. In rats, maternal toxicity was not observed up to 1,000 milligram/kilogram/day (mg/kg/day). Fetal effects occurred at all doses (≥100 mg/kg/day), and manifested as skeletal variations (increased incidences of full or rudimentary supernumerary ribs, pelvic girdle malpositioned caudal, costal cartilage 11 long). In New Zealand White rabbits, maternal effects consisted of mortality/moribundity in conjunction with minimal food consumption at 200 mg/kg/day. Fetal effects once again occurred at all doses tested (≥10 mg/kg/day). The sole fetal effect at the lowest dose tested was the appearance of the 27th presacral vertebrae. There were two studies in Himalayan rabbits. In both studies, maternal effects consisted of macroscopic findings in the stomach wall and an increased incidence of post-implantation loss at the 250 mg/kg/day dose level. In the first study, fetal effects occurred starting at 50 mg/kg/day and consisted of skeletal variations (increased incidence of the 27th prepelvic vertebra and malpositioned pelvic girdle). In the second study, the increased quantitative fetal susceptibility was not observed due to a change in the dose selection. Fetal effects occurred at 250 mg/kg/day and consisted of external, visceral, and skeletal abnormalities, and visceral variations, skeletal, bone and cartilage variations. In total, the effects in these studies are consistent with effects of other chemicals in this class.

In the two-generation reproductive study in rats, ocular toxicity occurred in parents and offspring and there was no increased offspring susceptibility of any kind. Reproductive effects included changes in sperm parameters, and a decrease of precoital interval.

To determine the mechanism for the thyroid hyperplasia observed in the chronic/carcinogenicity study in rats, two mode-of-action studies were performed. In the in vitro study, bicyclopyrone was negative for thyroid peroxidase inhibition. The results from the in vivo study suggested that the observed thyroid hyperplasia was the result of increased metabolism of thyroid hormones indicated by: (1) Decreased plasma T3 and T4 levels, (2) increased thyroid follicular cell hypertrophy, (3) increased liver weights associated, and (4) increased hepatocellular centrilobular hypertrophy and increased hepatic uridine diphosphate glucuronyl transferase (UDPGT) activities. Bicyclopyrone is categorized as having low acute lethality via all routes of administration. Bicyclopyrone produces minimal eye irritation and mild acute inhalation toxicity.

Two adequate carcinogenicity studies were submitted. One study conducted on rats showed the presence of rare ocular tumors in male rats only. The corneal tumors observed in male rats are (1) treatment related, (2) found at doses that were considered to be adequate and not excessive for assessing carcinogenicity, (3) there are no concerns for mutagenicity or genotoxicity, and (4) are supported by structure-activity relationship (SAR) data for another HPPD inhibitor, tembotrione. Another study conducted on mice showed lung tumors, which are not considered treatment related. Because the tumors are found only in one species and only in males, consistent with the Agency guidelines for carcinogen risk assessment, the Agency has classified bicyclopyrone as “suggestive evidence of cancer” and has determined that quantification of bicyclopyrone's carcinogenic potential is not required. A non-linear approach (i.e., reference dose (RfD)) will adequately protect for all chronic toxicity, including carcinogenicity that could result from exposure to bicyclopyrone. Using EPA's non-linear approach, the 1000X combined uncertainty factor used to calculate the chronic RfD/chronic population-adjusted dose for the chronic dietary assessment, generates a dose which is 10,000-fold lower than the dose at which the ocular tumors were not observed and is thus protective of their potential formation.

Specific information on the studies received and the nature of the adverse effects caused by bicyclopyrone as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in document titled “Bicyclopyrone: Human Health Risk Assessment for the Section 3 Registration Action on Cereals (Wheat and Barley)” at pp. 29-34 in docket ID number EPA-HQ-OPP-2015-0560.

Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which the NOAEL and the LOAEL are identified. Uncertainty/safety factors are used in conjunction with the POD to calculate a safe exposure level—generally referred to as a population-adjusted dose (PAD) or a RfD—and a safe margin of exposure (MOE). For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see http://www.epa.gov/pesticides/factsheets/riskassess.htm. A summary of the toxicological endpoints for bicyclopyrone used for human risk assessment is discussed in Unit III. B of the final rule published in the Federal Register of April 23, 2015 (80 FR 22648) (FRL-9926-66).

1. Dietary exposure from food and feed uses. In evaluating dietary exposure to bicyclopyrone, EPA considered exposure under the petitioned-for tolerances as well as all existing bicyclopyrone tolerances in 40 CFR 180.682. EPA assessed dietary exposures from bicyclopyrone in food as follows:

i. Acute exposure. Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide, if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure. Such effects were identified for bicyclopyrone. In estimating acute dietary exposure, EPA used food consumption information from the United States Department of Agriculture (USDA) 2003-2008 Nationwide Continuing Surveys of Food Intake by Individuals (CSFII). The acute dietary analysis was conducted for bicyclopyrone assuming tolerance level residues, default processing factors, and 100% crop treatment (PCT) information.

ii. Chronic exposure. In conducting the chronic dietary exposure assessment EPA used the food consumption data from the USDA 2003-2008 CSFII. The chronic dietary exposure assessment was conducted for bicyclopyrone assuming average field trial residues for crops, average empirical processing factors, anticipated residues for livestock commodities, and PCT estimates for some commodities.

iii. Cancer. Based on the data summarized in Unit III.A., EPA has determined that a separate cancer exposure assessment does not need to be conducted.

iv. Anticipated residue and percent crop treated (PCT) information. Section 408(b)(2)(E) of FFDCA authorizes EPA to use available data and information on the anticipated residue levels of pesticide residues in food and the actual levels of pesticide residues that have been measured in food. If EPA relies on such information, EPA must require pursuant to FFDCA section 408(f)(1) that data be provided 5 years after the tolerance is established, modified, or left in effect, demonstrating that the levels in food are not above the levels anticipated. For the present action, EPA will issue such data call-ins as are required by FFDCA section 408(b)(2)(E) and authorized under FFDCA section 408(f)(1). Data will be required to be submitted no later than 5 years from the date of issuance of these tolerances.

Section 408(b)(2)(F) of FFDCA states that the Agency may use data on the actual percent of food treated for assessing chronic dietary risk only if:

• Condition A: The data used are reliable and provide a valid basis to show what percentage of the food derived from such crop is likely to contain the pesticide residue.

• Condition B: The exposure estimate does not underestimate exposure for any significant subpopulation group.

• Condition C: Data are available on pesticide use and food consumption in a particular area, the exposure estimate does not understate exposure for the population in such area.

In addition, the Agency must provide for periodic evaluation of any estimates used. To provide for the periodic evaluation of the estimate of PCT as required by FFDCA section 408(b)(2)(F), EPA may require registrants to submit data on PCT.

The Agency estimated the PCT for existing uses as follows: The chronic analysis incorporated the following PCT estimates: Field corn, 40% and sweet/popcorn, 35%. The PCT for livestock commodities is based on the PCT estimate value for the livestock feed item used in the dietary burden with the highest PCT (field corn, 40%).

In most cases, EPA uses available data from United States Department of Agriculture/National Agricultural Statistics Service (USDA/NASS), proprietary market surveys, and the National Pesticide Use Database for the chemical/crop combination for the most recent 6-7 years. EPA uses an average PCT for chronic dietary risk analysis. The average PCT figure for each existing use is derived by combining available public and private market survey data for that use, averaging across all observations, and rounding to the nearest 5%, except for those situations in which the average PCT is less than one. In those cases, 1% is used as the average PCT and 2.5% is used as the maximum PCT. EPA uses a maximum PCT for acute dietary risk analysis. The maximum PCT figure is the highest observed maximum value reported within the recent 6 years of available public and private market survey data for the existing use and rounded up to the nearest multiple of 5%.

The Agency estimated the PCT for new uses as follows: The chronic analysis incorporated the following PCT estimates: Barley, 5% and wheat, 1%.

The Agency believes that the three conditions discussed in Unit III.C.1.iv. have been met. With respect to Condition A, PCT estimates are derived from Federal and private market survey data, which are reliable and have a valid basis. The Agency is reasonably certain that the percentage of the food treated is not likely to be an underestimation. As to Conditions B and C, regional consumption information and consumption information for significant subpopulations is taken into account through EPA's computer-based model for evaluating the exposure of significant subpopulations including several regional groups. Use of this consumption information in EPA's risk assessment process ensures that EPA's exposure estimate does not understate exposure for any significant subpopulation group and allows the Agency to be reasonably certain that no regional population is exposed to residue levels higher than those estimated by the Agency. Other than the data available through national food consumption surveys, EPA does not have available reliable information on the regional consumption of food to which bicyclopyrone may be applied in a particular area.

2. Dietary exposure from drinking water. The Agency used screening level water exposure models in the dietary exposure analysis and risk assessment for bicyclopyrone in drinking water. These simulation models take into account data on the physical, chemical, and fate/transport characteristics of bicyclopyrone. Further information regarding EPA drinking water models used in pesticide exposure assessment can be found at http://www.epa.gov/oppefed1/models/water/index.htm.

The Surface Water Concentration Calculator (SWCC) computer model was used to generate surface water Estimated Drinking Water Concentrations (EDWCs), while the Pesticide Root Zone Model for Groundwater (PRZM-GW) and the Screening Concentration in Ground Water (SCI-GROW) models were used to generate groundwater EDWCs. The maximum acute, chronic, and cancer surface water EDWCs associated with bicyclopyrone use on wheat and barley were 3.43, 1.02, and 0.46 parts per billion (ppb), respectively. For groundwater sources of drinking water, the maximum acute, chronic and cancer EDWCs of bicyclopyrone in shallow groundwater from PRZM-GW were 4.82, 4.2, and 2.1 ppb, respectively. EDWCs of 4.82 ppb and 4.2 ppb were used in the acute and chronic analyses, respectively.

3. From non-dietary exposure. The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets). Bicyclopyrone is not registered for any specific use patterns that would result in residential exposure.

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

There are marked differences among species in the ocular toxicity associated with bicyclopyrone's mechanism of toxicity, the inhibition of HPPD. Ocular effects following treatment with HPPD inhibitor herbicides are seen in the rat but not in the mouse. Monkeys also seem to be recalcitrant to the ocular toxicity induced by HPPD inhibition. One explanation for this species-specific response in ocular opacity may be related to species differences in the clearance of tyrosine. A metabolic pathway exists to remove tyrosine from the blood that involves the liver enzyme tyrosine aminotransferase (TAT). In contrast to rats where ocular toxicity is observed following exposure to HPPD-inhibiting herbicides, mice and humans are unlikely to achieve the levels of plasma tyrosine necessary to produce ocular opacities because the activity of TAT in these species is much greater compared to rats.

HPPD inhibitors (e.g., nitisinone) are used as an effective therapeutic agent to treat patients suffering from rare genetic diseases of tyrosine catabolism. Treatment starts in childhood but is often sustained throughout patient's lifetime. The human experience indicates that a therapeutic dose (1 mg/kg/day dose) of nitisinone has an excellent safety record in infants, children, and adults and that serious adverse health outcomes have not been observed in a population followed for approximately a decade. Rarely, ocular effects are seen in patients with high plasma tyrosine levels; however, these effects are transient and can be readily reversed upon adherence to a restricted protein diet. This observation indicates that an HPPD inhibitor in and of itself cannot easily overwhelm the tyrosine-clearance mechanism in humans.

Therefore, exposures to environmental residues of HPPD-inhibiting herbicides are unlikely to result in the high blood levels of tyrosine and ocular toxicity in humans due to an efficient metabolic process to handle excess tyrosine. The EPA continues to study the complex relationships between elevated tyrosine levels and biological effects in various species. In the future, assessments of HPPD-inhibiting herbicides may consider more appropriate models and cross species extrapolation methods. Therefore, EPA has not conducted cumulative risk assessment with other HPPD inhibitors.

1. In general. Section 408(b)(2)(C) of FFDCA provides that EPA shall apply an additional tenfold (10X) margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the Food Quality Protection Act Safety Factor (FQPA SF). In applying this provision, EPA either retains the default value of 10X, or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor.

2. The FQPA SF is retained at 10X for all exposure scenarios based on use of a LOAEL for the points of departure. The toxicology database for bicyclopyrone is adequate for characterizing toxicity and quantification of risk for food and non-food uses; however, a LOAEL from the New Zealand white rabbit developmental and chronic/carcinogenicity rat toxicity studies has been used as the POD for several scenarios.

There is no evidence of neurotoxicity in either of the neurotoxicity screening batteries, but there are effects in the chronic dog study. The level of concern is low, however, since the study and POD chosen for the chronic dietary exposure scenario is protective of these effects. There is evidence of increased quantitative fetal susceptibility following in utero exposure in both rats and rabbits; however, these effects are well characterized and the selected endpoints are protective of the observed fetal effects. Lastly, there are no residual uncertainties in the exposure database.

EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.

1. Acute risk. Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to bicyclopyrone will occupy 4.6% of the aPAD for females 13-49 years old, the population group receiving the greatest exposure.

2. Chronic risk. Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to bicyclopyrone from food and water will utilize 90% of the cPAD for children <1 years old the population group receiving the greatest exposure. There are no residential uses for bicyclopyrone.

3. Short-term risk. A short-term adverse effect was identified; however, bicyclopyrone is not registered for any use patterns that would result in short-term residential exposure. Short-term risk is assessed based on short-term residential exposure plus chronic dietary exposure. Because there is no short-term residential exposure and chronic dietary exposure has already been assessed under the appropriately protective cPAD (which is at least as protective as the POD used to assess short-term risk), no further assessment of short-term risk is necessary, and EPA relies on the chronic dietary risk assessment for evaluating short-term risk for bicyclopyrone.

4. Intermediate-term risk. An intermediate-term adverse effect was identified; however, bicyclopyrone is not registered for any use patterns that would result in intermediate-term residential exposure. Intermediate-term risk is assessed based on intermediate-term residential exposure plus chronic dietary exposure. Because there is no intermediate-term residential exposure and chronic dietary exposure has already been assessed under the appropriately protective cPAD (which is at least as protective as the POD used to assess intermediate-term risk), no further assessment of intermediate-term risk is necessary, and EPA relies on the chronic dietary risk assessment for evaluating intermediate-term risk for bicyclopyrone.

5. Aggregate cancer risk for U.S. population. Because the Agency has determined that the chronic RfD will be protective of any potential cancer risk and there is not a chronic risks do not exceed the Agency's level of concern, EPA concludes that there is not a concern for cancer risk from exposure to bicyclopyrone.

6. Determination of safety. Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to bicyclopyrone residues.

Adequate enforcement methodology liquid chromatography-mass spectroscopy/mass spectroscopy (LC-MS/MS) methods for tolerance enforcement have been developed and independently validated. For all matrices and analytes, the level of quantification (LOQ), defined as the lowest spiking level where acceptable precision and accuracy data were obtained, was determined to be 0.01 ppm for each of the common moieties, SYN503780 and CSCD686480, for a combined LOQ of 0.02 ppm is available to enforce the tolerance expression.

The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; email address: [email protected].

In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level. The Codex has not established a MRL for bicyclopyrone.

The requested tolerance levels for some wheat and barley raw agricultural commodities (RAC) differ slightly from those being set by the EPA. Although both the petitioner and EPA have used the Organization for Economic Cooperation and Development (OECD) calculation procedures to determine tolerance levels, EPA determined that some of the field residue trials were not independent, thus resulting in different inputs. Using the highest average RAC residues and average processing factors, EPA calculated tolerance levels for processed commodities that were generally lower than those requested and determined that the requested tolerances for residues in/on wheat and barley germ are not necessary as the expected residue levels are covered by the RAC tolerance levels.

Consistent with 40 CFR 180.6, EPA is amending existing livestock commodity tolerances as necessary. As a result of increased dietary burdens resulting from the use on wheat and barley commodities, the existing tolerances of 1.5 ppm for residues in/on the meat byproducts of cattle, goats, horses, and sheep are increased to 2.0 ppm; and the existing tolerance of 0.15 ppm for residues in/on for hog meat byproducts is increased to 0.40 ppm.

In addition, EPA changed the commodity terminology for aspirated grain fractions to grain, aspirated fractions in order to conform to terms used in the Agency's Food and Feed Commodity Vocabulary and amended the tolerance value for barley, hay from 0.3 ppm to 0.30 ppm to conform with the Agency policy to carry tolerance levels out two significant figures.

Therefore, tolerances are established for residues of the herbicide bicyclopyrone in or on barley, bran at 0.15 ppm; barley, grain, at 0.07 ppm; barley, hay at 0.30 ppm; barley, straw at 0.40 ppm; cattle, meat byproducts at 2.0 ppm; goat, meat byproducts at 2.0 ppm; grain, aspirated fractions at 0.30 ppm; hog, meat byproducts at 0.40 ppm; horse, meat byproducts at 2.0 ppm; sheep, meat byproducts at 2.0 ppm; wheat, bran at 0.07 ppm; wheat, forage at 0.40 ppm; wheat, grain, at 0.04 ppm; wheat, hay at 0.80 ppm; and wheat, straw at 0.50 ppm.

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

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

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

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

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

Therefore, 40 CFR chapter I is amended as follows:

On October 11, 2016, NMFS published a proposed rule in the Federal Register (81 FR 70080) to implement certain provisions of Resolutions C-16-01 and C-16-06 adopted by the IATTC in 2016. The proposed rule contained additional background information, including information on the IATTC, the international obligations of the United States as an IATTC member, and the need for regulations. The 30-day public comment period for the proposed rule closed on November 10, 2016.

The final rule is implemented under the Tuna Conventions Act (16 U.S.C. 951 et seq.), as amended on November 5, 2015, by title II of Public Law 114-81. The recent amendments direct the Secretary of Commerce, in consultation with the Secretary of State, and, with respect to enforcement measures, the U.S. Coast Guard, to promulgate such regulations as may be necessary to carry out the United States' obligations under the Antigua Convention, including recommendations and decisions adopted by the IATTC. The authority of the Secretary of Commerce to promulgate such regulations has been delegated to NMFS. This rule implements certain provisions of Resolutions C-16-01 and C-16-06 for U.S. commercial fishing vessels that fish for tuna or tuna-like species in the IATTC Convention Area. The preamble of the proposed rule included a detailed description of the elements of this rule.

This rule includes four elements: Two elements regarding FADs and two elements regarding silky sharks. The first element requires the owner or operator of a U.S. purse seine vessel to ensure characters of a unique code be marked indelibly on each fish aggregating device (FAD) deployed or modified on or after January 1, 2017. The vessel owner or operator must select one of the following two options for the unique code for each FAD: (1) Obtain a unique code from NMFS West Coast Region that NMFS has obtained from the IATTC Secretariat, as specified in Annex I of Resolution C-16-01 or (2) use an existing unique identifier associated with the FAD (e.g., the manufacturer identification code for the attached buoy).

The vessel owner or operator is required to ensure the characters for the unique code be at least five centimeters in height on the upper portion of the attached radio or satellite buoy in a location that does not cover the solar cells used to power the equipment. For FADs without attached radio or satellite buoys, the characters are required to be marked indelibly on the uppermost or emergent top portion of the FAD. In other words, the vessel owner or operator is required to ensure the marking is durable and will not fade or be erased (e.g., marked using an epoxy-based paint or an equivalent in terms of lasting ability) and visible at all times during daylight. In circumstances where the observer is unable to view the unique code, the captain or crew is required to assist the observer (e.g., by providing the unique code of the FAD to the observer).

The second element requires the owner or operator of a vessel to record and submit information about the FAD to the address specified by the Highly Migratory Species (HMS) Branch, Sustainable Fisheries Division, NMFS West Coast Region (Suite 4200, 501 W. Ocean Blvd., Long Beach, CA 90802). Owners and operators of a FAD are required to record this information on the standard form developed by the IATTC Secretariat and provided to the owners and operators by the HMS Branch.

The third element prohibits the crew, operator, and owner of a commercial purse seine fishing vessel of the United States used to fish for tuna or tuna-like species from retaining on board, transshipping, storing, or landing any part or whole carcass of a silky shark that is caught in the Convention Area. U.S. purse seiners do not target silky sharks, yet they are caught incidentally and are primarily discarded as discussed in the Classification Section.

The fourth element requires the crew, operator, and owner of a U.S. longline fishing vessel to limit the retention of silky sharks caught in the IATTC Convention Area to a maximum of 20 percent by weight of the total catch of fish during any fishing trip that occurred in whole or in part in the IATTC Convention Area. U.S. longline vessels fishing in the IATTC Convention Area do not target, and infrequently catch, silky sharks. Data from 2008 to 2015 show that any incidentally caught silky sharks are released, and almost all are released alive. Silky sharks are commonly released by cutting the line or dehooking the shark before it is brought onboard the vessel.

NMFS received one comment letter during the 30-day public comment period that closed on November 10, 2016. The comment letter was from a representative of Tri-Marine Management Company, LLC (Tri-Marine). Three distinct comments are expressed in the letter, which NMFS responds to below.

Comment 1: Unfortunately, scientific data shows total mortality of silky sharks on purse seiners still exceeds 84 percent (http://www.intres.com/articles/meps_oa/m521p143.pdf). The conservation gain of this measure will be very limited given the poor survivability of released sharks.

Response: NMFS agrees that the anticipated conservation benefit for the U.S. purse seine fleet in the eastern Pacific Ocean (EPO) following these regulations is likely minimal. As noted in the preamble of the proposed rule, silky sharks are not targeted by U.S. purse seine vessels in the EPO and they are infrequently caught. However, this is not the case in other IATTC nations, where silky sharks are retained and consumed. The IATTC scientific staff has specifically recommended prohibiting retention in purse seine fisheries, similar to the measures adopted for oceanic whitetip sharks Resolution C-11-10 (Resolution on the Conservation of Oceanic Whitetip Sharks Caught in Association with Fisheries in the Antigua Convention Area).

Although studies in the Pacific Ocean have shown that a large percentage of silky sharks do not survive after undergoing the brailing process, restrictions on retention can remove the incentive for purse seine vessels to target silky sharks. Therefore, much of the conservation benefit from this Resolution is expected from implementing this restriction by IATTC nations with vessels that target silky sharks. NMFS is implementing this provision of the Resolution to comply with U.S. obligations as a member of the IATTC.

Comment 2: While we understand and respect the conservation aim of this proposed rule, the operational implications of demonstrating full compliance were not adequately accounted for by the IATTC and should be considered by NMFS in the development and enforcement of this rule. Silky sharks are often caught unintentionally in purse seine sets on schools of tuna that are associated with FADs, and also in unassociated sets. When tuna and other non-target species are caught in purse seine sets, the net is brought alongside the vessel and everything (including silky sharks) is scooped onto the deck using a brailer. Brails are screened for non-target species like sharks when they are brought onboard. When silky sharks are seen, the crew carefully releases them overboard using best practices, which they are trained on (http://www.issfguidebooks.org/purseseine-3-14/).

Brails are large, each containing as much as seven metric tons (mt) of fish, which are conveyed quickly from the brail to the fish wells to preserve the quality of the catch. While crew, officers, and onboard observers are diligent in identifying, releasing, and logging the catch of silky sharks, there are still instances where sharks are inadvertently loaded into fish wells, especially very small sharks. In order to demonstrate full compliance with this rule, each brail would need to be examined in its entirety (e.g., dumped out on deck before being loaded into fish wells). For many vessels this is not feasible without greatly slowing operations to a point where fish quality may not meet acceptable standards.

The negative economic impacts due to slowed operations and fish waste because of poor quality would be significant. Therefore, if this proposed rule is adopted, we urge you to consider guidelines for implementation and enforcement that prohibit the intended retention of silky sharks, but do not penalize purse seine vessel operators in the rare event that silky sharks are identified at the point of offload.

Response: NMFS recognizes that methodically checking for and discarding silky sharks on the deck takes more time and effort than dropping the catch into wells without searching for sharks. However, the language in Resolution C-16-06 is not flexible enough to prohibit only the intended retention of silky sharks. The United States must implement Resolution C-16-06 to satisfy obligations as a member of the IATTC.

In addition, regulations to prohibit the retention onboard, transshipping, landing, or storing of sharks is not without precedent for purse seine vessels fishing for tuna in the Pacific Ocean. Many of the large U.S. purse seine vessels that could catch silky sharks also fish in the western and central Pacific Ocean and are subject to NMFS regulations at 50 CFR 300.226 that prohibit the retention of silky sharks in those waters (without an exception for unintentional retention). Therefore, the practice is feasible. U.S. purse seine vessels in the EPO are also subject to regulations at 50 CFR 300.27, which already prohibit retention of oceanic whitetip shark (without an exception for unintentional retention), which presumably present the same feasibility issues.

Comment 3: We encourage NMFS to promote more effective conservation measures for silky sharks at the IATTC, such as a measure that would require the fins of any sharks landed in any fishery in the Convention Area to be naturally attached rather than applying a fins-to-carcass ratio. In addition, we recognize that the catch of silky sharks is higher in FAD sets than in unassociated sets, and are highly supportive of scientifically based, equitably applied, FAD management.

Response: NMFS agrees with the commenter's suggestion to pursue shark measures in the IATTC that would prohibit landing with fins-attached. Such proposals have been tabled for consideration by the IATTC since 2012, and the United States has strongly supported these proposals.

With the exception of a non-substantive adjustment to the wording of the new definition “HMS Branch” in 50 CFR 300.21, there are no changes to the regulatory text in the final rule from the proposed rule.

The NMFS Assistant Administrator has determined that this proposed rule is consistent with the Tuna Conventions Act and other applicable laws.

This action is categorically excluded from the requirement to prepare an Environmental Assessment in accordance with NOAA Administrative Order (NAO) 216-6. A memorandum for the file has been prepared that sets forth the decision to use a categorical exclusion, and a copy is available from NMFS (see ADDRESSES).

This rule has been determined to be not significant for purposes of Executive Order 12866.

This rule contains a collection-of-information requirement subject to the Paperwork Reduction Act (PRA) and which has been approved by OMB Control Number 0648-0148. NMFS amended an existing supporting statement for the Pacific Tuna Fisheries Logbook to include the data collection requirements for FADs, as described in this rule. Public reporting burden for the additional collection of information is estimated to average ten minutes per form, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate, or any other aspect of this data collection, including suggestions for reducing the burden, to NMFS (see ADDRESSES) and by email to [email protected], or fax to (202) 395-5806.

Regarding the elements of the rule pertaining to silky sharks; there are no new collection-of-information requirements associated with this action that are subject to the PRA, and existing collection-of-information requirements still apply under the following Control Numbers: 0648-0593 and 0648-0214.

Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number. All currently approved NOAA collections of information may be viewed at: http://www.cio.noaa.gov/services_programs/prasubs.html.

The Chief Counsel for Regulation, Office of the General Counsel, Department of Commerce, determined that this rule would not have a significant economic impact on a substantial number of small entities. Although an Initial Regulatory Flexibility Analysis (IRFA) was published to aid the public in commenting upon the small business impact of the proposed regulations, that analysis concluded that the action will not have a significant adverse economic impact on a substantial number of small entities. Public comment was solicited on the IRFA and proposed rule, and no challenges to the conclusions or other substantive issues in the IRFA were received through public comment. Accordingly, a Final Regulatory Flexibility Analysis was not prepared. Because the actions contained in this final rule are not expected to have a significant economic impact on a substantial number of small entities, the Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration that this rule will not have a significant adverse impact on a substantial number of small entities. The factual basis for this determination is described below.

As described in the SUPPLEMENTARY INFORMATION section, the regulations require FAD identification and data reporting as well as fishing restrictions on silky sharks. The entities directly affected by the actions of this final rule are (1) U.S. purse seine vessels that use FADs to fish for tuna or tuna-like species in the IATTC Convention Area, and (2) U.S. purse seine and longline vessels that catch silky sharks.

The United States Small Business Administration (SBA) defines a “small business” (or “small entities”) as one with annual revenue that meets or is below an established size standard. On December 29, 2015, NMFS issued a final rule establishing a small business size standard of $11 million in annual gross receipts for all businesses primarily engaged in the commercial fishing industry (NAICS 11411) for Regulatory Flexibility Act (RFA) compliance purposes only (80 FR 81194; December 29, 2015). The $11 million standard became effective on July 1, 2016, and is to be used in place of the U.S. SBA current standards of $20.5 million, $5.5 million, and $7.5 million for the finfish (NAICS 114111), shellfish (NAICS 114112), and other marine fishing (NAICS 114119) sectors of the U.S. commercial fishing industry in all NMFS rules subject to the RFA after July 1, 2016. Id. at 81194. The new standard results in fewer commercial finfish businesses being considered small.

NMFS prepared analyses for this regulatory action in light of the new size standard. All of the entities directly regulated by this regulatory action are commercial finfish fishing businesses. Under the new size standards, the entities for which the action on FADs applies are considered large and small business, and the longline vessels for which the action on silky sharks applies to be small business.

As of July 2016, there are 15 large purse seine vessels (with at least 363 mt of fish hold volume) listed on the IATTC Regional Vessel Register. The number of U.S. large purse seine vessels on the IATTC Regional Vessel Register has increased substantially in the past two years due to negotiations regarding the South Pacific Tuna Treaty (SPTT) and the interest expressed by vessel owners that typically fish in the western and central Pacific Ocean (WCPO) in relocating to the EPO. Neither gross receipts nor ex-vessel price information specific to individual fishing vessels are available to NMFS, so NMFS applied indicative regional cannery prices—as approximations of ex-vessel prices—to annual catches of individual vessels to estimate their annual receipts. Indicative regional cannery prices are available through 2014 (developed by the Pacific Islands Forum Fisheries Agency; available at https://www.ffa.int/node/425). NMFS estimated vessels' annual receipts during 2012-2014. Using this approach, NMFS estimates that among the affected vessels, the range in annual average receipts in 2012-2014 was $3 million to $20 million and the median was about $13 million. Thus, NMFS estimates that slightly more than half of the affected large purse seine vessels are small entities.

Because only the large purse seine vessels fish with FADs and incidentally catch silky sharks in the EPO, the action is not expected to impact the coastal purse seine vessels. U.S. purse seiners do not target silky sharks in the EPO. Since 2005, the best available data from observers show that the incidental catches of silky sharks are primarily discarded. However, a small percentage has been landed in the past ten years. For example, in 2015, a year in which more than three large purse seine vessels fished in the EPO, about 3 percent of the total catches of silky sharks were landed and the rest were discarded either dead or alive. Since at least 2005, the observer coverage rate on class size 6 vessels in the EPO has been 100 percent.

As of August 2016, the IATTC Regional Vessel Register lists 158 U.S. longline vessels that have the option to fish in the IATTC Convention Area. The majority of these longline vessels possess Hawaii Longline Limited Access Permits (issued under 50 CFR 665.13). In addition, there are U.S. longline vessels based on the U.S. West Coast, some of which operate solely under the Pacific HMS permit. U.S. West Coast-based longline vessels operating under the Pacific HMS permit fish primarily in the EPO and are currently restricted to fishing with deep-set longline gear outside of the U.S. West Coast exclusive economic zone (EEZ).

There have been less than three West Coast-based vessels operating under the HMS permit since 2005. Therefore, landings and ex-vessel revenue are confidential. However, the number of Hawaii-permitted longline vessels that have landed in West Coast ports has increased from 1 vessel in 2006 to 14 vessels in 2014. In 2014, 621 mt of highly migratory species were landed by Hawaii permitted longline vessels with an average ex-vessel revenue of approximately $247,857 per vessel. For the longline fishery, the ex-vessel value of catches by the Hawaii longline fleet in 2012 was about $87 million. With 129 active vessels in that year, per-vessel average revenues were about $0.7 million, well below the $11 million threshold for finfish harvesting businesses. NMFS considers all longline vessels, for which data is non-confidential, that catch silky sharks in the IATTC Convention Area to be small entities for the purposes of the RFA.

U.S. longline vessels fishing in the IATTC Convention Area, whether under the Hawaii Longline Limited Access Permit or the Pacific HMS permit, do not target silky sharks and all those caught incidentally are released. An evaluation of total catch per longline trip where silky sharks have been caught and released shows that, if the average weights of silky sharks are approximated, the amount of silky sharks caught by U.S. longline vessels fishing in the EPO do not come close to 20 percent by weight of the total catch of fish during a fishing trip.

An IRFA was prepared for the proposed rule, and the analysis concluded that the action will not have a significant adverse economic impact on a substantial number of small entities. Under the new size standards, the entities impacted by the action on FADs are considered large and small business. However, a disproportional economic effect between small and large businesses is not expected. There will be only a minimal additional time burden for owners and operators of large purse seine vessels to ensure characters of a unique code be marked indelibly on their FADs and to record data for FAD activities. And while the large purse seine vessels impacted by the actions with respect to treatment of silky sharks would be required to release all silky sharks, U.S. purse seine vessels do not target silky sharks, and primarily release those caught incidentally. However, there may be some modifications to the fishing practices of these large and small entities to release all catch of silky sharks. NMFS considers the longline vessels for which the action on silky sharks applies to be small entities. U.S. longline vessels fishing in the EPO do not target silky sharks and release all those incidentally caught. U.S. longline vessels only occasionally catch a small amount of silky sharks on fishing trips in the EPO. Therefore, this action is not expected to impact the fishing practices of these longline vessels.

Thus, these actions are not expected to substantially change the typical fishing practices of affected vessels. In addition, any impact to the income of U.S. vessels would be minor. Therefore, NMFS has determined that the action is not expected to have a significant economic impact on a substantial number of small entities. The action will also not have a disproportional economic impact on small business entities.

For the reasons set out in the preamble, 50 CFR part 300 is amended as follows:

The snapper-grouper fishery of the South Atlantic includes the other jacks complex which is composed of lesser amberjack, almaco jack, and banded rudderfish and is managed under the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (FMP). The FMP was prepared by the South Atlantic Fishery Management Council and is implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622.

The recreational ACL for other jacks complex in the South Atlantic is 267,799 lb (121,472 kg), round weight. Under 50 CFR 622.193(l)(2)(i), NMFS is required to close the recreational sector for the other jacks complex when landings reach, or are projected to reach, the recreational ACL by filing a notification to that effect with the Office of the Federal Register.

NMFS previously projected that the recreational ACL for the South Atlantic other jacks complex for the 2016 fishing year would be reached by August 9, 2016. Accordingly, NMFS published a temporary rule in the Federal Register to implement accountability measures (AMs) to close the recreational sector for the other jacks complex in the South Atlantic EEZ effective from August 9, 2016, until the start of the 2017 fishing year on January 1, 2017 (81 FR 52366, August 8, 2016).

However, the most recent landings data for the other jacks complex now indicate the recreational ACL has not been reached. Consequently, and in accordance with 50 CFR 622.8(c), NMFS temporarily re-opens the recreational sector for the other jacks complex on December 2, 2016. The recreational sector will remain open through the remainder of 2016 fishing year or until the recreational ACL is reached, whichever happens first. Re-opening the recreational sector allows for an additional opportunity to recreationally harvest the other jacks complex while minimizing the risk of the recreational ACL being exceeded.

The Regional Administrator, NMFS Southeast Region, has determined this temporary rule is necessary for the conservation and management of the other jacks complex and the South Atlantic snapper-grouper fishery and is consistent with the Magnuson-Stevens Act and other applicable laws.

This action is taken under 50 CFR 622.8(c) and is exempt from review under Executive Order 12866.

These measures are exempt from the procedures of the Regulatory Flexibility Act because the temporary rule is issued without opportunity for prior notice and comment.

This action responds to the best scientific information available. The Assistant Administrator for NOAA Fisheries (AA), finds that the need to immediately implement this action to temporarily re-open the recreational sector for the other jacks complex constitutes good cause to waive the requirements to provide prior notice and opportunity for public comment pursuant to the authority set forth in 5 U.S.C. 553(b)(B), as such procedures are unnecessary and contrary to the public interest. Such procedures are unnecessary because the rule implementing the recreational ACL and AMs has been subject to notice and comment, and all that remains is to notify the public of the re-opening. Such procedures are contrary to the public interest because of the need to immediately implement this action to allow recreational fishers to harvest the recreational ACL of species of the other jacks complex from the EEZ. Prior notice and opportunity for public comment would require time and would delay the re-opening of the recreational sector.

For the aforementioned reasons, the AA also finds good cause to waive the 30-day delay in the effectiveness of this action under 5 U.S.C. 553(d)(3).

NMFS and the Council manage the Gulf reef fish fishery, which includes red snapper, under the FMP. The Council prepared the FMP and NMFS implements the FMP through regulations at 50 CFR part 622 under the authority of the Magnuson Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act).

On August 25, 2016, NMFS published a notice of availability for Amendment 45 and requested public comment (81 FR 58466). On September 8, 2016, NMFS published a proposed rule for Amendment 45 and requested public comment (81 FR 62069). The proposed rule and Amendment 45 outline the rationale for the action contained in this final rule. A summary of the management measures described in Amendment 45 and implemented by this final rule is provided below.

Amendment 45 extends the 3-year sunset provision implemented through the final rule for Amendment 40 to the FMP (80 FR 22422, April 22, 2015) for an additional 5 years. Amendment 40 established distinct private angling and Federal for-hire (charter vessel and headboat) components of the Gulf reef fish recreational sector fishing for red snapper, and allocated red snapper resources between these recreational components. The purpose of establishing these separate recreational components was to provide a basis for increasing the stability for the for-hire component and the flexibility in future management of the recreational sector, and to reduce the likelihood of recreational red snapper quota overruns, which could jeopardize the rebuilding of the red snapper stock (the Gulf red snapper stock is currently overfished and is under a rebuilding plan). As a result of the stock status, the actions in Amendment 40 were also intended to prevent overfishing while achieving optimum yield, particularly with respect to recreational fishing opportunities, and while rebuilding the red snapper stock.

Amendment 40 defined the Federal for-hire component as including operators of vessels with Federal charter vessel/headboat permits for Gulf reef fish and their angler clients. The private angling component was defined as including anglers fishing from private vessels and state-permitted for-hire vessels. Amendment 40 also established accountability measures for the Gulf red snapper recreational components. In addition, Amendment 40 applied a 3-year sunset provision for the regulations implemented through its final rule. The sunset provision maintained the measures for sector separation through the end of the 2017 fishing year, ending on December 31, 2017.

This final rule extends Gulf recreational red snapper sector separation through the end of the 2022 fishing year, ending on December 31, 2022, rather than the current sunset date of December 31, 2017. Beginning on January 1, 2023, the red snapper recreational sector will be managed as a single entity without the separate Federal for-hire and private angling components. The Council would need to take further action for these recreational components and management measures to extend beyond the 5-year extension in Amendment 45.

Additionally, as a result of extending the sunset provision for sector separation, this final rule extends the respective red snapper recreational component quotas and ACTs through the 2022 fishing year, instead of through the 2017 fishing year as implemented through Amendment 40.

A total of 115 comments were received on the notice of availability and proposed rule for Amendment 45. Most of the comments (91 comments), including one from a recreational fishing organization, were not in favor of extending the sunset provision from Amendment 40. The primary reason given was an opposition to sector separation implemented through Amendment 40, including: The concern that sector separation was unfair to private anglers, particularly with respect to fishing season length in Federal waters; the position that all recreational fishermen, regardless of whether they use a private vessel or a for-hire vessel to harvest red snapper, should be managed under the same regulations; and opposition to any part of the recreational quota being privatized. These comments are duplicative of those provided on Amendment 40 and were addressed in the final rule implementing Amendment 40 (80 FR 22422, April 22, 2015). Those responses to comments are incorporated here by reference.

Other comments in opposition to Amendment 45 and the proposed rule expressed a preference for recreational red snapper fishing to be managed by the Gulf states or managed through the use of fish tags, or expressed opposition to the Federal for-hire component being managed under a catch share program in the future. These comments are outside the scope of Amendment 45. Amendment 45 only addresses extending Amendment 40's sunset provision, not the strategies or measures under which the separate components of the recreational sector may be managed.

Fifteen comments were received in favor of extending the sunset provision. Rationale in support included: That extending the sunset provides more time to develop Federal for-hire red snapper management measures, and that sector separation is providing a longer Federal season for operators of federally permitted for-hire reef fish vessels. Eight comments did not indicate whether they were for or against extending the sunset provision and one comment from a Federal agency indicated they had no comments on Amendment 45 or the proposed rule.

Comment 1: The Council, when approving Amendment 40, established a 3-year sunset provision to ensure that the Council would evaluate the merits of sector separation within a specific time period. Extending sector separation now, before the Council has evaluated sector separation, violates the Council's intent to consider the merits of sector separation over the 3-year evaluation period.

Response: NMFS disagrees. As stated in the final rule for Amendment 40 (80 FR 22422, April 22, 2015), the purpose of separating the recreational sector into components was to provide a basis for increased flexibility in future management of the recreational sector and reduce the likelihood of recreational quota overruns, which could negatively impact the rebuilding of the red snapper stock. As described in Amendment 40, the Council established the 3-year sunset provision to encourage timely action to implement and evaluate alternative management structures. If such structures were under development, the Council also would have the opportunity to determine whether to to extend sector separation to continue to develop those structures or instead to let sector separation end under the sunset provision.

The Council is working toward developing altnerative management structures and will continue to evaluate sector separation as these structures develop. In view of its work on those structures, chose to extend the sunset provision to continue that work. Amendment 40 represented the first step toward developing alternative structures to manage the recreational sector. Since Amendment 40 was implemented, the Council has established three ad hoc advisory panels (APs) to help it develop management alternatives for recreational red snapper management in the Gulf. The Ad Hoc Red Snapper Charter For-hire AP and the Ad Hoc Reef Fish Headboat AP have convened on several occasions and are assisting the Council in developing management actions for their respective fishing modes. The Council also recently established the Ad Hoc Red Snapper Private Angler AP, which it charged with providing recommendations on private recreational red snapper management measures that would provide more quality access to the red snapper resource in Federal waters, reduce discards, and improve fisheries data collection. This AP has yet to meet.

Although the Council is making progress in its efforts to develop alternative red snapper recreational management measures, it is unlikely that the Council, with help from its APs, will approve any management measures prior to January 1, 2018, when Amendment 40 expires under the current sunset provision. Therefore, the Council decided to take action through Amendment 45 to extend the sunset provision for an additional 5-year period to give it additional time to develop the future red snapper management measures contemplated under Amendment 40. Extending the sunset provision in this final rule is consistent with the intent behind including the sunset provision in Amendment 40 as it provides the Council with additional time to develop alternative management structures and to continue to consider the merits of sector separation over an additional 5 years. Because of the time it would take to develop and implement an amendment to extend the sunset time period, rather than waiting any longer into the sunset period, the Council chose to act now to extend sector separation for an additional 5 years, and its action is consistent with the intent in including the sunset provision in Amendment 40.

Comment 2: Sector separation should not be extended for an additional 5 years because sector separation disproportionately harms private anglers by reducing the length of their Federal season; unreasonably creates a different set of rules for each recreational component fishing under the same recreational quota; is not based on the best scientific information available; creates derby-like conditions for the private angler component; allows the privatization of a portion of the recreational quota; and it is premature to extend sector separation before the litigation concerning sector separation is resolved.

Response: NMFS disagrees. The Council approved Amendment 40 and submitted the amendment to NMFS for review and Secretarial approval. During this process, NMFS received many comments in opposition to sector separation citing the same substantive reasons as those received on Amendment 45 and proposed rule. Responses to these comments are contained in the final rule for Amendment 40 (80 FR 22422, April 22, 2015) and are incorporated here by reference. In those responses, NMFS explained why it believed sector separation was appropriate. The Council chose to extend sector separation despite the concerns with sector separation itself and NMFS is approving that decision for the same reasons we approved Amendment 40.

With respect to the comment that it is premature to extend sector separation until the litigation concerning sector separation is resolved, NMFS disagrees. The final rule implementing Amendment 40 was challenged in both the United States District Court for the Eastern District of Louisiana, Coastal Conservation Ass'n v. United States Department of Commerce, No. 2:15-cv-01300, and in the United States District Court for the Middle District of Florida, The Fishing Rights Alliance, Inc. v. Pritzker, No. 8:15-cv-01254. On January 5, 2016, the United States District Court for the Eastern District of Louisiana ruled in favor of NMFS, dismissing the matter with prejudice. That decision is on appeal to the United States Court of Appeals for the Fifth Circuit and oral argument was held on November 1, 2016, Coastal Conservation Ass'n v. United States Department of Commerce, No. 16-30137. The other action is still pending. NMFS does not need to await the outcome of these legal challenges before approving the Council's decision to extend sector separation for an additional 5 years under Amendment 45. Amendment 40 continues to be valid and enforceable until a court rules to the contrary. Depending on the outcome of those challenges, the Council may revisit sector separation, as appropriate.

On May 1, 2015, NMFS published the final rule for a framework action to revise the Gulf red snapper commercial and recreational quotas and ACTs, including the recreational component ACTs, and to announce the closure dates for the recreational sector components for the 2015 fishing year (80 FR 24832). However, during the implementation of the framework action, the term and regulatory reference for total recreational quota was inadvertently used instead of total recreational ACT when referring to the applicability of the recreational component ACTs after sector separation ends in § 622.41(q)(2)(iii)(B) and (C). This rule corrects this error by revising the text and regulatory references within the component ACTs in § 622.41(q)(2)(iii)(B) and (C) to reference the total recreational sector ACT instead of the total recreational quota.

The Regional Administrator, Southeast Region, NMFS has determined that this final rule is consistent with Amendment 45, the FMP, the Magnuson-Stevens Act, and other applicable law.

This final rule has been determined to be not significant for purposes of Executive Order 12866.

The Magnuson-Stevens Act provides the statutory basis for this rule. No duplicative, overlapping, or conflicting Federal rules have been identified. In addition, no new reporting, record-keeping, or other compliance requirements are introduced by this final rule.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration during the proposed rule stage that this rule would not have a significant economic impact on a substantial number of small entities. The factual basis for this determination was published in the proposed rule and is not repeated here. No significant issues were received regarding the certification by public comments on the proposed rule, no changes were made to the rule in response to such comments, and NMFS has not received any new information that would affect its determination. As a result, a final regulatory flexibility analysis is not required and none was prepared.

For the reasons set out in the preamble, 50 CFR part 622 is amended as follows:

The fishery for coastal migratory pelagic fish includes king mackerel, Spanish mackerel, and cobia, and is managed under the Fishery Management Plan for Coastal Migratory Pelagic Resources in the Gulf of Mexico and Atlantic Region (FMP). The FMP was prepared by the Gulf of Mexico and South Atlantic Fishery Management Councils and is implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622.

Separate migratory groups of cobia were established in Amendment 18 to the FMP (76 FR 82058, December 29, 2011), and then revised in Amendment 20B to the FMP (80 FR 4216, January 27, 2015). The southern boundary for Atlantic migratory group cobia occurs at a line that extends due east of the Florida and Georgia state border at 30°42′45.6″ N. lat. The northern boundary for Atlantic migratory group cobia is the jurisdictional boundary between the Mid-Atlantic and New England Fishery Management Councils, as specified in 50 CFR 600.105(a).

Atlantic migratory group cobia are unique among federally managed species in the southeast region, because no Federal commercial permit is required to harvest and sell them. The distinction between commercial and recreational sectors is not as clear as other federally managed species in the southeast region. For example, regulations at 50 CFR part 622 specify quotas, annual catch limits, and AMs for cobia that are sold and cobia that are not sold. However, for purposes of this temporary rule, Atlantic migratory group cobia that are sold are considered commercially-caught, and those that are not sold are considered recreationally-caught.

The commercial quota for Atlantic migratory group cobia is 50,000 lb (22,680 kg), round or gutted weight, for the 2016 fishing year, from January 1 through December 31, as specified in 50 CFR 622.384(d)(2).

The AMs for the commercial sector of Atlantic migratory group cobia, specified at 50 CFR 622.388(f)(1)(i), require that NMFS file a notification with the Office of the Federal Register to prohibit the sale and purchase of cobia for the remainder of the fishing year if commercial landings reach or are projected to reach the commercial quota specified in § 622.384(d)(2). The commercial AM is triggered for 2016, because NMFS projects that commercial landings of Atlantic migratory group cobia have reached the commercial quota. Accordingly, the commercial sector for Atlantic migratory group cobia is closed at 12:01 a.m., local time, on December 6, 2016, and remains closed until 12:01 a.m., local time, January 1, 2017.

During the commercial closure, the sale and purchase of Atlantic migratory group cobia is prohibited. Additionally, on June 20, 2016, NMFS closed the recreational sector for Atlantic migratory group cobia for the remainder of the 2016 fishing year, because the recreational annual catch target was projected to be reached (81 FR 12601, March 10, 2016). Therefore, the possession limit for recreational Atlantic migratory group cobia is zero for the remainder of the 2016 fishing year. The prohibition on sale and purchase does not apply to Atlantic migratory group cobia that were harvested, landed ashore, and sold prior to 12:01 a.m., local time, December 6, 2016, and were held in cold storage by a dealer or processor.

The commercial and recreational sectors for Atlantic migratory group cobia will re-open at the beginning of the 2017 fishing year on January 1, 2017.

The Regional Administrator for the NMFS Southeast Region has determined this temporary rule is necessary for the conservation and management of Atlantic migratory group cobia and is consistent with the Magnuson-Stevens Act and other applicable laws.

This action is taken under 50 CFR 622.388(f)(1)(i) and is exempt from review under Executive Order 12866.

These measures are exempt from the procedures of the Regulatory Flexibility Act because the temporary rule is issued without opportunity for prior notice and comment.

This action is based on the best scientific information available. The Assistant Administrator for NOAA Fisheries finds good cause to waive the requirements to provide prior notice and opportunity for public comment, pursuant to the authority set forth at 5 U.S.C. 553(b)(B), as such prior notice and opportunity for public comment is unnecessary and contrary to the public interest. Such procedures are unnecessary because the AMs for Atlantic migratory group cobia have already been subject to notice and comment, and all that remains is to notify the public of the commercial closure for the remainder of the 2016 fishing year. Prior notice and opportunity for public comment on this action would be contrary to the public interest, because of the need to immediately implement the commercial closure to protect Atlantic migratory group cobia, since the capacity of the fishing fleet allows for rapid harvest of the commercial quota. Prior notice and opportunity for public comment would require time and would potentially result in a harvest that exceeds the commercial quota.

For the aforementioned reasons, the AA also finds good cause to waive the 30-day delay in the effectiveness of this action under 5 U.S.C. 553(d)(3).