Federal Register Vol. 81, No.233,

This rule is issued under section 8e of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” Section 8e provides that whenever certain commodities are regulated under Federal marketing orders, imports of those commodities into the United States are prohibited unless they meet the same or comparable grade, size, quality, and/or maturity requirements as those in effect for the domestically produced commodities. The Act also authorizes The Department of Agriculture (USDA) to perform inspections and other related functions (such as commodity sampling) on those imported commodities and to certify whether these requirements have been met.

Parts 944, 980, and 999 of title 7 of the Code of Federal Regulations (CFR) specify inspection, certification, and reporting requirements for imported commodities regulated under 8e. Additionally, these parts specify the imported commodities that may be exempt from grade, size, quality, and/or maturity requirements when imported for specific purposes (such as processing, donation to charitable organizations, or livestock feed) as well as the form importers must use to report to USDA and the U.S. Customs and Border Protection (CBP) imports of commodities exempt from 8e regulations.

USDA is issuing this rule in conformance with Executive Orders 12866, 13563, and 13175.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. There are no administrative procedures that must be exhausted prior to any judicial challenge to the provisions of import regulations issued under section 8e of the Act.

This rule makes a clarifying change to part 980, the vegetable import regulations, by moving the procedure for filing an exempt commodity form for tomatoes destined for noncommercial outlets for experimental purposes from § 980.212, the tomato import regulations, to § 980.501, the imported vegetable safeguard procedures section. This change removes reference to a form that does not exist for imports and makes the safeguard regulations consistent for all imported vegetables that are exempt from 8e regulations.

This rule also changes § 999.600, the pistachio import regulations, by removing reference to a paper-based notification of entry process, known in the industry as the “stamp and fax” process. This paper-based process is being replaced by an electronic filing requirement that was developed to comply with the International Trade Data System (ITDS) and is intended to be specified within AMS's Specialty Crops Inspection Division's regulations (form SC-357, Initial Inspection Request for Regulated Imported Commodities). Removing this outdated information streamlines the regulations and provides consistency among the specialty crop import regulations.

This rule also makes other minor administrative changes to §§ 944.401, 999.1, and 999.600 in the fruit and specialty crop import regulations. These changes, which include updating agency and program names and removing or updating other information that is duplicative or out of date, help ensure the import regulations contain accurate information and align with the ITDS objective of streamlining import processes for the trade.

The import regulations in parts 944, 980, and 999 provide that individual lots of some imported commodities may be exempted from 8e requirements if those commodities are intended to be used in processing or in some other exempted outlet, such as a charitable organization or as livestock feed. To import exempt commodities into the United States, importers and receivers are required to certify to USDA and CBP as to the intended, authorized exempt use of those commodities. Certification is reported by both importers and receivers using a paper or electronic FV-6 form, Importer's Exempt Commodity Form.

On March 26, 1996, a final rule was published in the Federal Register (61 FR 13057) that changed, among other things, the safeguard section of the imported vegetable regulations (§ 980.501) by adding exemptions, subject to certain safeguard provisions, for tomatoes used for processing (canning and pickling), charity, and relief. At that time, the tomato import regulations already contained an exemption for tomatoes destined for noncommercial outlets for experimental purposes as well as an associated exemption reporting form (Certificate for Special Purpose Shipment) to be completed by the importer and the receiver of the tomatoes (§ 980.212(b)). However, the Certificate of Special Purpose form is not used to report the exempt use of these imported tomatoes; instead, an Importer's Exempt Commodity Form (form FV-6) is completed by importers and receivers, pursuant to the long-standing safeguard procedures that are in place for imported fruits, vegetables, and specialty crops. Therefore, a clarifying change is made to move the exempt-use reporting requirements for tomatoes destined for noncommercial outlets for experimental purposes from the tomato import regulations (§ 980.212) to the safeguard section for imported vegetables (§ 980.501). Incorporating the safeguard procedures for imported tomatoes into the vegetable safeguard procedures reflects current practice and standardizes the vegetable import regulations.

The regulations for imported pistachios provide for aflatoxin sampling procedures, based on lot size (§ 999.600(d)). These procedures currently require that an importer provide the inspection service office that will draw and prepare samples of the pistachio shipment with a copy of Customs entry documentation and other information related to the shipment; and in turn, the inspection service signs, stamps, and returns the entry documentation to the importer. This paper-based entry procedure is known in the industry as the “stamp and fax” process because the documentation is “stamped” by the inspection service and returned to the importer via “fax.”

In support of ITDS, § 999.600(d) is revised to remove the paper-based “stamp and fax” process. This process is being replaced by an electronic process that importers will use to notify AMS of an initial request for inspection (form SC-357, Initial Inspection Request for Regulated Imported Commodities). The initial request is intended to alert the inspection service and CBP that a lot of pistachios will be arriving that will require inspection at the port of entry or at another location (this is identical to the purpose of the old “stamp and fax” process). AMS's Specialty Crops Inspection Division intends to amend its inspection application regulations (7 CFR part 51) to provide for the electronic filing of the initial request for inspection, thereby meeting CBP's requirement that the regulations of agencies participating in ITDS be revised to provide for electronic filing of shipment entry data.

To further ensure that the fruit, vegetable, and specialty crop import regulations provide accurate information to the import trade, the USDA agency and program names are being updated where needed.

Also, a statement about the requirement that importers provide USDA inspectors with identifying information, including a Customs entry number, for each lot being inspected is simplified in the fruit and specialty crops import regulations in §§ 944.401(e) (olives) and 999.1(c)(1) (dates), respectively. These changes will make the olive and date import regulations consistent with the other fruit, vegetable, and specialty crop import regulations.

Finally, a paragraph titled “importation” in the date import regulations (§ 999.1(e)) is removed because it contains redundant and incomplete information about filing inspection or exemption documents with CBP. These requirements are more accurately explained elsewhere in the date regulations; specifically, § 999.1(b) provides the grade requirements that must be met by dates prior to importation, § 999.1(c) provides the inspection and certification requirements, and § 999.1(d) provides detailed exemption information and also references the safeguard section in the specialty crops import regulations (§ 999.500) that provides details on filing an electronic or paper FV-6 exemption form.

These changes will ensure the import regulations contain accurate and consistent information, which should benefit the import trade.

Changing the 8e import regulations to remove the paper-based notification of entry for imported pistachios supports the International Trade Data System (ITDS), a key White House economic initiative that has been under development for over ten years and is mandated for completion by December 31, 2016 (pursuant to Executive Order 13659, Streamlining the Export/Import Process for America's Businesses, signed by President Obama on February 19, 2014 (79 FR 10657)). Under ITDS, the import and export trade will file shipment data through an electronic “single window,” instead of completing multiple paper-based forms to report the same information to different government agencies. ITDS will greatly reduce the burden on America's import and export trade while still providing information necessary for the United States to ensure compliance with its laws.

By the end of 2016, the ITDS “single window” will be presented to the import and export trade through CBP's Automated Commercial Environment (ACE) platform. ACE will be the primary system through which the global trade community will file information about imports and exports so that admissibility into the U.S. may be determined and government agencies may monitor compliance.

Prior to the implementation of the ITDS “single window,” CBP is requiring that the 47 partnering government agencies that are participating in the ITDS project, including AMS, ensure that agency regulations provide for the electronic entry of import and/or export information.

AMS's Marketing Order and Agreement Division (MOAD) is currently developing the functionality of a new automated system called the Compliance and Enforcement Management System (CEMS) that will interface with CBP's ACE system in support of ITDS. CEMS will electronically link with the ACE system to create a “pipeline” through which data will be transmitted between MOAD and CBP. CEMS will contain several features, including an exempt imported commodities module and the ability to message CBP about whether a shipment may be released for importation into the United States.

AMS has determined that the changes in this rule meet CBP's requirements for ITDS by streamlining a notification process for imported pistachios; shifting an exempt-tomato reporting requirement to the proper safeguard section of the vegetable regulations, which was revised in 2015 to provide an electronic filing option; and by removing duplicate or revising outdated information. These changes will reduce the burden on America's import trade without compromising AMS's ability to ensure compliance with its import regulations.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened.

Small agricultural service firms, which includes importers and USDA-accredited laboratories who perform services required by import regulations, are defined by the Small Business Administration (SBA) as those having annual receipts of less than $7,500,000 (13 CFR 121.201).

Based on 2015 reporting, USDA estimates that there were two importers and two receivers of tomatoes that were exempt from 8e requirements. Although USDA does not have access to data about the business sizes of these importers and receivers, it is likely that the majority may be classified as large entities.

This action moves the requirements for reporting imported tomatoes destined for noncommercial outlets for experimental purposes, which are exempt from 8e regulations, from the tomato import regulations to the safeguard section of the vegetable import regulations. This change to the regulations does not revise the procedures currently used by importers and receivers of exempt tomatoes; instead, it shifts the outdated requirements currently listed under § 980.212 to the more appropriate safeguard section in § 980.501. Most importers and receivers already file FV-6 forms electronically using AMS's Marketing Order Online System (MOLS), while some paper forms are still submitted. In 2015, AMS estimates it received five electronic FV-6 forms and no paper FV-6 forms for approximately 14,900 pounds of exempt tomatoes.

As part of the full implementation of ITDS, importers and receivers will report exempt shipments through CBP's ACE system and AMS's CEMS system, which, as noted earlier, is currently under development and will eventually replace MOLS. An affirmation of interim rule as final rule was published in the Federal Register on June 25, 2015 (80 FR 36465) that provided for the electronic submission of FV-6 forms, a practice that has existed since MOLS was implemented in 2008 but was not reflected in the regulations. This action imposes no additional burden on importers and receivers of exempt tomatoes.

Regarding alternatives to this action, AMS determined that these changes to the regulations were needed to comply with the ITDS mandate. Moving an outdated, paper-based exempt form-filing requirement from the import tomato regulations to the safeguard section of the vegetable import regulations standardizes the regulations and properly provides for the current requirement of filing a paper or electronic form FV-6, which will benefit importers and receivers who import these exempt tomatoes. In addition, changing the pistachio regulations by removing the paper-based “stamp and fax” requirement streamlines the regulations and reduces the burden on the trade. The other administrative changes made in this action will also provide the import trade with accurate information.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection requirements for the form FV-6 (for commodities exempt from 8e requirements) have been previously approved by OMB and assigned OMB No. 0581-0167 (Specific Commodities Imported into United States Exempt From Import Regulations). No changes in the requirements for the FV-6 form as a result of this action are necessary. The shift of the requirements for exempt-use filings from the tomato import regulations to the safeguard section for imported vegetables is administrative in nature and does not change the practice that has existed for many years. Should any changes to form FV-6 become necessary in the future, they would be submitted to OMB for approval.

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

In addition, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule.

Further, importers are already familiar with the long-existing process and requirement to file FV-6 forms for commodities exempt from 8e regulations. Also, the import trade is fully aware of the ITDS initiative, which is designed to streamline and automate the filing of import shipment data.

Finally, interested persons are invited to submit comments on this interim rule, including the regulatory and informational impacts of this action on small businesses.

This rule invites comments on updates to reporting and notification requirements, as well as other clarifying and administrative changes, to the regulations for fruit, vegetable, and specialty crop import regulations. Any comments received will be considered prior to finalization of this rule.

After consideration of all relevant material presented, it is found that this interim rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined upon good cause that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect and that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because: (1) This rule clarifies and standardizes exempt commodity form-filing requirements and does not impose any new requirements, which should benefit importers and receivers; (2) this rule eliminates a paper-based notification of entry requirement that is no longer going to be used by importers of pistachios; (3) the import industry is well aware of the ITDS initiative and its goal to automate paper-based processes; (4) CBP is requiring timely update of import regulations to meet the ITDS electronic data submission requirement; and (5) this rule provides a 60-day comment period, and any comments received will be considered prior to finalization of this rule.

For the reasons set forth in the preamble, 7 CFR parts 944, 980, and 999 are amended as follows:

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to certain The Boeing Company Model 707-300, 707-300B, and 707-300C series airplanes; and certain Model 727C, 727-100C, and 727-200F series airplanes. The NPRM published in the Federal Register on March 28, 2013 (78 FR 18922) (“the NPRM”). The NPRM was prompted by a report indicating that a cam latch on the MCD broke during flight. The NPRM proposed to require performing repetitive inspections of the MCD cam latches; replacing cam latches, certain bolts, and door hinge fittings; performing related investigative and corrective actions, if necessary; and rigging the MCD. We are issuing this AD to detect and correct discrepancies of the cam latches, latch pins, and latch pin cross bolts, which could reduce the structural integrity of the MCD, and result in potential loss of the cargo door and rapid decompression of the airplane.

Since we issued the NPRM, we have reviewed Boeing 707 Alert Service Bulletin A3536, Revision 1, dated September 16, 2015 (for Model 707-300, 707-300B, and 707-300C series airplanes); and Boeing Alert Service Bulletin 727-52A0150, Revision 1, dated November 5, 2015 (for Model 727C, 727-100C, and 727-200F series airplanes). (We referred to Boeing 707 Alert Service Bulletin A3536, dated February 6, 2012; and Boeing Alert Service Bulletin 727-52A0150, dated January 30, 2012; as the appropriate sources of service information for accomplishing the actions specified in the NPRM.)

Boeing 707 Alert Service Bulletin A3536, Revision 1, dated September 16, 2015; and Boeing Alert Service Bulletin 727-52A0150, Revision 1, dated November 5, 2015; clarify the inspection conditions and the corrective actions for certain conditions. Certain inspections of the cam latches and latch pins were changed from detailed inspections to general visual inspections. Also, a detailed inspection of mating parts and immediately adjacent cam latches and latch pins for any cracks or any gouges in critical areas was added to certain corrective actions specified in the service information.

Also, the corrective actions for latch pin extensions that are between 0.84 and 0.89 inch or between 0.91 and 0.94 inch were changed. Boeing 707 Alert Service Bulletin A3536, Revision 1, dated September 16, 2015; and Boeing Alert Service Bulletin 727-52A0150, Revision 1, dated November 5, 2015; specify replacement of any discrepant latch pin and a detailed inspection of the mating cam latch for any cracks or gouges in lieu of the repetitive detailed inspections described in Boeing 707 Alert Service Bulletin A3536, dated February 6, 2012; and Boeing Alert Service Bulletin 727-52A0150, dated January 30, 2012.

In light of the issuance of the revised service information discussed previously, we have revised paragraphs (c), (g), and (h) of this AD to refer to Boeing 707 Alert Service Bulletin A3536, Revision 1, dated September 16, 2015; and Boeing Alert Service Bulletin 727-52A0150, Revision 1, dated November 5, 2015. We have also added new paragraph (l) of this AD to give credit for doing actions before the effective date of this AD using Boeing 707 Alert Service Bulletin A3536, dated February 6, 2012; and Boeing Alert Service Bulletin 727-52A0150, dated January 30, 2012. In addition, we have removed the Optional Terminating Action, which was paragraph (m) in the proposed AD, and moved that information into paragraph (g)(2) of this AD to align with the revised service information. We have redesignated subsequent paragraphs accordingly.

In addition, since certain inspections and conditions were revised in Boeing 707 Alert Service Bulletin A3536, Revision 1, dated September 16, 2015; and Boeing Alert Service Bulletin 727-52A0150, Revision 1, dated November 5, 2015; we have revised the description of the actions required by this AD to correspond with the terminology used in Boeing 707 Alert Service Bulletin A3536, Revision 1, dated September 16, 2015; and Boeing Alert Service Bulletin 727-52A0150, Revision 1, dated November 5, 2015. As a result, certain paragraphs in the proposed AD have been rearranged, and the corresponding paragraph identifiers have been redesignated in this AD, as listed in the following table:

We have also revised the Costs of Compliance section in this final rule to reflect the number of work-hours specified in Boeing 707 Alert Service Bulletin A3536, Revision 1, dated September 16, 2015; and Boeing Alert Service Bulletin 727-52A0150, Revision 1, dated November 5, 2015. We have also included the costs for the repetitive inspections required before the MCD rigging check as well as replacement of the alloy cross bolts; these costs were inadvertently omitted from the NPRM. In addition, we have included the costs for the concurrent actions in Boeing 707/720 Service Bulletin 3477, Revision 2, dated April 15, 1993; and Boeing Service Bulletin 727-52-0142, Revision 2, dated April 15, 1993.

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

FedEx Express had no objection to the NPRM.

Boeing stated that it was difficult to align the requirements proposed in paragraphs (g), (h), (i), (j) and (l) of the proposed AD with the actions described in Boeing 707 Alert Service Bulletin A3536, dated February 6, 2012; and Boeing Alert Service Bulletin 727-52A0150, dated January 30, 2012. Boeing commented that it is not clear which requirements in the proposed AD go with which section of table 1 and table 2 in paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 727-52A0150, dated January 30, 2012. Boeing expressed concern that the proposed AD does not include all of the items in paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 727-52A0150, dated January 30, 2012. Boeing suggested that the proposed AD be rewritten so operators are not confused with unclear compliance requirements, which might cause situations of non-compliance.

Boeing also requested that paragraphs (h)(1), (h)(2), (h)(3)(i), and (h)(3)(ii) of the proposed AD be rewritten to improve clarity because words were omitted that might lead to confusion or misinterpretation of the requirements in the proposed AD.

We agree that the description of the parts to be inspected and the required tasks should be consistent throughout this final rule and should match what is described in the Boeing service information. With the exception of paragraph (l)(2) of this AD, we are requiring only actions that are described in Boeing 707 Alert Service Bulletin A3536, Revision 1, dated September 16, 2015; and Boeing Alert Service Bulletin 727-52A0150, Revision 1, dated November 5, 2015. We have revised paragraphs (g), (h), (i), and (j) of this AD accordingly.

For clarity we have moved the “Concurrent Actions” paragraph of the proposed AD (paragraph (l) of the proposed AD) before the “Exceptions to Service Information Specifications” paragraph (paragraph (k) of the proposed AD). In this AD, the “Concurrent Actions” paragraph is redesignated as paragraph (i) of this AD.

The United States Air Force Joint STARS (Joint STARS) program stated that its concern is that the NPRM addresses only airplanes that are frequently used to haul cargo. For operators that do not haul cargo and typically only open the MCD for C-check inspections, the general visual inspections required every 330 flight cycles or 150 days is excessive. This commenter stated that these repetitive inspections do not fit into the current Joint STARS maintenance program and would result in airplane downtime and additional cost. This commenter noted that detailed inspections every 3,000 flight cycles or 24 months, and high frequency eddy current (HFEC) inspections every 6,000 flight cycles or 48 months, would fit into its current maintenance schedule and not cause a significant impact.

We agree that the required intervals for repetitive inspections may not be appropriate for some operators because they infrequently use the cargo door. However, we disagree with revising the intervals for the repetitive inspections required by this AD. We need to evaluate the requests for different inspection intervals on a case-by-case basis, based on the operator and its use of the MCD. Operators may request a change in the intervals for the repetitive inspections by following the procedures in paragraph (m) of this AD and requesting approval of an alternative method of compliance.

We also note that the FAA has limited oversight of public aircraft operations (PAO). The government entity conducting the PAO is responsible for oversight of the operations, including aircraft airworthiness.

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

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

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

We also determined that these changes will not increase the economic burden on any operator or increase the scope of this AD.

We reviewed Boeing 707 Alert Service Bulletin A3536, Revision 1, dated September 16, 2015; and Boeing Alert Service Bulletin 727-52A0150, Revision 1, dated November 5, 2015. This service information describes procedures for doing a general visual inspection for broken or missing cam latches, latch pins, and latch pin cross bolts; torqueing the cross bolts in the latch pins; measuring the extension of the latch pins; replacing all alloy steel cross bolts through the latch pins with CRES cross bolts; doing a general visual inspection of all cam latches for lip deformation; doing a HFEC or magnetic particle inspection of cam latch 1 and cam latch 2 for cracks and replacing all cracked or broken parts; checking the rig of the MCD and re-rigging as applicable; and doing related investigative and corrective actions. This service information also describes procedures for doing repetitive inspections for certain conditions specified in the service information, which terminate after the MCD rigging is done as specified in this service information. This service information also describes procedures for doing MCD post-rigging inspections and corrective actions. These service bulletins are distinct because they apply to different airplane models.

We also reviewed Boeing 707/720 Service Bulletin 3477, Revision 2, dated April 15, 1993; and Boeing Service Bulletin 727-52-0142, Revision 2, dated April 15, 1993. This service information describes procedures for doing general a general visual inspection of the hinge fittings and the cam latches on the MCD, and related investigative and corrective actions. These service bulletins are distinct because they apply to different airplane models.

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

We estimate that this AD affects 18 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

We estimate the following costs to do any necessary related investigative actions and certain replacements that will be required based on the results of the inspections. We have no way of determining the number of aircraft that might need these actions:

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:

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Dassault Aviation Model FALCON 7X airplanes. The NPRM published in the Federal Register on April 13, 2016 (81 FR 21770) (“the NPRM”).

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2015-0216, dated October 28, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Dassault Aviation Model FALCON 7X airplanes. The MCAI states:

You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-5466.

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

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

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

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

We also determined that these changes will not increase the economic burden on any operator or increase the scope of this AD.

We reviewed Dassault Service Bulletin 7X-245, dated June 8, 2015. The service information describes procedures for measuring fuel tank panel thickness, and repair if necessary. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We estimate that this AD affects 6 airplanes of U.S. registry. We also estimate that it will take about 8 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Required parts will cost about $0 per product. Based on these figures, we estimate the cost of this AD on U.S. operators to be $4,080, or $680 per product.

In addition, we estimate that any necessary follow-on actions will take about 20 work-hours and require parts costing $2,244, for a cost of $3,944 per product. We have no way of determining the number of aircraft that might need this action.

According to the manufacturer, some of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected individuals. We do not control warranty coverage for affected individuals. As a result, we have included all costs in our cost estimate.

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

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

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

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

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

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

3. Will not affect intrastate aviation in Alaska; and

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

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

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Fokker Services B.V. Model F28 Mark 0070 and 0100 airplanes. The NPRM published in the Federal Register on June 23, 2016 (81 FR 40823) (“the NPRM”).

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2015-0113, dated June 22, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Fokker Services B.V. Model F28 Mark 0070 and 0100 airplanes. The MCAI states:

You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-7271.

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

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

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

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

We reviewed Fokker Service Bulletin SBF100-57-049, dated March 24, 2015, which describes procedures for an inspection for corrosion of certain wing rear spar lower girder areas, modification of the wing trailing edge lower skin panels, and corrective actions if necessary. We also reviewed Fokker Service Bulletin SBF100-57-050, Revision 1, dated May 19, 2015, which describes procedures for repair of the wing spar. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

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

We estimate the following costs to comply with this AD:

We estimate the following costs to do any necessary corrective actions that will be required based on the results of the required inspection. We have no way of determining the number of airplanes that might need these corrective actions:

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

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

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

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

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

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

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

3. Will not affect intrastate aviation in Alaska; and

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

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

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Bombardier, Inc. Model CL-600-2A12 (CL-601 Variant), and CL-600-2B16 (CL-601-3A, CL-601-3R, and CL-604 Variants) airplanes. The NPRM published in the Federal Register on June 28, 2016 (81 FR 41889) (“the NPRM”). The NPRM was prompted by a report that a potential chafing condition exists between the negative-G fuel feed drain line of the APU and its surrounding structure and components. The NPRM proposed to require, for certain airplanes, a detailed inspection for chafing conditions of the negative-G fuel feed drain line of the APU, and corrective actions if necessary. For certain other airplanes, the NPRM proposed to require replacement of the APU negative-G fuel feed tube assembly and the drain line. We are issuing this AD to prevent a chafing condition in the negative-G fuel feed drain line, which can result in fuel leaking from the drain line. This condition, in combination with a nearby hot surface or other potential ignition source, could result in an uncontrolled fire in the aft equipment bay.

Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian AD CF-2015-26, dated August 31, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc. Model CL-600-2A12 (CL-601 Variant) and CL-600-2B16 (CL-601-3A, CL-601-3R, and CL-604 Variants) airplanes. The MCAI states:

Corrective actions include replacing the APU negative-G fuel feed drain line. You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-7418.

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

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

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

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

We reviewed the following Bombardier, Inc. service information.

• Bombardier Service Bulletin 601-0640, dated May 19, 2015; and Bombardier Service Bulletin 604-28-021, dated May 19, 2015. This service information describes procedures for a detailed inspection for chafing conditions of the negative-G fuel feed drain line of the APU, and corrective actions. These service bulletins are distinct since they apply to different airplane models.

• Bombardier Service Bulletin 605-28-009, dated May 19, 2015. This service information describes procedures for a detailed inspection for chafing conditions of the negative-G fuel feed drain line of the APU, replacement of the APU negative-G fuel feed tube assembly and the drain line, and corrective actions.

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

We estimate that this AD affects 504 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.

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

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

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

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

3. Will not affect intrastate aviation in Alaska; and

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

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

The Bureau of Industry and Security (BIS) issues this final rule to remove the Special Iraq Reconstruction License (SIRL) provisions from the Export Administration Regulations (EAR), consistent with the Retrospective Regulatory Review Initiative. In the preamble to the proposed rule published in the Federal Register on June 7, 2016 (81 FR 36481) (hereinafter “the June 7 proposed rule” or “the June 7 rule”), BIS reviewed the origins of the SIRL, established in 2004 (69 FR 46070, July 30, 2004) to supplement options to facilitate exports and reexports to Iraq and transfers within Iraq of items in furtherance of civil reconstruction and other projects in Iraq funded by specified entities, including the United States government. BIS also reviewed the record of related transactions since the SIRL was established.

The record indicates that exporters supplying items used in support of the civil reconstruction efforts in Iraq have not relied on the SIRL to advance those efforts, apparently because of its complexity and narrowness. Further, since 2004, BIS processed only three applications for the SIRL and approved only one, as compared to over 400 approved individual license applications for the export of items to Iraq between 2012 and 2015. Finally, with the implementation of updates to the EAR, the relative advantages of the SIRL have been offset by changes to individual licenses and other types of authorizations offered by BIS that provide less complex alternatives to the SIRL.

Thus, consistent with the President's Retrospective Regulatory Review Initiative to streamline regulations and reduce unnecessary regulatory burdens on the public (see “Improving Regulatory Review” (Executive Order 13563 of January 18, 2011)), BIS concluded that the SIRL proved not to be useful.

BIS received no comments in response to the June 7 rule. BIS, therefore, publishes in final form the amendments to the EAR to remove the SIRL as described initially in the June 7 rule.

Although the Export Administration Act expired on August 20, 2001, the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 2001 Comp., p. 783 (2002), as amended by Executive Order 13637 of March 8, 2013, 78 FR 16129 (March 13, 2013) and as extended by the Notice of August 4, 2016, 81 FR 52587 (August 8, 2016), has continued the Export Administration Regulations in effect under the International Emergency Economic Powers Act. BIS continues to carry out the provisions of the Export Administration Act, as appropriate and to the extent permitted by law, pursuant to Executive Order 13222 as amended by Executive Order 13637.

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. This rule has been determined to be not significant for purposes of Executive Order 12866.

2. This rule amends collections previously approved by the Office of Management and Budget (OMB) under Control Numbers 0694-0088, “Simplified Network Application Processing + System (SNAP+) and the Multi-Purpose Application,” which carries a burden hour estimate of 43.8 minutes to prepare and submit form BIS-748; and 0694-0137, “License Exemptions and Exclusions.”

The total burden hours associated with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA) and the aforementioned OMB Control Numbers are not expected to decrease significantly as a result of this removal of part 747 of the EAR because of the infrequent use of part 747 of the EAR by exporters.

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.

3. This rule does not contain policies with Federalism implications as that term is defined under Executive Order 13132.

4. The Chief Counsel for Regulation at the Department of Commerce certified to the Chief Counsel for Advocacy at the Small Business Administration that this rule, if adopted, would not have a significant economic impact on a substantial number of small entities. The factual basis was published in the proposed rule and is not repeated here. BIS received no comments, which means there were no comments that addressed the economic impact of this rule on small entities. Therefore, a final regulatory flexibility analysis is not required and one was not prepared.

Accordingly, under the authority of 50 U.S.C. 1701 et seq., parts 730, 747, 748 and 762 of the Export Administration Regulations (15 CFR parts 730-774) are amended as follows:

Validated end-users (VEUs) are designated entities located in eligible destinations to which eligible items may be exported, reexported, or transferred (in-country) under a general authorization instead of a license. The names of the VEUs, as well as the dates they were so designated, and their respective eligible destinations (facilities) and items are identified in Supplement No. 7 to part 748 of the EAR (15 CFR part 748). Under the terms described in that supplement, and in conformity with section 748.15 of the EAR, VEUs may obtain eligible items without an export license from BIS. Eligible items vary between VEUs, and may include commodities, software, and technology, except items controlled for missile technology or crime control reasons on the Commerce Control List (CCL) (part 774 of the EAR).

VEUs are reviewed and approved by the U.S. Government in accordance with the provisions of section 748.15 and Supplement Nos. 8 and 9 to part 748 of the EAR. The End-User Review Committee (ERC), composed of representatives from the Departments of State, Defense, Energy, Commerce, and other agencies, as appropriate, is responsible for administering the VEU program. BIS amended the EAR in a final rule published on June 19, 2007 (72 FR 33646), to create Authorization VEU.

In this final rule, BIS amends Supplement No. 7 to part 748 of the EAR (Supplement No. 7) to remove the VEU SMIC from the list of VEUs in the PRC. Specifically, BIS removes information for SMIC from Supplement No. 7. BIS takes this action at SMIC's request. BIS makes this change to Supplement No. 7 at the company's request and not in response to activities of concern.

Although the Export Administration Act expired on August 20, 2001, the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 2001 Comp., p. 783 (2002), as amended by Executive Order 13637 of March 8, 2013, 78 FR 16129 (March 13, 2013), and as extended by the Notice of August 4, 2016, 81 FR 52587 (August 8, 2016), has continued the EAR in effect under the International Emergency Economic Powers Act. BIS continues to carry out the provisions of the Export Administration Act, as appropriate and to the extent permitted by law, pursuant to Executive Order 13222 as amended by Executive Order 13637.

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. This rule has been determined to be not significant for purposes of Executive Order 12866.

2. This rule involves collections previously approved by the Office of Management and Budget (OMB) under Control Number 0694-0088, “Multi-Purpose Application,” which carries a burden hour estimate of 43.8 minutes to prepare and submit form BIS-748; and for recordkeeping, reporting and review requirements in connection with Authorization VEU, which carries an estimated burden of 30 minutes per submission. Total burden hours associated with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA) and OMB Control Number 0694-0088 are not expected to increase significantly as a result of this rule. Notwithstanding any other provisions of law, no person is required to respond to, nor 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.

3. This rule does not contain policies with Federalism implications as that term is defined under Executive Order 13132.

4. Pursuant to the Administrative Procedure Act (APA), 5 U.S.C. 553(b)(B), BIS finds good cause to waive requirements that this rule be subject to notice and the opportunity for public comment because they are unnecessary. In determining whether to grant or remove VEU designations, a committee of U.S. Government agencies evaluates information about and commitments made by candidate companies, the nature and terms of which are set forth in 15 CFR part 748, Supplement Nos. 8 and 9. The criteria for evaluation by the committee are set forth in 15 CFR 748.15(a)(2) and the authority to remove VEU designations is contained in 15 CFR 748.15(a)(3). The information, commitments, and criteria for this extensive review were all established through the notice of proposed rulemaking and public comment process (71 FR 38313 (July 6, 2006) (proposed rule), and 72 FR 33646 (June 19, 2007) (final rule)). In publishing this final rule, BIS removes a VEU from the list of VEUs in the PRC, at the request of the VEU, similar to past requests by other VEUs, approved by the End-User Review Committee. This change has been made within the established regulatory framework of the VEU program. Further, this rule does not abridge the rights of the public or eliminate the public's option to export under any of the forms of authorization set forth in the EAR.

Publication of this rule in other than final form is unnecessary because the procedure for revocation of a VEU or facility from the Authorized VEU list is similar to the license revocation procedure, which does not undergo public review. During the VEU revocation procedure, the U.S. Government analyzes confidential business information according to set criteria to determine whether a given authorized VEU entity remains eligible for VEU status. Revocation may be the result of a material change in circumstance at the VEU or the VEU's authorized facility. Such changes may be the result of a VEU or VEU facility no longer meeting the eligibility criteria for Authorization VEU, and may thus lead the U.S. Government to modify or revoke VEU authorization. VEUs or VEU facilities that undergo material changes that result in their no longer meeting the criteria to be eligible VEUs must, according to the VEU program, have their VEU status revoked. Here, however, SMIC requested removal from the VEU program. Consequently, BIS is removing SMIC from the list of VEUs. Public comment on whether to make the removal is unnecessary.

Section 553(d) of the APA generally provides that rules may not take effect earlier than thirty (30) days after they are published in the Federal Register. However, BIS finds good cause to waive the 30-day delay in effectiveness for this rule pursuant to 5 U.S.C. 553(d)(3) because the delay would be contrary to the public interest. BIS is simply removing SMIC as a VEU. In this rule, BIS amends the EAR consistent with established objectives and parameters administered and enforced by the responsible designated departmental representatives to the End-User Review Committee. Delaying this action's effectiveness would likely cause confusion regarding which items are authorized by the U.S. government, and in turn stifle the purpose of the VEU program. Accordingly, it would be contrary to the public interest to delay this rule's effectiveness.

No other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this final rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required under the APA or by any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601et seq.) are not applicable. As a result, no final regulatory flexibility analysis is required and none has been prepared.

Accordingly, part 748 of the EAR (15 CFR parts 730-774) is amended as follows:

The Department makes the following revisions to the ITAR in this final rule:

• A definition of “classified” is moved from § 121.1(e) to § 120.46;

• The structure of § 121.1(a)-(e) is realigned, with paragraphs (a) and (b) revised to clarify the existing requirements for United States Munitions List (USML) controls, and paragraphs (c), (d) and (e) removed;

• Thirteen USML categories are amended to clarify that commodities, software, and technology subject to the Export Administration Regulations (EAR) and related to defense articles in a USML category may be exported or temporarily imported on the same license with defense articles from any category, provided they are to be used in or with that defense article;

• In three places within the USML, the word “enumerated” is replaced with the word “described” to make the language consistent with changes directed in the Final Rule published at 79 FR 61226, Oct. 10, 2014;

• Section 122.4(c)(4) is revised to permit the Directorate of Defense Trade Controls (DDTC) to approve an alternative timeframe, not less than 60 days, to the current 60-day requirement for registrants to provide a signed amended agreement;

• Section 124.2(c)(5)(v) is revised to correct errors to the USML category references for gas turbine engine hot sections, from VI(f) and VIII(b) to Category XIX;

• Section 124.12 is amended in paragraph (a)(9) to update the name of the Defense Investigative Service to Defense Security Service;

• Section 126.9 on Advisory Opinions and Related Authorizations is amended to correct paragraph (a);

• Paragraph (b) of § 126.10 is amended to clarify the scope of control and disclosure of information, however, notwithstanding the changes to paragraph (b) it is the Department's policy not to publicly release information relating to activities regulated by the ITAR except as required by law or when doing so is otherwise in the interest of the United States Government; and

• Section 127.7(b) is amended to clarify the policies and procedures regarding statutory debarments (addressing inadvertent omissions resulting from a prior amendment to that section), and § 127.11 is amended to make conforming revisions to paragraph (c) omitted from prior amendment to that section.

The Department of State is of the opinion that controlling the import and export of defense articles and services is a foreign affairs function of the United States Government and that rules implementing this function are exempt from sections 553 (Rulemaking) and 554 (Adjudications) of the Administrative Procedure Act (APA). Although the Department is of the opinion that this rule is exempt from the rulemaking provisions of the APA, the Department is providing 30 days for the public to submit comments without prejudice to its determination that controlling the import and export of defense services is a foreign affairs function.

Since this rule is exempt from the provisions of 5 U.S.C. 553, there is no requirement for an analysis under the Regulatory Flexibility Act.

This rulemaking does not involve a mandate that will result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This rulemaking is not a major rule within the definition of 5 U.S.C. 804.

This rulemaking will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132, the Department has determined that this rulemaking does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this rulemaking.

Executive Orders 12866 and 13563 direct agencies to assess 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, distributed impacts, and equity). These executive orders stress the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The Department has determined that, given the nature of the amendments made in this rulemaking, there will be minimal cost to the public. Therefore, the benefits of this rulemaking outweigh the cost. This rule has not been designated a “significant regulatory action” by the Office and Information and Regulatory Affairs under Executive Order 12866.

The Department of State reviewed this rulemaking in light of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

The Department of State determined that this rulemaking will not have tribal implications, will not impose substantial direct compliance costs on Indian tribal governments, and will not preempt tribal law. Accordingly, the requirements of Executive Order 13175 do not apply to this rulemaking.

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

Accordingly, for the reasons set forth above, title 22, chapter I, subchapter M, parts 120, 121, 122, 124, 126, and 127 are amended as follows:

I. Executive Summary A. Purpose of the Rule

The purpose of the rule is to require PHAs to establish, within 18 months of the effective date, a policy disallowing the use of prohibited tobacco products, as such term is defined in § 965.653(c), inside all indoor areas of public housing, including but not limited to living units, indoor common areas, electrical closets, storage units, and PHA administrative office buildings, and in all outdoor areas within 25 feet of the housing and administrative office buildings (collectively, “restricted areas”). As further discussed in this rule, such a policy is expected to improve indoor air quality in public housing; benefit the health of public housing residents, visitors, and PHA staff; reduce the risk of catastrophic fires; and lower overall maintenance costs.

This rule applies to all public housing other than dwelling units in mixed-finance buildings. PHAs are required to establish, within 18 months of the effective date of the rule, policies disallowing the use of prohibited tobacco products in all restricted areas. PHAs may, but are not required to, further restrict smoking to outdoor dedicated smoking areas outside the restricted areas, create additional restricted areas in which smoking is prohibited (e.g., near a playground), or, alternatively, make their entire grounds smoke-free.

PHAs are required to document their smoke-free policies in their PHA plans, a process that requires resident engagement and public meetings. The proscription on the use of prohibited tobacco products must also be included in a tenant's lease, which may be done either through an amendment process or as tenants renew their leases annually.

The costs to PHAs of implementing smoke-free policies may include training, administrative, legal, and enforcement costs. The costs of implementing a smoke-free policy are minimized by the existence of current HUD guidance on many of the topics covered by the mandatory smoke-free policy required by this rule. Already, hundreds of PHAs have voluntarily implemented smoke-free policies. Furthermore, infrastructure already exists for enforcement of lease violations, and violation of the smoke-free policy would constitute a lease violation. In addition, time spent by PHA staff on implementing and enforcing the smoke-free policy will be partially offset by the time that staff no longer have to spend mediating disputes among residents over secondhand smoke (SHS) infiltration within living units. Given the existing HUD guidance, initial learning costs (such as the costs of staff and resident training understanding of this policy) associated with implementation of a smoke-free policy may not be significant. For the hundreds of PHAs that are already implementing voluntary smoke-free policies, there will be minimal costs of updating smoke-free policies, and these minimal costs will generally apply only if their existing policies are not consistent with the minimum requirements for smoke-free policies proposed by this rule.

However, implementing the requirements successfully may require additional enforcement legal costs for cases where repeated violations lead to evictions. Total recurring costs to PHAs of implementation and enforcement are expected to be $7.7 million, although they may be higher in the first few years of implementation, given the necessity of establishing designated smoking areas (a total of $30.2 million in the first year).

The benefits of smoke-free policies could also be considerable. Over 700,000 units would be affected by this rule (including over 500,000 units inhabited by elderly households or households with a non-elderly person with disabilities), and their non-smoking residents would have the potential to experience health benefits from a reduction of exposure to SHS. PHAs will also benefit from a reduction of damage caused by smoking, and residents and PHAs both gain from seeing a reduction in injuries, deaths, and property damage from fires caused by prohibited tobacco products. Estimates of these and other rule-induced impacts are summarized in the following table:

For additional details on the costs and benefits of this rule, please see the Regulatory Impact Analysis (RIA) for this rule, which can be found at www.regulations.gov, under the docket number for this rule. Additional information on how to view the RIA is included below.

On November 17, 2015, HUD published a proposed rule at 80 FR 71762, soliciting input from the public on requiring PHAs to have smoke-free policies in place for public housing. The proposed rule was an outgrowth of many years of research on the harms and costs associated with smoking and ongoing efforts from HUD to promote the voluntary adoption of smoke-free policies by PHAs and the owners/operators of federally subsidized multifamily properties. The preamble of this proposed rule contains more information on HUD's efforts and the findings on which HUD relied in proposing this regulation.

As a result of these combined actions, over 600 PHAs have implemented smoke-free policies in at least one of their buildings. While this voluntary effort has been highly successful, it has also resulted in a scattered distribution of smoke-free policies, with the greatest concentration in the Northeast, West, and Northwest, which also results in unequal protection from SHS for public housing residents. This is due to several factors, including the fact that many of the benefits accrue to residents instead of PHAs, implementation of new policies can be difficult in fiscally tight times, uncertainty over whether indoor smoking bans are enforceable, and differences in the opinions and experience of the boards that govern PHAs. HUD recognizes that additional action is necessary to truly eliminate the risk of SHS exposure to public housing residents, reduce the risk of catastrophic fires, lower overall maintenance costs, and implement uniform requirements to ensure that all public housing residents are equally protected.

Therefore, HUD is requiring PHAs to implement smoke-free policies within public housing except for dwelling units in a mixed-finance project. Public housing is defined as low-income housing, and all necessary appurtenances (e.g., community facilities, public housing offices, day care centers, and laundry rooms) thereto, assisted under the U.S. Housing Act of 1937 (the 1937 Act), other than assistance under section 8 of the 1937 Act.

In finalizing this policy, it is important for HUD to reiterate that HUD's rule does not prohibit individual PHA residents from smoking. PHAs should continue leasing to persons who smoke. In addition, this rule is not intended to contradict HUD's goals to end homelessness and help all Americans secure quality housing. Rather, HUD is prohibiting smoking inside public housing living units and indoor common areas, public housing administrative office buildings, public housing community rooms or community facilities, public housing day care centers and laundry rooms, in outdoor areas within 25 feet of the housing and administrative office buildings, and in other areas designated by a PHA as smoke-free (collectively, “restricted areas”). PHAs have the discretion to establish outdoor designated smoking locations outside of the required 25 feet perimeter, which may include partially enclosed structures, to accommodate smoker residents, to establish additional smoke-free areas (such as in and around a playground), or, alternatively, to make their entire grounds smoke-free.

Furthermore, section 504 of the Rehabilitation Act of 1973, the Fair Housing Act, and the Americans with Disabilities Act provide the participant the right to seek a reasonable accommodation, including requests from residents with mobility impairments or mental disabilities. A request for a reasonable accommodation from an eligible participant must be considered, and granted unless there is a fundamental alteration to the program or an undue financial and administrative burden.

The only substantive change in this final rule from the proposed rule is that now waterpipes (also known as hookahs) are included in the list of products that may not be used in the restricted areas. PHAs are required under this final rule to only permit the use of waterpipes outside the restricted areas. While HUD found no evidence of human fatalities associated with hookahs, there were sufficient incidents of property damage to warrant their inclusion in this rule.

In addition, HUD has changed the items covered under the smoking ban from “lit tobacco products” to “prohibited tobacco products” to make clear that waterpipes are included in the list of prohibited products.

Some commenters objected to the proposed 25-foot smoke-free perimeter around all public housing buildings. Some felt that the distance was too large because it would force smokers off the property and onto sidewalks or adjacent areas, including the street. Others expressed concern that the distance would be too great for elderly residents or residents with disabilities or would place residents in danger from having to travel so far. Some believed that the distance could subject smokers to crime or would force parents to leave sleeping children. Some also suggested that forcing residents to go so far to smoke would cause them to leave public housing, increasing turnover costs for PHAs.

Other reasons for objecting included an argument that it would effectively require PHAs to build designated smoking areas or it would be impossible to enforce. Commenters stated that requiring smokers to go outdoors is enough and that residents should be able to smoke on their porches or balconies. Some wrote that any extra perimeter is unfair if there is not a shared porch or landing where smoking there would affect others.

Commenters objecting to the 25-foot distances suggested that instead PHAs be allowed to create their own policies regarding outdoor smoking and any distance restrictions around buildings, taking their own layouts into account. Others suggested that HUD allow PHAs to comply with existing smoke-free policies or use minimum distances required by state laws.

Several commenters pointed out that PHAs may use office space in buildings not owned by the PHA, and the PHA has no control over the actions of other tenants in the building. These commenters asked for additional clarity on how the proposed rule would apply to such situations.

Some commenters suggested alternative requirements to the 25-foot barrier, including a minimum distance from common entrances or using a shorter distance such as 15 or 20 feet. Commenters also asked HUD for additional insight into their rationale for a 25-foot perimeter.

A group of commenters, however, supported the perimeter and even requested that HUD expand the outdoor restrictions. Some stated that 25 feet may not be enough to protect children, and that outdoor smoking should also be banned in areas frequented by children, particularly playgrounds. Some suggested that the perimeter be extended to 25 feet from all playgrounds. Other commenters suggested that all common areas, such as pools, should also be included in the smoke-free zone. Commenters suggesting that the smoke-free zone be more than 25 feet asked for a range of new distances, from 40-50 feet to 100 feet. Commenters stated that 25 feet may still be too close to buildings to prevent smoke drift. Some also asked that HUD expressly prohibit parking lots from being used as designated smoking areas.

Several commenters suggested that the smoke-free perimeter should be extended to cover the entire property. These commenters stated that such a policy would protect residents from drifting smoke in designated areas or would make smoke-free enforcement easier. Another commenter suggested that HUD should allow a PHA to designate a smoking area, outside of which no smoking would be allowed.

HUD Response: HUD appreciates the comments on this part of the rule, and recognizes that for some developments, residents may have to cross the street to be 25 feet away from the building. HUD included the 25-foot perimeter in the proposed rule based on several factors. A smoke-free perimeter of sufficient size must be established around doorways in order to limit smoke exposure to individuals entering and leaving buildings. A sufficient perimeter is also needed to prevent SHS from entering windows that are open in units on lower floors and to prevent SHS exposure to individuals on lower floor balconies or porches. One study found that toxins present in SHS approach ordinary background levels approximately 23 feet from the source (Repace, 2005). In addition, local government ordinances have customarily adopted 25-foot boundaries as standard practice when prohibiting outdoor smoking in the vicinity of public building entrances and windows. PHAs without ample grounds may consider working with their local municipalities to identify nearby public areas where residents who wish to continue smoking can do so in a safe environment. PHAs may also consider, if available, offering these residents the option to move to an alternate site that has more accessible space for outdoor smoking. The smoke-free policy must extend to all outdoor areas up to 25 feet from the housing and administrative office buildings, or to the PHA's property boundary in situations where the boundary is less than 25 feet from the PHA-owned buildings. These decisions are at the discretion of the PHA. However, the rule requires the 25-foot restriction to be enforced across all PHAs.

This policy is not intended to force anyone to move out of public housing, but instead to offer safe, decent and sanitary housing for all populations. HUD is not requiring any PHA to build a designated smoking area, but to work with residents to address any difficulties they encounter. HUD understands that PHAs only have the authority to implement smoke-free policies in buildings and office spaces they own.

Commenters objected to the proposed rule on the basis that it would impose too great a burden on PHAs. Some stated that this was an unfunded mandate from HUD. Others stated that the proposed rule would necessitate increased monitoring of residents without increasing funding for PHAs, or would increase the workload of an already inadequate staff. Several commenters wrote that the proposed rule would add administrative burden in implementing the policies by requiring education of residents, and through increased enforcement efforts. Several commenters pointed out that implementing the policies would have costs related to unit turnaround, either due to increased evictions or as a result of residents voluntarily moving out. Some stated that the proposed rule would increase paperwork on the PHA without providing additional benefits to residents or that putting the burden of monitoring and enforcement on public housing administrators is not practical or fair.

Commenters also stated that the policies would increase vacancies at public housing properties, stressing PHAs both financially and in Real Estate Assessment Center (REAC) evaluations. Commenters asked that HUD make financial incentives available to PHAs to offset implementation costs.

HUD Response: HUD acknowledges that PHAs may incur training, administrative, legal and enforcement costs, as well as additional expenditure of staff time in these areas. These expenses are outlined in the Regulatory Impact Analysis (RIA). All PHAs receive an annual operating subsidy and capital fund grants, and could also use their operating reserves to cover the initial costs of implementing smoke-free policies. PHAs that have already implemented smoke-free policies indicated in stakeholder listening sessions that the costs were less than they expected once the smoke-free policy was fully implemented, and after that there were savings in unit turnover costs. HUD expects that costs will be minimized by PHAs' utilization of existing HUD resources on the smoke-free policy and continued usage of standard lease enforcement procedures. Additionally, HUD has no evidence that this policy will increase vacancies. In contrast, housing agencies that have implemented smoke-free policies have experienced greater demand for their units. This rule will not impose any Federal mandates on any state, local, or tribal governments or the private sector within the meaning of the Unfunded Mandates Reform Act of 1995 (UMRA).

In addition to the concerns about burdens on PHAs generally, some commenters expressed concerns with burdens on small PHAs. Some stated that the proposed rule would have an outsized impact on small PHAs' administrative expenses. Others commented that there was not enough information in the proposed rule on how maintenance or insurance costs would be lower for small PHAs. Others stated that small, rural PHAs would be at a disadvantage because they are unable to partner with outside organizations to help with implementing the rule in a way that larger, more urban PHAs could. Some commenters also expressed concerns that small PHAs face greater competition in the affordable housing market, so a smoking ban would increase their vacancy rates.

HUD Response: Although some aspects of the rule may be burdensome, as noted in the RIA, HUD expects these burdens to be accompanied by the benefits of smoke-free policies, including reduction in maintenance costs, less risk of catastrophic fires, and fewer residential complaints from residents who are impacted by smoke. Additionally, creating a smoke-free environment may be more attractive to tenants and could result in increased leasing. In fact, some PHAs use smoke-free policies as a marketing feature to attract tenants. Cost savings are expected to be realized in the less expensive turnover of rental units. For example, painting and carpet cleaning costs are expected to be much lower with a smoke-free policy in place.

The capital and operating funds can be used to implement smoke-free policies. Note, however, that capital funds can only be used for eligible activities identified in 24 CFR 905.200. Financial costs relative to funding for small PHAs are not expected to be greater than relative costs facing larger PHAs. Small PHAs, like large PHAs, can request insurance premium allowances from their insurance providers after implementing smoke-free policies.

Housing agencies are encouraged to start the process of implementing smoke-free policies early so that the necessary implementation activities can be spread out over the allowed 18-month implementation period with regular lease renewal practices (e.g., lease recertification). Small PHAs unable to partner with as many outside organizations will have access to national smoking cessation resources such as 1-800-QUIT-NOW, a toll-free portal which routes callers to their state quitline, and community health centers for any smoking cessation needs. HUD is also working with federal partners to identify geographical areas with the greatest need for resources, and will, when possible, work to provide additional technical assistance. Best practices on moving to a smoke-free environment are found on HUD's Web page for Smoke-Free Housing Toolkits (http://portal.hud.gov/hudportal/HUD?src=/smokefreetoolkits1). Additional smoke-free guidance will be made available to PHAs.

HUD has no evidence that this policy will increase vacancies. In contrast, housing agencies that have implemented smoke-free policies have experienced greater demand for their units.

Many commenters objected to the proposed rule because of the burden it would place on public housing residents. Some stated that an indoor smoking ban is unfair to persons with disabilities who cannot easily travel outside their units, particularly if they live alone and cannot leave without help. Others commented that it was not right to force the elderly or persons with disabilities outside in bad weather, putting their health at risk. Some simply stated that it would be unfair to make the elderly or persons with disabilities walk that far to smoke. Some commented that people use smoking to deal with medical issues; prohibiting indoor smoking would force them to forego the use of nicotine to combat their pain.

Other commenters focused on the effects the proposed ban would have on those with mental health issues who may rely on smoking to help deal with those issues. Some stated that residents in acute stages of post-traumatic stress syndrome need to smoke to calm down but cannot leave their apartment. Some stated that smoking helps people calm down and relieve stress, and this rule would increase their burden. Several commenters stated that the use of eviction as an enforcement mechanism would result in the most vulnerable residents in public housing, who need secure housing the most, being forced out of their homes.

Some commenters stated that forcing residents, particularly women, outside at night and in bad weather would put them in danger.

Commenters stated that the rule should exempt PHAs serving seniors or residents with disabilities to avoid discrimination problems. Others asked that HUD allow PHAs to grandfather in existing residents; some pointed out that the smoke damage is already done, and it will be difficult to tell if the smell of smoke is from current or past smoking. However, other commenters stated that HUD should not allow smoke-free policies to be grandfathered in for existing public housing residents. These commenters stated that grandfathering the smoking ban for some but not all the residents would make enforcement difficult.

HUD Response: Although smokers will face new requirements, other residents will generally benefit from an improved quality of life that minimizes the dangers of indoor smoking and SHS exposure. In addition, residents should experience improved indoor air quality and reduced interpersonal friction among neighbors exposed to others' smoking.

There is no “right” to smoke in a rental home, and smokers are not a protected sub-class under anti-discrimination laws. In addition, this rule does not prohibit smoking by residents; rather, it requires that if residents smoke that they do so at least 25 feet away from the buildings. HUD is aware that commenters and national surveys suggest that persons with disabilities tend to smoke at a higher rate than persons without a disability. See national survey of smoking prevalence among those with disabilities at https://www.cdc.gov/mmwr/preview/mmwrhtml/mm6444a2.htm. PHAs are encouraged to engage with these residents early and often when developing the smoke-free policy and to work with social service agencies to identify other alternatives to smoking in their units. This rule grants flexibilities to PHAs in addressing difficulties encountered by residents. In the case that a particular resident is especially burdened by the smoke-free policy, the PHA may consider such flexibilities as moving that resident to a first-floor unit which would provide easier access to smoking outside of their units, or modifying a walkway for easier use by that resident (e.g. adding additional lighting). HUD encourages PHAs to ensure an appropriately safe environment for all residents, smokers and nonsmokers alike.

HUD is not aware of any medical conditions for which smoking is considered a legitimate, proven treatment. Also, in situations where nicotine treatment is appropriate (i.e., smoking cessation) it can be delivered orally or through dermal applications. Research has shown that smokers with behavioral health conditions (i.e., mental and/or substance abuse disorders) actually benefit from quitting smoking. As summarized by the Substance Abuse and Mental Health Services Administration, research has demonstrated that quitting smoking can decrease depression, anxiety, and stress, and for those in treatment for substance use disorders, smoking cessation can increase long-term abstinence from alcohol or other drugs.7

Additionally, under this regulation, PHAs cannot “grandfather” tenants by exempting them from the application of the rule. PHAs that have implemented smoke-free policies have reported significant implementation challenges when they allow current residents to be “grandfathered” into the policy. Allowing this situation presents additional enforcement challenges and will only prolong the time that other residents are exposed to SHS and the risk of fire.

Many commenters asked HUD to include cessation help in the final rule. Commenters had a variety of suggestions on the best way to provide such services. Some stated that HUD should partner with other federal agencies such as the National Institutes of Health or Health and Human Services to provide resources; they stated that Health Centers target the same populations served by public housing. Commenters referenced the national quitline or state-operated quitlines as possible resources. Commenters stated that PHAs should be required to use cessation services that are proven to be effective, and suggested that PHAs and HUD work with state and local health agencies or tobacco prevention and cessation programs for resources. Some commenters pointed out that there is cessation help available through Medicaid and private insurance plans. Commenters also asked that HUD provide toolkits or other help to PHAs looking to partner with organizations to provide cessation help.

Commenters specifically mentioned a variety of cessation methods or techniques. Commenters suggested that HUD mandate that the types of required cessation treatments be varied instead of limited to a few options. Some requested that HUD provide nicotine replacement therapy. Some stated that any cessation courses or counseling be provided on-site. Some specifically stated that PHAs should give residents information on the interaction between nicotine addiction and psychotropic drugs.

Commenters stated that cessation support should begin now and continue for a longer period of time after the effective date of the rule. Commenters stated that any cessation materials should be available in languages other than English when appropriate for the PHA's population.

Some commenters suggested that HUD should supply funding for the cessation services or at least help PHAs locate funding, especially if the PHA is serving a population with mental health issues. Several suggested that PHAs be allowed to use savings generated by the proposed rule to pay for incentives for cessation and associated costs of treatment programs such as child care or transportation. Commenters stated that the time that residents spend taking or volunteering at cessation courses should count towards their community service requirement or that PHAs should be able to count funding provided for cessation help and incentives as funding towards fulfilling Section 3 requirements.

Some commenters stated that residents face a variety of barriers to quitting smoking, including the fact that limited cellphone minutes or language barriers interfere with the use of quitlines. Others stated that it would be unfair to hold PHAs accountable for public health outcomes like cessation. Commenters were also concerned that rural PHAs would not have the same access to cessation tools and programs as PHAs in urban areas. Commenters asked HUD to explicitly forbid PHAs from requiring cessation as part of enforcement efforts.

HUD Response: HUD acknowledges the importance of connecting residents interested in quitting smoking to cessation resources, preferably at no cost. Although HUD will not directly provide cessation assistance, HUD has resources available on Healthy Homes Web site (http://portal.hud.gov/hudportal/HUD?src=/program_offices/healthy_homes/hhi) for residents interested in cessation. Medicaid covers the cost of tobacco cessation services and prescription smoking cessation medications for recipients, and although Medicaid coverage varies by state, all 50 states offer at least some smoking cessation coverage. Residents of all states also have access to “quitlines,” which are free evidence-based cessation services that residents can access by calling 1-800-QUIT-NOW. HUD is also working closely with Federal agencies involved in tobacco control to help make cessation resources available to residents. For example, the Centers for Disease Control and Prevention (CDC) has coordinated with state tobacco control programs (i.e. health departments that receive CDC tobacco control grants in all 50 states) to assist PHAs in implementing smoke-free policies in their respective states. The CDC is also developing educational materials for housing managers and residents to help link them to smoking cessation services (e.g. community health centers). Federally Qualified Health Centers, supported through the Health Resources and Services Administration, serve many PHA residents and have made promotion of smoking cessation a top priority. The guidance that HUD has created to date emphasizes the value of partnerships between housing providers and local organizations (e.g. local health departments and clinics, and tobacco control organizations such as the American Lung Association) in making smoking cessation services available to residents.

Commenters on the proposed rule provided a lengthy list of resources that they used to assist residents. HUD will make this information, where applicable, available to interested PHAs.

Section 3 is a provision of the Housing and Urban Development Act of 1968 that ensures employment and other economic opportunities generated by HUD financial assistance are directed to low-income persons, particularly those receiving housing assistance. Section 3 requirements may be fulfilled to the extent residents are employed in providing cessation services, in accordance with 24 CFR part 135, provided that employment opportunities for cessation services are generated by the use of covered PIH assistance.

Commenters asked HUD for expanded definitions of several key terms, particularly “smoking”. Several asked that HUD define the term broadly to capture a variety of dangerous products and not to limit the rule to “lit tobacco products” in order to be consistent with existing state and local standards.

Other requests for definitions included definitions for “smoke,” “electronic smoking devices,” “hookahs,” “enclosed,” “indoor area,” and “partially enclosed.” Some commenters were concerned that allowing for partially enclosed designated smoking areas would run against current state indoor smoking bans. Commenters also asked that HUD change the phrase “interior common areas” in the space where smoking is banned to be “interior areas” to make it clearer that smoking is prohibited in all indoor areas.

Commenters often provided examples from model or existing codes and standards for HUD to use as guides for many of these definitions.

HUD Response: HUD does not define “smoking,” but rather “prohibited tobacco products.” HUD is restricting the use of prohibited tobacco products, including cigarettes, cigars, pipes, and waterpipes (hookahs). Because PHAs must ban the use of specific items, it is unnecessary to define what smoke is. In addition, this rule does not supersede state or local smoking bans, so if such laws prohibit the use of partially enclosed designated smoking areas, the PHAs would still be subject to those requirements.

HUD has changed the phrase “interior common areas” to “interior areas.”

Some commenters stated that the indoor ban was fine, but HUD should require PHAs to provide a reasonable DSA. Commenters wrote that any DSA should be sheltered from the weather, have shade and seating, and should be accessible to anyone with mobility issues and have appropriate safety features, such as lighting. Commenters stated that any DSA should be far enough away from buildings to prevent smoke drift, which some commenters specified as at least 25 or 50 feet from other smoke-free zones. Some stated that residents should have input on deciding whether or not to have a DSA or where any DSA should be located. Some asked that PHAs be required to sign memoranda of understanding with local police forces to clarify that using the DSA would not count as loitering.

Commenters expressed concern that the cost of building and maintaining benches or other amenities in a DSA would be too expensive for PHAs. Some stated that HUD should provide the funding or that PHAs should seek funding from the tobacco industry to pay for them. Some also stated that smokers should be allowed to contribute money to pay for covered smoking areas.

Some commenters stated that HUD should encourage outdoor smoke-free areas and discourage DSAs entirely, as having DSAs could raise concerns regarding reasonable accommodations and accessibility. Some commenters suggested that PHAs with DSAs evaluate their policies on a regular basis to determine if it would be appropriate to make the property 100 percent smoke-free. Commenters also stated that HUD should not encourage partially enclosed DSAs, as they can trap smoke, provide hidden areas for crime, and violate state clean air laws.

HUD Response: HUD does not mandate DSAs. However, some PHAs have achieved better compliance with smoking bans in restricted areas when there is a designated location with seating. Also, the use of DSAs could potentially make implementation of the smoke-free policy easier because they demonstrate to a smoking resident how far he or she must move away from the building. If a PHA decides to implement a DSA, HUD recommends appropriate wellness and safety features, such as appropriate seating and shade. If a PHA chooses to designate a smoking area for residents, it must ensure that the area is accessible for persons with disabilities, in accordance with a PHA's obligations under section 504 of the Rehabilitation Act of 1973, Title II of the Americans with Disabilities Act, and the Fair Housing Act. This may include a flat or paved pathway, ramp, and adequate lighting depending on the need and area selected. HUD encourages PHAs to include DSAs in future capital needs planning.

Many commenters asked that HUD include ENDS in the list of prohibited tobacco products. These commenters pointed out that the aerosol emitted by the devices is not harmless, and the toxins in the aerosol are higher than in FDA-approved nicotine inhalers. Others stated that ENDS pose risks of fire or explosion due to their batteries or poisoning from the liquids. Commenters stated that ENDS also increases third-hand exposure to nicotine (nicotine that settles on surfaces within a building), and banning ENDS may help stop the increase of ENDS usage among teens.

Commenters stated that ENDS are not devices approved for stopping smoking, and their use can undermine efforts to de-normalize smoking. Others commented that the use of ENDS can undermine enforcement efforts, either by making it appear that the policy is not taken seriously, or by causing confusion about whether it is ENDS or a cigarette being used.

Some commenters supporting the ban of ENDS asked that if HUD does not include ENDS in the proposed rule, that HUD make it explicit that a PHA can choose to do so themselves. Others asked HUD to track and share research to help PHAs make the case for including ENDS in smoke-free policies.

Other commenters objected to the inclusion of ENDS in the indoor smoking ban. Some stated that the science on the harm caused by ENDS is not settled and therefore there is no justification at this time for including them in the policy, because prohibiting ENDS does not advance the proposed rule's goals of improved health and savings on maintenance costs. Commenters stated that ENDS are an important tool in stopping smoking and allowing them would therefore help to soften the larger no-smoking policy, while adding flexibility to the proposed rule. Some commenters stated that the proposed rule does not contain enough justification to include ENDS in the policy and therefore, if HUD decides to include them, there should be another round of comments.

Commenters also asked that if HUD includes ENDS in the final policy, HUD consider limiting the places ENDS are prohibited only to common areas. Some stated that enforcing ENDS would be more difficult than only enforcing a cigarette ban, because ENDS lacks some of the markers of cigarette smoke such as a smell.

HUD Response: Research to date on ENDS is still developing and lacks clear consensus, in contrast with research on the effects of cigarettes and other tobacco products. Unlike with products that involve burning of substances, there is little evidence that ENDS significantly increases fire risks, and there is no conclusive evidence that the vapors emitted by ENDS cause damage to the units themselves. Therefore, prohibiting ENDS will not necessarily reduce the risk of catastrophic fires or maintenance costs for PHAs, and this rule does not prohibit the use of ENDS.

However, PHAs may exercise their discretion to include a prohibition on ENDS in their individual smoke-free policies if they deem such a prohibition beneficial. In addition, if evidence in the future arises that banning ENDS will, for example, result in significant maintenance savings, HUD will reconsider including them in items that are prohibited inside public housing.

Many comments focused on how PHAs are to enforce smoke-free policies. Some commenters stated that enforcement would be impossible because PHAs would not be able to prove that residents were smoking or the exact origins of a smoke smell. Commenters asked for additional guidance on how to detect violations and expressed concern that enforcing policies across scattered sites or in non-business hours would be extremely difficult. Commenters also stated that HUD should provide additional guidance on who can report violations and that HUD should place the burden of proof of violations on the complaining party.

Commenters also expressed concern about having a primary method of enforcement be reporting from tenants. Commenters stated that relying on residents to report will erode trust and increase tensions between residents, staff, and management. Some commenters stated that requiring residents to report violations would lead to additional confrontations with police. Commenters stated that residents should be able to report violations in a way that makes them feel safe. Some commenters stated that resident reporting will require additional mediation between tenants and that HUD should create a method of enforcement that does not rely on residents reporting each other, such as using routine maintenance inspections to look for evidence of smoking indoors.

Some commenters asked for specific guidance on how PHAs are to enforce smoke-free policies, and asked for HUD to publish successful enforcement actions from agencies with smoke-free policies in place. Commenters expressed concern that some PHAs or managers would not enforce the smoke-free policies consistently, leading to liability for PHAs. To address such concerns, commenters suggested that HUD impose heavy fines on managers who do not enforce policies, conduct site visits to ensure enforcement, and provide information to residents on whom to contact if managers are not enforcing policies. Commenters also stated that the costs of enforcement will be equal to or greater than any savings on maintenance generated by smoke-free policies.

Commenters also expressed concern about the use of eviction as an enforcement mechanism, stating that evictions do not help create strong communities. Commenters also wrote that increased evictions will increase homelessness and costs to PHAs. Commenters stated that it was unfair to subject children to homelessness from eviction for the actions of their parents, that it would be unfair to evict an entire family for the actions of one individual, or that it would be unfair to evict tenants for the actions of their guests. Commenters stated that relying solely on eviction sets up residents for failure and puts groups at the highest risk for discrimination in housing or with higher health risks at even greater risk of homelessness. Some stated that if families who are evicted as a result of this rule tend to fall into a protected class, there might be a disparate impact claim against the PHA or HUD.

Some stated that evicting families for a legal activity would be impossible because courts would not uphold evictions, or even that local ordinances may make evictions for smoking illegal. Commenters suggested that the rule explicitly state that smoking in violation of the PHA's policy is an offense that can result in eviction in order to allow courts to enforce evictions.

Commenters suggest that HUD require PHAs to take specific, progressive enforcement steps prior to allowing eviction, in particular focusing on education and cessation treatments.

Others stated that the rule should minimize evictions, or eliminating evictions from enforcement options completely, perhaps using a system of fines, positive incentives, or cessation treatment instead. Commenters stated that the final rule language should specify that violation of a smoke-free policy is not a material or serious violation of the lease. Some commenters suggested that HUD consider structuring the smoke-free requirement like the community service requirement, where noncompliance mandates specific actions to allow a tenant to “cure” the violation and where PHAs do not renew leases instead of evicting tenants.

HUD Response: HUD believes that allowing a PHA to enforce its smoke-free policy through lease enforcement actions is the best way to ensure compliance with such policies. Upon successful implementation, smoke-free policies should be enforced similar to other policies under lease enforcement procedures. HUD does not expect the enforcement of smoke-free policies to be significantly easier or more difficult than other unit-focused policies PHAs have established. Based on experiences of the PHAs that have already implemented smoke-free policies, when there is resident engagement in developing the plan and an effective plan for implementation, policy enforcement is less likely to lead to evictions. As written in this rule, the lease and appropriate amendment(s) will be the primary smoke-free policy enforcement mechanism. All residents must sign the amendment(s) as a condition of their continuing occupancy. PHAs will have local flexibility as to how the lease amendment process occurs during the 18-month implementation period after the final rule effective date. HUD has clarified that the adoption of a PHA smoke-free policy is likely to constitute a significant amendment or modification to the PHA Plan, which would require PHAs to conduct public meetings according to standard PHA amendment procedures. Therefore, PHAs are encouraged to obtain board approval when creating their individual smoke-free policies.

HUD affords PHAs flexibility in designing policies on reporting of violations by other residents, in order to fit the local needs of the housing communities. However, a PHA must sufficiently enforce its smoke-free policy in accordance with the rule's standards, by taking action when it discovers a resident is violating the policy. PHAs must ensure due process when enforcing the lease. If a PHA pursues lease enforcement as a remedy, public housing residents retain their right to an informal and formal hearing before their tenancy is terminated. As currently written, the new regulations intentionally distinguish lease violations based on criminal behaviors from violations based on civil behaviors, and place smoke-free violations in the latter category to discourage overly aggressive enforcement approaches and decrease the potential of eviction and homelessness.

Termination of assistance for a single incident of smoking, in violation of a smoke-free policy, is not grounds for eviction. Instead, HUD encourages a graduated enforcement approach that includes escalating warnings with documentation to the tenant file. HUD has not included enforcement provisions in this rulemaking because lease enforcement policies are typically at the discretion of PHAs, and it is appropriate for local agencies to ensure fairness and consistency with other policies. HUD also is not requiring any specific graduated enforcement procedure, because public housing leases are subject to different local and state procedural requirements that must be met prior to eviction. Best practices regarding smoke-free implementation and enforcement are available at http://portal.hud.gov/hudportal/HUD?src=/smokefreetoolkits1. HUD will provide additional guidance in the future with examples of graduated enforcement steps.

This rule does not expressly authorize or prohibit imposing fines on non-complying PHA managers. Once the rule takes effect, HUD may use PHA certifications to verify that PHAs have implemented a smoke-free policy within the required timeframe. HUD may also use the periodic REAC inspections and OIG audits to help monitor and confirm whether the policy is being enforced. The PIH regulations at 24 CFR 903.25 state that to ensure that a PHA is in compliance with all policies, rules, and standards adopted in the PHA Plan approved by HUD, HUD shall, as it deems appropriate, respond to any complaint concerning PHA noncompliance with its plan. If HUD determines that a PHA is not in compliance with its plan, HUD will take whatever action it deems necessary and appropriate.

Commenters asked that HUD have some sort of plan in place to evaluate the effect of the proposed rule. Some stated that HUD should evaluate, after 1 or 2 years, the success of the rule in getting units smoke-free and whether there have been health benefits. Others stated that HUD should review how each PHA has implemented a smoke-free policy, including surveys to residents on how the policy is working and if improvements are needed. Some commenters stated that the evaluation should be of the PHAs themselves, including how they document violations and manage accommodation requests, how well PHAs comply with the requirements and adhere to “best practices”, and the PHAs' outcomes of the smoke-free policies. These evaluations could be done as part of periodic reviews of PHA performance in general.

Other suggestions for evaluations focused on the effects of the rule itself. Some suggested that HUD should survey tenants to track smoking cessation progress. Others stated that HUD should evaluate support for the policies among tenants, numbers of complaints, health changes, costs, savings, and turnover and eviction as a result of the policies. Commenters stated that HUD should carefully keep track of the number of evictions due to smoke-free policies. Commenters suggested that HUD should study whether completely smoke-free grounds would be appropriate.

Commenters stated that HUD could partner with other agencies for evaluation studies.

HUD Response: HUD agrees that it is important to evaluate various aspects of the implementation of the rule by the PHAs, including the benefits on indoor air quality and resident health as well as the actual implementation process. Although HUD has identified and made available effective practices from housing providers that have implemented smoke-free policies, there is value in doing this using a more systematic process (e.g., see http://portal.hud.gov/hudportal/documents/huddoc?id=SFGuidanceManual.pdf). HUD is supporting research on the implementation of smoke-free policies in federally assisted multifamily properties through its Healthy Homes Technical Studies Grant Program. A goal of this research is to identify effective implementation practices as well as impacts on indoor air quality and smoking cessation among residents. HUD has also worked with the National Center for Health Statistics to match administrative data for residents of federally assisted housing (including public housing) with multiple years of data from the National Health Interview Survey. This is a cost effective way to track potential changes in the smoking behavior of residents over time (i.e., before and after the rule becomes effective). HUD is a member of a work group that includes federal partner agencies in order to explore opportunities for cooperative activities to evaluate the impact of the rule. HUD is also cooperating with researchers who are part of a university/philanthropy partnership planning to survey PHAs that have already implemented smoke-free policies, in order to capture lessons learned that will be valuable for PHAs that have not yet implemented smoke-free policies. This effort will include interviews of both management and residents.

Some commenters felt that it was unfair to only cover public housing with this proposed rule. Commenters felt that the covered properties should be expanded to include all multifamily dwelling units in the country, all rental and subsidized housing, mixed-finance developments, Section 8 vouchers, or all properties receiving HUD assistance.

However, other commenters stated that HUD should never consider requiring homeless assistance programs to have a smoke-free policy. Some also stated that HUD should not expand the requirement beyond public housing.

Commenters did have some questions about the applicability of the rule. Some asked about whether the rule applies to non-dwelling units leased to other entities. Others asked whether low-income housing on tribal lands would be covered. Commenters also asked how this rule would apply to public housing projects converting their assistance under the Rental Assistance Demonstration Program.

HUD Response: The final rule does not apply to tribal housing, mixed-finance developments, or PHA properties that have converted to project-based rental assistance contracts under RAD. HUD will continue to promote voluntary adoption of smoke-free policies by all owners receiving project-based assistance and may consider expansion of requirements to additional housing assistance programs in the future. In addition, HUD will issue a solicitation of comments in the Federal Register to obtain feedback on the prospect of requiring smoke-free policies in other HUD-assisted properties. Absent regulations, private owners and PHAs can continue to use HUD's “Smoke-Free Housing Toolkit for Public Housing Authorities and Owners/Management Agents” (available at http://portal.hud.gov/hudportal/documents/huddoc?id=pdfowners.pdf) to help in implementation of smoke-free polices.

Commenters objected to the mandate that PHAs create smoke-free policies, instead asking that it continue to be left up to the PHA's discretion. They stated that letting PHAs make the decision would allow them to decide where to allocate resources and best account for the needs of the residents and PHA. Other commenters simply asked that PHAs be allowed to craft policies they designed instead of having policies determined by HUD. Commenters also asked that small PHAs be given more flexibilities.

Commenters specifically asked that PHAs be given flexibility with the implementation phase of smoke-free policies. Some asked for the ability to implement policies at a time of the year with pleasant weather to make compliance easier. Others asked for the ability to phase-in policies by buildings or properties instead of all at once; however, some commenters explicitly opposed phasing in the policy across buildings. Commenters also asked for a longer implementation period, even as much as 5 years.

Another specific flexibility requested by commenters was for a PHA to establish buildings or scattered-site locations as designated smoking buildings, if physically separate from non-smoking buildings.

Commenters also asked that PHAs with established smoke-free policies continue to keep the existing policies, even if the perimeter around buildings is less than 25 feet. These commenters stated that it would be extremely burdensome, costly, and confusing to change existing policies, and compliance with additional restrictions might impose additional costs, such as building shelters for smokers, that they have already decided are unnecessary. However, some commenters stated that PHAs should be required to conform to any policies that are stricter than what they may currently have in place.

Some commenters also asked that HUD make it explicit that a PHA may adopt policies that are stricter than the ones required by HUD.

Commenters also asked that HUD allow PHAs to have maximum budget flexibility during implementation to pay for up-front costs.

HUD Response: HUD has been advocating for smoke-free housing since 2009 because the health benefits to residents are substantial, and the costs and benefits to PHAs are also compelling in terms of reduction in maintenance and unit turnover costs. HUD applauds the more than 600 PHAs that already have implemented policies in at least one building since HUD began promoting voluntary adoption of smoke-free housing policies. The rule's mandatory approach implements uniform standards and requirements which will greatly minimize the disproportionate exposure to SHS for public housing residents.

The flexibility inherent in the rule allows PHAs to implement their smoke-free policies in a way that does not violate the standards established in the final rule. The final rule bans the use of prohibited tobacco products in all public housing living units, interior common areas, and all outdoor areas within 25 feet from public housing and administrative office buildings where public housing is located. The rule also gives PHAs the flexibility to limit smoking to DSAs, which may include partially enclosed structures, to accommodate residents who smoke.

PHAs must exercise their discretion in a way that reasonably relates to the purpose of the rule, and PHAs face legal risk when imposing a standard that exceeds the scope of legal authority (e.g., is arbitrary and capricious). PHAs are encouraged to exercise their discretion and may adopt stricter smoke-free policies. This approach should always consider resident feedback prior to adopting stricter smoke-free policies.

Budget flexibility in terms of combining operating, capital, or housing assistant payment funds is permitted to the extent otherwise provided under arrangements such as Moving to Work (MTW).

Commenters stated that HUD should provide funding for the implementation costs of this rule, specifically through increased Operating or Capital Fund allocations. Commenters wrote that without additional staff to help, the smoke-free policies cannot be successful. Commenters also asked for additional funding to remediate and repair any damage caused by residents who are currently smoking.

HUD Response: The rule provides no additional financial assistance for policy implementation; however, HUD has already begun to mobilize our public health and private partners such as the Centers for Disease Control and Prevention, American Cancer Society, the American Lung Association and Environmental Protection Agency, among others, to support PHAs.

Many commenters expressed concern that tenants be adequately involved in a PHA's implementation of the final rule when effective. Commenters stated that HUD should require specific engagement activities. They stated that these requirements should include multiple meetings with tenants to educate them on the policy, how to comply, and what assistance is available to them. Commenters stated that PHAs should use community advisory boards to address issues and tenant concerns during implementation. Commenters stated that HUD should require PHAs to engage their residents, particularly on health issues associated with smoking and SHS, prior to amending leases; some stated that engagement should be ongoing for a year prior to a PHA amending a lease.

To ensure that residents are fully engaged from the beginning, some commenters stated that HUD should specify that implementing a smoke-free policy would require a significant amendment to the PHAs' plans. However, other commenters stated that PHAs with smoke-free policies in place should not have to make significant amendments.

Commenters also suggested changes to the timeline for compliance with the final rule. Several stated that 18 months is not enough time for PHAs to have smoke-free policies in effect. Commenters stated that 18 months was too short a time period to adequately educate tenants and get their support, amend leases, and do other supporting tasks like constructing DSAs. Some asked for specific time periods, from 24 to 36 months to up to 3 years, while others asked for PHAs to be able to apply for more time. Commenters stated that allowing PHAs flexibility on the timeline for implementing the rule so that the PHAs could use the existing Annual Plan amendment process would save money and effort.

Commenters alternatively asked that HUD allow for an implementation timeline in stages, allowing residents to participate voluntarily for the first 6 months, year, or 2 years of the policy before being subject to penalties.

Some commenters, however, stated that 18 months was too much time, and stated that HUD should encourage PHAs to begin implementation as soon as possible after the final rule is effective, including providing cessation help and educational resources. Commenters suggested that PHAs should be able to implement smoke-free policies for new residents prior to that deadline, and some stated that HUD should require compliance within 6 months. Commenters asked if PHAs would be able to phase-in their properties during the 18-month period.

HUD Response: HUD included in the proposed rule the 18-month timeframe after the final rule effective date for PHAs to enlist the involvement and support their resident councils, initiate cessation programs, post notices, and disseminate information to the residents, pursuant to PIH regulations and best practices among early smoke-free policy adopters. In the final rule, HUD has clarified that the adoption of a PHA smoke-free policy is likely to constitute a significant amendment or modification to the PHA Plan, which would require PHAs to conduct public meetings according to standard PHA amendment procedures. Therefore, PHAs are encouraged to obtain board approval when creating their individual smoke-free policies. HUD believes this approach will allow local organizations to pledge their support for the smoke-free policy and to support the mission of providing healthier housing for low-income residents.

The PHA must consult with resident advisory boards to assist with and make recommendations for the PHA plan. Those recommendations must include input from PHA residents. With regard to the smoke-free policy, the PHA plan will list the PHA's rules, standards and policies that will govern maintenance and management of PHA operations. HUD believes that 18 months will provide PHAs sufficient time to conduct resident engagement and hold public meetings that are required when an amendment constitutes a significant change to the PHA plan.

The final rule will become effective 60 days after publication in the Federal Register. Once the rule is effective, PHAs will then have 18 months to implement smoke-free policies. PHAs must incorporate the smoke-free policy into resident leases. The lease will continue to be the legally binding document between the PHA and the resident. Leases (including recertifications, automatic renewals, new leases, lease addendums and modifications) can be modified at any time by written agreement between the resident and the PHA. PHAs may provide a specific date that the policy will take effect. PIH regulations permit PHAs to modify rules and regulations to be incorporated by reference into the lease form, as long as the PHAs provide at least 30 days' notice to all affected residents (see 24 CFR 966.5), and allow resident feedback on the new lease language (see 24 CFR 966.3). PHAs must consider this feedback prior to making the changes.

To amend individual resident leases based on the modified lease form adopted by the PHA, a PHA must notify a resident of the written revision to an existing lease 60 days before the lease revision is to take effect and specify a reasonable time period for the family to accept the offer (see 24 CFR 966.4(l)(2)(iii)(E)). PIH regulations also provide that leases are required to stipulate that the resident has an opportunity for a hearing on a grievance of any proposed adverse action against the resident (see 24 CFR 966.52(b)). However, PHA grievance procedures are not applicable to class grievances and cannot be used as a forum for initiating or negotiating policy changes, including smoke-free policy changes (see 24 CFR 966.51(b)).

HUD strongly encourages PHAs to post signs referencing the new smoke-free policy. Signs must be accessible to all residents and visitors, and must be posted in multiple languages if appropriate for residents of the PHA, in accordance with HUD's current guidance on limited English proficiency. PHAs are not required to construct smoking shelters or DSAs.

Commenters stated that the smoke-free language in leases should include not only the policy, but also information on any available DSAs or cessation services.

HUD Response: A public housing lease specifies the rights and responsibilities between the PHA and tenant. If a PHA chooses to develop one or more DSAs, PHAs are encouraged to note the availability and location of any DSAs in the lease. HUD also encourages PHAs to share this information using less formal communication methods (e.g. letters, flyers, seminars, etc.) to ensure residents are aware of the policy. The information must be presented in pertinent places in various languages to help residents understand the policy.

Commenters objected to the idea behind the proposed rule, stating that prohibiting smoking in public housing is an invasion of civil rights because it would ban an individual's freedom to do something that is legal. Others stated that it was an invasion of smokers' privacy. Some commented that people should be able to smoke in their own homes and that a smoking ban is authoritarian and invasive.

Commenters also objected to the proposed policy because it does not prohibit smoking in private homes and therefore unfairly punishes the poor and working class. Commenters stated that smoking bans demonize and dehumanize smokers and discriminate against smokers. Some stated that if HUD is banning smoking, HUD should also ban all things that cause harm or smell, such as pet dander or smelly food.

HUD Response: HUD believes that focusing on public housing is appropriate, as HUD and our PHA partners have already made significant progress in this area. More than 600 PHAs have already implemented smoke-free policies in at least one of their buildings since HUD began promoting voluntary adoption of smoke-free housing policies in 2009. HUD is not using this policy as a punishment for any group of people. Instead, HUD believes this policy will benefit many residents especially vulnerable populations (e.g. children, elderly persons, and persons with disabilities). This rule will protect the health and well-being of public housing residents and PHA staff and is an opportunity to lower overall maintenance costs and reduce the risk of catastrophic fires. Smoke-free public housing helps HUD realize its mission of providing safe, decent and sanitary housing for vulnerable populations nationwide. Additionally, smoke-free policies are increasingly being adopted in market-rate rental housing and condominiums.

In Constitutional jurisprudence, courts have found that smoke-free policies do not violate the Equal Protection Clause because there is no fundamental right to smoke,8 and the classification of a “smoker” does not infringe on a fundamental Constitutional right.9 In addition, the act of smoking is entitled to only minimal level of protection, and courts assess smoking-related Equal Protection claims under a rational basis standard of review 10 —meaning that those who challenge a smoke-free regulation bear the burden to prove that the regulation is not rationally related to a legitimate government interest.

Courts 11 have held that protecting persons from SHS is a valid use of the State's police power that furthers a legitimate government purpose.12 And, those courts considering Equal Protection challenges to smoking restrictions have concluded that the restrictions bear a reasonable relation to such legitimate state interests as: (1) Improving resident health and safety; (2) reducing fire hazards; (3) maintaining clean and sanitary conditions; and (4) reducing non-smoker complaints and threats of litigation.13

Commenters stated that an indoor smoking ban would actually increase fires as people tried to hide their smoking and disposed of cigarettes improperly. Commenters also stated that they supported smoking bans in public places and near doors, but felt that smoking should still be permitted in an individual tenant's unit. Commenters suggested that instead of a smoking ban, PHAs could require a higher security deposit from smokers.

Commenters also stated that given the number of individuals with mental health problems who rely on smoking, this rule would be unfair to that population. Commenters wrote that bans in individual units would make it harder for tenants with mental illnesses to maintain stable housing. Some objected to the rule because they stated that some individuals who smoke do so to avoid returning to prior addictions. Commenters stated that discouraging any part of the population from affordable housing programs is contrary to the mission of HUD and PHAs.

Some commenters objected to the rule because they stated that the rule contradicts a recent notice from HUD that PHAs should slow evictions based on criminal history, while now encouraging evictions for legal activities. Other commenters stated that the rule contradicts Congressional direction to increase flexibility and reduce unnecessary regulatory burdens. Commenters also objected to the rule by stating that funding should be used for priorities other than enforcement of the rule, including evictions.

HUD Response: This rule is an opportunity to lower overall maintenance costs and reduce the risk of catastrophic fires in properties while advancing the health of public housing residents and PHA staff. Smoking within a tenant's unit exposes other residents to SHS. As such, smoke-free public housing is fully aligned with HUD's mission of providing safe, decent and sanitary housing for vulnerable populations nationwide. HUD encourages all PHAs to work with all of their residents to ensure they fully understand the policy. In order to meet a successful 18-month implementation timeframe, HUD encourages community engagement and outreach so PHAs will be able to solicit support and involvement of their resident councils and tenants. Residents who smoke and comply with the smoke-free policy can continue their residency in public housing. During enforcement of their smoke-free housing policies, HUD expects PHAs to follow administrative grievance procedures. Where there are violations of the smoke-free policy, HUD encourages PHAs to use a graduated enforcement approach that includes written warnings for repeated policy violations before pursuing lease termination or eviction. HUD will provide additional guidance with examples of graduated enforcement steps.

HUD emphasizes that this rule, unlike previous HUD guidance on smoking, is not optional or merely a recommendation. However, PHAs may not treat tenants who smoke punitively in their implementation of this regulation by, for example, requiring a higher security deposit from tenants who smoke. Residents can be charged for property damage that is beyond normal wear and tear, in accordance with 24 CFR 966.4(b)(2).

Commenters asked for more information and further clarification on what PHAs could offer as a reasonable accommodation under the rule. Some expressed confusion on whether smokers were eligible for reasonable accommodations, and some commenters explained that the reasonable accommodation was not available to help with the smoking habit, but rather was intended to address the underlying disability that frustrates the tenant's ability to comply with the smoke-free policy. Commenters explained that individuals with mental health disabilities or cognitive or learning disabilities may have difficulties in understanding the new smoke-free policies or complying with traditional cessation treatments, and that any PHA not allowing reasonable accommodations for tenants with disabilities is not considering the whole picture.

Others asked for specific lists of permissible accommodations or for best practices in providing reasonable accommodations. Some commenters requested that HUD explicitly state in the final rule that a PHA must grant appropriate requests for reasonable accommodations. Commenters also stated that HUD should take public comment on any future reasonable accommodation guidance.

Some commenters stated that reasonable accommodations should not include the ability to smoke indoors. Commenters asked whether HUD would defend PHAs who do not allow indoor smoking as a reasonable accommodation. Some commenters stated that smoking in the tenant's unit should be allowable as a reasonable accommodation, particularly for the elderly in winter or individuals who are disabled and cannot leave their unit. Commenters have stated that smaller PHAs may not have accommodations to offer other than allowing smoking in a tenant's unit.

Commenters offered other suggestions of permissible reasonable accommodations, including allowing the tenants to use ENDS in their unit, smoking closer to the building than the 25-foot barrier, additional time for compliance for those using cessation services, or moving smokers with mobility disabilities into units closer to elevators or on the ground floor. Commenters also stated that HUD should make it clear that smoking is not a bar to receiving assistance and should allow tenants who cannot comply to receive vouchers to move out of public housing.

However, commenters also expressed concern about the reasonable accommodation process. Commenters shared concerns that relying on the reasonable accommodation process assumes all residents with disabilities know their rights, assumes at least some requests will be granted, and places all the burden on the residents with disabilities themselves. Others stated that a PHA may be unable to move residents, due to costs of moving or a low vacancy rate. Commenters suggested that HUD require that language advising residents of their right to request a reasonable accommodation be included in leases along with other smoke-free requirements.

HUD Response: Under section 504 of the Rehabilitation Act of 1973, Title II of the Americans with Disabilities Act, and the Fair Housing Act, PHAs are prohibited from discriminating on the basis of disability and must make reasonable accommodations in their rules, policies, practices, and services. A reasonable accommodation is a change, adaptation or modification to a policy, rule, program, service, practice, or workplace which will allow a qualified person with a disability to participate fully in a program, take advantage of a service, or perform a job. In order to show that a requested accommodation may be necessary, there must be an identifiable relationship, or nexus, between the requested accommodation and the individual's disability. This individualized determination must be made on a case-by-case basis by the PHA. When a person with a disability requests an accommodation related to his or her disability, a recipient must make the accommodation unless the recipient can demonstrate that doing so would result in a fundamental alteration in the nature of its program or an undue financial and administrative burden.

Often, a PHA's Admissions and Continued Occupancy Plan (ACOP) will include guidelines for submission consideration, but an individual with a disability is not required to use a specific format when requesting an accommodation. General guidance on the reasonable accommodation process can be found at http://go.usa.gov/cJBBC. HUD also issued reasonable accommodation guidance entitled, “Joint Statement of the Department of Housing and Urban Development and the Department of Justice on Reasonable Accommodations under the Fair Housing Act,” which can be found at http://www.hud.gov/offices/fheo/disabilities/_modifications_mar08.pdf. HUD has determined that additional, specific guidance on accommodations related to smoke-free public housing is unnecessary, given the case-by-case nature of these decisions.

Research shows that SHS will intrude into other units even when there is mechanical ventilation or air cleaners are installed. HUD acknowledges that some persons, including persons with disabilities, may have additional challenges in quitting, but reiterates that this rule does not require persons who smoke to stop smoking; rather, they must perform the activity in allowable areas outside of the public housing facilities and other restricted areas.

HUD's guidance, “Change is in the Air,” available at http://portal.hud.gov/hudportal//huddoc?id=smokefreeactionguide.pdf, provides examples of how PHAs have approached and managed smoke-free policies for residents with disabilities. Not all of these examples involve reasonable accommodations, but they demonstrate a range of options that PHAs can use to implement smoke-free policies. For instance, PHAs have allowed residents to move to the first floor or closer to an exit door, and provided designated smoking areas with an accessible walkway, cover, lighting, and seating.

HUD continues to encourage PHAs to engage residents early in the development of the policy so that there is adequate time to consider reasonable accommodations requests they receive. Language advising residents of their right to request a reasonable accommodation should already be contained within the PHA's ACOP. Under this rule, HUD is not requiring that reasonable accommodation language be contained in the lease. Public housing residents who suspect they are victims of housing discrimination can call (800) 669-9777.

The act of smoking itself is not a disability under the ADA. HUD encourages all PHAs to fully engage with their residents so they fully understand the policy. Smokers with behavioral health conditions may require individualized attention to ensure they understand the policy and available cessation resources, as well as reasonable accommodation request procedures.

Some commenters were skeptical that there was adequate scientific justification for the rule and questioned whether SHS is dangerous. Commenters stated that the rule is merely part of a crusade against smokers.

Other commenters stated that the ban on indoor smoking would be unnecessary if better construction, insulating electrical outlets or improving ventilation, were used in public housing.

HUD Response: HUD relies on the conclusions of Federal agencies and other authoritative organizations regarding the health effects of exposure to SHS. Based on these conclusions, the scientific evidence for the adverse health effects of SHS exposure is compelling. In a 2006 report, the Surgeon General concluded that there is no risk-free level of exposure to SHS. In children, the U.S. Surgeon General concluded that SHS exposure can cause sudden infant death syndrome, and can also cause acute respiratory infections, middle ear infections and more severe asthma in children. In adults, the Surgeon General has concluded that SHS exposure causes heart disease, lung cancer, and stroke. In addition, SHS is designated as a known human carcinogen by the U.S. Environmental Protection Agency, the U.S. National Toxicology Program, and the International Agency for Research on Cancer.

The Surgeon General also concluded in 2006 that “eliminating indoor smoking fully protects nonsmokers from exposure to SHS. Separating smokers from nonsmokers, cleaning the air, and ventilating buildings cannot eliminate exposure to secondhand smoke.” HUD acknowledges that the movement of SHS from a smoker's unit to other parts of a building can be partially reduced through improvements in ventilation systems and through the increased air sealing of units; however, these strategies cannot fully eliminate exposure. Increased air sealing could also have the disadvantage of increasing SHS exposures to non-smokers in the sealed units, and could increase the amount of SHS that settles on surfaces within the sealed units.

Commenters asked that HUD include requirements on no-smoking signs in the final rule. Commenters stated that HUD should require a minimum amount of signage, and others stated that any signs should be in all languages applicable to a given PHA.

HUD Response: HUD strongly encourages PHAs to post signs referencing their smoke-free policy. These signs must be accessible to all residents, and must be posted in multiple languages if appropriate for residents of the PHA, in accordance with HUD's guidance on limited English proficiency.

Commenters stated that the proposed rule does not go far enough in only banning tobacco smoking. They asked that HUD include other items in the ban, including all products creating smoke, such as non-tobacco cigarettes and scented candles and incense, or other things posing health risks such as fatty foods or alcohol.

HUD Response: This rule bars the use of prohibited tobacco products indoors, and outdoors within 25 feet of any building. Prohibited tobacco products include waterpipes. HUD is focusing first on public housing because HUD already has significant progress to build upon, as many PHAs have voluntarily implemented smoke-free policies. HUD intends next to turn attention to other HUD-assisted housing. Although this rule curtails a behavior that public housing regulations previously allowed, instituting smoke-free public housing would ensure that public housing residents enjoy the confirmed and significant health benefits that many higher-income market-rate residents now enjoy and increasingly demand of the private housing market. As a practical matter, HUD also is focusing first on smoke-free public housing because, in public housing, HUD can more readily leverage the Federal government's direct financial investments and existing regulatory framework to promote broad-based, successful policy implementation than where housing depends on private owners and contracts. However, HUD will issue a solicitation of comments in the Federal Register to obtain feedback from owners and tenants on the prospect of requiring smoke-free policies in other HUD-assisted properties.

Commenters asked that HUD provide specific support for training in the final rule, both for residents and for PHA staff on both the reasons for the rule and proper enforcement of no-smoking policies.

HUD Response: HUD agrees that PHAs and residents will need training on the reasons for the rule and proper enforcement of smoke-free policies. HUD is coordinating with other federal agencies and non-governmental organizations on providing assistance to PHAs, as appropriate, in implementing smoke-free policies. HUD will provide training to PHAs in the form of video- and print-based materials, as well as in-person training for select PHAs. Training resources will be focused on geographic areas with the greatest need, including areas where few PHAs previously implemented smoke-free policies. Resident training should be provided by PHA staff.

Many commenters asked that HUD include waterpipes in the smoke-free policy. These commenters stated that they are still a fire hazard and the smoke gives off harmful elements like cigarette smoke. Some commenters stated that waterpipes pose a carbon monoxide hazard in addition to the other toxins. Commenters stated that hookah sessions frequently last longer than the time it takes to smoke a cigarette and that some experts believe the SHS from waterpipes may be more hazardous than that from cigarettes.

Commenters asked that if HUD does not include waterpipes in the smoke-free policy standard, the final rule should be explicit that PHAs may do so themselves.

Other commenters stated that HUD should not include waterpipes in the final rule, and noted that for some cultural groups, there is a cultural significance to smoking around a waterpipe that HUD should keep in mind.

HUD Response: Waterpipes (hookahs) are smoking devices that use coal or charcoal to heat tobacco, and then draw the smoke through water and a hose to the user. HUD recognizes that the use of hookahs is fundamentally different from the use of cigarettes, cigars, or other handheld tobacco products. Hookahs are not held while in use, and therefore require a person to remain in one spot while using them. In addition, the lit coals, which can last for half an hour or longer, cannot be extinguished and therefore must be used or discarded, leading the users to spend longer time periods outdoors than users of other tobacco products. For many residents, there may not be a permissible way to use a hookah outside their homes. But for PHAs that establish DSAs, it may still be feasible for outdoor hookah smoking in those locations, especially if the DSA is covered, preventing precipitation from interfering with the lighting of the coals.

Both the heating source and burning of tobacco are sources of contaminant emissions. HUD agrees with commenters that there is considerable evidence that the use of waterpipes results in the emission of contaminants that are similar to those identified in SHS from other tobacco products, including carbon monoxide, respirable particulate matter (PM2.5), nicotine and benzene. There is no evidence that the drawing of tobacco smoke through water in hookahs makes the smoke less hazardous. Furthermore, because hookah sessions generally extend for longer periods than required to smoke a cigarette or other tobacco products, they can result in higher concentrations of contaminants. Finally, the presence of lit charcoal poses a fire risk to the property. Several examples of hookahs causing serious fire damage have been seen in homes around the country.14 In addition, the World Health Organization 15 and the American Lung Association 16 recommend that hookahs should be subjected to the same regulations as cigarettes. Therefore, HUD has amended the final rule to state that waterpipes fall under the definition of a “prohibited tobacco product.”

While the use of hookahs may be viewed as a significant cultural practice, this does not qualify a resident for exclusion from the policy. As previously noted, there is no fundamental right to smoke and the act of smoking is entitled to only a minimal level of protection under the Equal Protection Clause. Therefore, smoking a hookah, as a significant cultural practice, does not itself provide a reason for exclusion from the policy.

Commenters stated that no matter what, smoking should not be a bar to public housing tenancy, despite some statements by PHA directors that state they already discriminate against smokers.

Commenters also wrote that HUD should state in the rule that the rule does not guarantee a smoke-free environment in order to avoid lawsuits from tenants with non-compliant neighbors.

HUD Response: This rule is not to be interpreted as making smoking a bar to public housing tenancy. Prospective and current residents are free to smoke outdoors with the understanding that smoking is prohibited within a 25-foot perimeter of buildings and in accordance with the PHA's smoke-free policy. This rule does not guarantee a smoke-free environment; residents may still be exposed to SHS on public housing grounds, particularly outside the 25-foot smoke-free perimeter. HUD emphasizes that the smoke-free policy is intended to reduce financial costs for PHAs as well as improve indoor air quality for all residents.

As part of the proposed rule, HUD asked the public to share specific information, particularly from PHAs who have already implemented smoke-free policies and can share their experiences. HUD received a number of comments with past experiences and suggestions for best practices, and we appreciate all the input. The information commenters submitted has helped inform HUD as to changes in the final rule and in developing further guidance for PHAs on implementing and enforcing this final rule.

The Office of Management and Budget (OMB) reviewed this proposed rule under Executive Order 12866 (entitled “Regulatory Planning and Review”). OMB determined that this rule was economically significant under the order. The docket file is available for public inspection in the Regulations Division, Office of General Counsel, U.S. Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410-0500. The Regulatory Impact Analysis (RIA) prepared for this rule is also available for public inspection in the Regulations Division and may be viewed online at www.regulations.gov, under the docket number above. Due to security measures at the HUD Headquarters building, an advance appointment to review the public comments must be scheduled by calling the Regulations Division at (202) 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.

The information collection requirements contained in this proposed rule have been submitted to the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB control number 2577-0226. 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 OMB control 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. This rule prohibits smoking of tobacco in all indoor areas of and within 25 feet of any public housing and administrative office buildings for all PHAs, regardless of size.

There are 2334 “small” PHAs (defined as PHAs with fewer than 250 units), which make up 75 percent of the public housing stock across the country. Of this number, approximately 378 have already instituted a voluntary full or partial policy on indoor tobacco smoking.

HUD anticipates that implementation of the policy will impose minimal additional costs, as creation of the smoke-free policy only requires amendment of leases and the PHA plan, both of which may be done as part of a PHA's normal course of business. Additionally, enforcement of the policy will add minimal incremental costs, as PHAs must already regularly inspect public housing units and enforce lease provisions. Any costs of this rule are mitigated by the fact that PHAs have up to 18 months to implement the policy, allowing for costs to be spread across that time period.

While there are significant benefits to the smoke-free policy requirement, the majority of those benefits accrue to the public housing residents themselves, not to the PHAs. PHAs will realize monetary benefits due to reduced unit turnover costs and reduced fire and fire prevention costs, but these benefits are variable according to the populations of each PHA and the PHA's existing practices.

Finally, this rule does not impose a disproportionate burden on small PHAs. The rule does not require a fixed expenditure; rather, all costs should be proportionate to the size of the PHA implementing and enforcing the smoke-free policy.

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

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. 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. The FONSI is also available to view online at www.regulations.gov.

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 or 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 final 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 for the Public Housing program is 14.872.

Accordingly, for the reasons stated in the preamble, HUD amends 24 CFR parts 965 and 966 as follows:

Paperwork Reduction Act

The collection of information contained in these temporary and final regulations is in §§ 1.6695-2(b) and 1.6695-2T(b) and is reported on Form 8867, “Paid Preparer's Due Diligence Checklist.” Responses to this collection of information are mandatory. The collection of information in current § 1.6695-2 was previously reviewed and approved under control number 1545-1570. Control number 1545-1570 was discontinued in 2014, as the burden for the collection of information contained in § 1.6695-2 is reflected in the burden on Form 8867 under control number 1545-1629.

This document contains amendments to 26 CFR parts 1 and 602 under section 6695(g) of the Code, imposing a penalty on tax return preparers who fail to comply with the due diligence requirements imposed by the Secretary by regulations with respect to determining the eligibility for, or the amount of, the EIC. Section 6695(g) was added to the Code because Congress believed more thorough efforts by tax return preparers are important to improving EIC compliance. H.R. Rep. No. 105-148, 105th Cong. 1st Sess., p. 512 (June 24, 1997).

Enacted by section 1085(a)(2) of the Taxpayer Relief Act of 1997, Public Law 105-34 (11 Stat. 788, 955 (1997)), and effective for taxable years beginning after December 31, 1996, section 6695(g) originally imposed a $100 penalty on an income tax return preparer who failed to meet the EIC due diligence requirements set forth in regulations prescribed by the Secretary. Section 8246 of the Small Business and Work Opportunity Tax Act of 2007, Public Law 110-28 (121 Stat. 112, 200 (2007)) amended the penalty to apply to all tax return preparers. Section 501(a) of the United States-Korea Free Trade Agreement Implementation Act, Public Law 112-41 (125 Stat. 428, 459 (2011)), amended section 6695(g) to increase the amount of the penalty to $500, effective for returns required to be filed after December 31, 2011. Section 208(c), Div. B of the Tax Increase Prevention Act of 2014, Public Law 113-295 (128 Stat. 4010, 4073 (2014)) (2014 Act), added section 6695(h), which indexes the penalty amount for inflation, effective for returns or claims for refund filed after December 31, 2014.

Section 1.6695-2 implements section 6695(g) by imposing due diligence requirements on persons who are tax return preparers under section 7701(a)(36) with respect to determining eligibility for, or the amount of, the EIC. The due diligence requirements set forth in § 1.6695-2(b) are that the preparer must: (1) Complete and submit Form 8867, “Paid Preparer's Earned Income Credit Checklist;” (2) complete the Earned Income Credit Worksheet (Worksheet), as contained in the Form 1040 instructions or record the preparer's computation of the credit, including the method and information used to make the computation; (3) not know or have reason to know that any information used by the preparer in determining eligibility for, and the amount of, the EIC is incorrect and make reasonable inquiries when required, documenting those inquiries and responses contemporaneously (knowledge requirement); and (4) retain, for three years from the applicable date, the Form 8867, the Worksheet (or alternative records), and the record of how and when the information used to determine eligibility for, and the amount of, the EIC was obtained by the preparer, including the identity of any person furnishing information and a copy of any document relied on by the preparer.

To comply with the knowledge requirement under § 1.6695-2(b)(3), the tax return preparer may not ignore the implications of information furnished to, or known by, the tax return preparer, and must make reasonable inquiries if the information furnished to the tax return preparer appears to be incorrect, inconsistent, or incomplete. Examples in § 1.6695-2(b)(3)(ii) illustrate this requirement. This knowledge requirement is consistent with the verification requirement imposed on all tax return preparers with respect to preparation of any tax return or claim for refund under the accuracy-related standards set forth in § 1.6694-1(e).

A tax return preparer is required to submit the Form 8867 to the IRS when the preparer electronically files the tax return. If a tax return preparer required to complete the Form 8867 is not electronically filing the taxpayer's return with the IRS, § 1.6695-2(b)(1) provides rules for submission of the form. If the tax return preparer required to complete the Form 8867 is not the signing tax return preparer, the preparer satisfies the submission requirement by providing a copy of the completed Form 8867 to the signing tax return preparer. If the tax return preparer required to complete the Form 8867 is the signing tax return preparer but the taxpayer is not electronically filing the return, the preparer must provide a copy of the completed Form 8867 to the taxpayer to be attached to the return being filed with the IRS.

Section 1.6695-2(c) provides that a firm that employs a tax return preparer subject to a penalty under section 6695(g) is also subject to a penalty if certain conditions apply. Under this rule, a firm will be subject to a penalty if and only if one or more members of principal management (or principal officers) of the firm or branch participated in, or prior to the time the return was filed, knew of the failure to comply with the due diligence requirements; the firm failed to establish reasonable and appropriate procedures to ensure compliance with the due diligence requirements; or, through willfulness, recklessness, or gross indifference (including ignoring facts that would lead a person of reasonable prudence and competence to investigate or ascertain) the firm disregarded its own reasonable and appropriate compliance procedures. A firm subject to a section 6695(g) penalty under this section is not eligible for the exception to the penalty in § 1.6695-2(d). Under this exception, the penalty will not be applied if the tax return preparer can demonstrate to the satisfaction of the IRS that, considering all of the facts and circumstances, the tax return preparer's normal office procedures are reasonably designed and routinely followed to ensure compliance with the due diligence requirements, and the failure to meet the due diligence requirements with respect to the particular tax return or claim for refund was isolated and inadvertent.

Section 207, Div. Q of the Protecting Americans from Tax Hikes Act of 2015, Public Law 114-113 (129 Stat. 2242, 3082 (2015)) (PATH Act) amended section 6695(g) by expanding the scope of the due diligence requirements to also include claims of the CTC/ACTC under section 24 and the AOTC under section 25A(a)(1), effective for taxable years beginning after December 31, 2015.

These temporary regulations reflect the changes made to section 6695(g) by the PATH Act by expanding the due diligence requirements to the CTC/ACTC and the AOTC. These temporary regulations also conform the regulation to the 2014 Act, reflecting that the penalty is to be adjusted for inflation.

The temporary regulations amend § 1.6695-2 to implement the changes made by the PATH Act that extend the preparer due diligence requirements to returns or claims for refund including claims of the CTC/ACTC and/or AOTC in addition to the EIC. As a result of these changes, one return or claim for refund may contain claims for more than one credit subject to the due diligence requirements. Pursuant to the statute, each failure to comply with the due diligence requirements set forth in regulations prescribed by the Secretary results in a penalty. The section 6695(g) requirements apply to each credit claimed, meaning more than one penalty could apply to a single return or claim for refund. The temporary regulations provide examples to show how multiple penalties could apply when one return or claim for refund is filed.

The Form 8867 has been revised for the 2016 tax year and is a single checklist to be used for all applicable credits (EIC, CTC/ACTC, and/or AOTC) on the return or claim for refund subject to the section 6695(g) due diligence requirements. The Form 8867 was streamlined to eliminate unnecessary redundancy with other forms and schedules. These changes were intended to reduce burden while increasing the utility of the Form 8867 as a checklist for tax return preparers to more accurately determine taxpayer eligibility for credits, thereby reducing errors and increasing compliance by preparers and taxpayers. The temporary regulations clarify § 1.6695-2(b)(1)(ii) to illustrate that the completion of Form 8867 can be based on information provided by the taxpayer to the preparer or otherwise reasonably obtained or previously known by the preparer.

The examples provided in § 1.6695-2(b)(3)(ii) have been updated to provide more insight into when a tax return preparer has satisfied the due diligence knowledge requirement, including for purposes of the CTC and AOTC. The updates to the examples in § 1.6695-2T(b)(3)(ii) illustrate that the knowledge requirement for purposes of due diligence can be satisfied in conjunction with a tax return preparer's information-gathering activities done for the purpose of accurately completing other aspects of a tax return or claim for refund. New examples, Example 2 and Example 4, have also been added to illustrate that in certain circumstances a tax return preparer may satisfy the knowledge requirement based on existing knowledge without having to make additional reasonable inquiries. Another new example, Example 7, provides an example of due diligence for purposes of the AOTC.

Section 1.6695-2(a) is amended by the temporary regulations to reflect the changes made by section 208(c) of the 2014 Act, requiring the IRS to index the penalty for inflation for returns or claims for refund filed after December 31, 2014. In addition, § 1.6695-2T(c)(3) clarifies the parenthetical therein by removing the words “or ascertained.”

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 assessment is not required. For applicability of the Regulatory Flexibility Act, please refer to the cross-reference notice of proposed rulemaking published elsewhere in this issue of the Federal Register. Pursuant to section 7805(f) of the Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on the impact on small businesses.

The principal author of this regulation is Rachel L. Gregory, Office of the Associate Chief Counsel (Procedure & Administration).

Accordingly, 26 CFR parts 1 and 602 are amended as follows:

On November 9, 2015, the Department of Defense published a proposed rule titled, “National Security Education Program (NSEP) and NSEP Service Agreement,” (80 FR 69166-69171) for a 60-day public comment period. The public comment period closed on January 8, 2016. No public comments were received.

After the 60-day public comment period for the proposed rule, minor administrative edits were made to provide clarity or remove outdated, unnecessary, or confusing language in the regulatory text due to an internal DoD re-organization. Offices and symbols have been updated to reflect the most current organizational structure.

The David L. Boren National Security Education Act of 1991 (Title VIII, Pub. L. 102-183), as amended, codified at 50 U.S.C. 1901 et seq. (NSEA), mandated that the Secretary of Defense create and sustain a program to award scholarships to U.S. undergraduate students, fellowships to U.S. graduate students, and grants to U.S. institutions of higher education.

The NSEP is authorized through 50 U.S.C. 1901-1912 to award scholarships, fellowships, and grants to institutions of higher education in order to increase the quantity, diversity, and quality of the teaching and learning of subjects in the fields of foreign languages, area studies, counterproliferation studies, and other international fields that are critical to the Nation's interest, as well as to produce an increased pool of applicants for working the departments and agencies of the United States Government with national security responsibilities.

NSEP oversees nine national security language and culture initiatives designed to attract, recruit, and train a future federal workforce skilled in languages and cultures to work across all agencies involved in national security. These initiatives support professional proficiency language training at U.S. colleges and universities, as well as support students to study overseas in regions critical to U.S. national security through scholarships and fellowships.

The final rule outlines requirements applicable to the NSEP office and NSEP award recipients. This includes information about the NSEP service agreement, which award recipients must adhere to as a condition of award. In exchange for support, NSEP awardees must work in qualifying national security positions in the U.S. federal government for at least one year.

NSEP, as outlined in the David L. Boren National Security Education Act of 1991, oversees multiple critical initiatives. All of NSEP's programs are designed to complement one another, ensuring that the lessons learned in one program inform the approaches of the others. Congress specifically—and uniquely—structured NSEP to focus on the combined issues of language proficiency, national security, and the needs of the federal workforce.

NSEA outlines five major purposes for NSEP, namely:

• To provide the necessary resources, accountability, and flexibility to meet the national security education needs of the United States, especially as such needs change over time;

• To increase the quantity, diversity, and quality of the teaching and learning of subjects in the fields of foreign languages, area studies, counterproliferation studies, and other international fields that are critical to the nation's interest;

• To produce an increased pool of applicants to work in the departments and agencies of the United States government with national security responsibilities;

• To expand, in conjunction with other federal programs, the international experience, knowledge base, and perspectives on which the United States citizenry, government employees, and leaders rely; and

• To permit the federal government to advocate on behalf of international education.

As a result, NSEP is the only federally-funded effort focused on the combined issues of language proficiency, national security, and the needs of the federal workforce.

• Boren Scholarships are awarded to U.S. undergraduates for up to one academic year of overseas study of languages and cultures critical to national security. Boren Scholars demonstrate their merit for an award in part by agreeing to fulfill a one year (minimum) service commitment to the U.S. government. NSEP awards approximately 150 Boren Scholarships annually.

• Boren Fellowships are awarded for up to two years to U.S. graduate students who develop independent projects that combine study of language and culture in areas critical to national security. Boren Fellows demonstrate their merit for an award in part by agreeing to fulfill a one year (minimum) service commitment to the U.S. government. NSEP awards approximately 100 Boren Fellowships annually.

• The Language Flagship supports students to achieve superior-level proficiency in critical languages including Arabic, Chinese, Hindi Urdu, Korean, Persian, Portuguese, Russian, Swahili, and Turkish. Flagship students combine language study with a major discipline of their choice and complete a year-long overseas program that includes intensive language study, direct enrollment in a local university, and a professional internship experience. In addition, The Language Flagship awards grants to U.S. universities recognized as leaders in the field of language education and supports new concepts in language education. More than 2,000 U.S. undergraduate students participate annually in The Language Flagship's programs, which are based at more than 20 U.S. institutions of higher education and multiple universities overseas.

• The Language Flagship also manages a Flagship/ROTC initiative, through which ROTC cadets and midshipmen are supported at Flagship institutions, thus building a cadre of students with professional-level proficiency and commitment to serve in the U.S. armed forces.

• The English for Heritage Language Speakers (EHLS) program provides professional English language instruction for U.S. citizens who are native speakers of critical languages. Participants receive scholarships to the EHLS program at Georgetown University, which provides eight months of instruction. This training allows participants to achieve professional-level proficiency in the English language and prepares them for key federal job opportunities. NSEP awards approximately 20 EHLS Scholarships annually.

• The African Flagship Languages Initiative (AFLI) is a Flagship language program, designed in cooperation with Boren Scholarships and Fellowships, to improve proficiency outcomes in a number of targeted African languages. The Intelligence Authorization Act for Fiscal Year 2010, Section 314 (Pub. L. 111-259) initially directed the establishment of a pilot program to build language capabilities in areas critical to U.S. national security interests, but where insufficient instructional infrastructure currently exists domestically. Based on the successes of its many critical language initiatives, NSEP was designated to spearhead the effort. All AFLI award recipients are funded through either a Boren Scholarship or Boren Fellowship. Participants complete eight weeks of domestic language study at the University of Florida prior to departure overseas, followed by intensive, semester-long study internationally. AFLI's current language offerings include Akan/Twi, French (for Senegal), Hausa, Portuguese (for Mozambique), Swahili, Wolof, and Zulu.

• The National Language Service Corps (NLSC) is a civilian corps of volunteers with certified proficiency in foreign languages. Its purpose is to support DoD or other U.S. departments or agencies in need of foreign language services, including surge or emergency requirements. NLSC capabilities include language support for interpretation, translation, analysis, training, logistics activities, and emergency relief activities. Members generally possess professional-level proficiency in a foreign language and in English, and may have clearances or may be clearable.

• Project GO provides grants to U.S. institutions of higher education with large ROTC student enrollments, including the Senior Military Colleges. In turn, these institutions provide language and culture training to ROTC students from across the nation, funding domestic and overseas ROTC language programs and scholarships. To accomplish Project GO's mission, NSEP closely works with Army, Air Force, and Navy ROTC Headquarters, as well as with U.S. institutions of higher education. To date, institutions participating in the program have supported critical language study for over 3,000 ROTC students nationwide. More than 20 domestic institutions host Project GO programs serving ROTC students from across the country.

• Language Training Centers (LTC) are a collaborative initiative to develop expertise in critical languages, cultures and strategic regions for DoD personnel. Section 529(e) of the National Defense Authorization Act for Fiscal Year 2010 authorized the establishment of the program in 2011. The program's purpose is to leverage the expertise and infrastructure of higher education institutions to train DoD personnel in language, culture, and regional area studies. In 2010, NSEP funded the study “Leveraging Language and Cultural Education and U.S. Higher Education” to fulfill a Congressional request. Findings from the Leveraging report revealed that federal investments in language and culture at higher education institutions produced a group of universities with well-established programs and faculty expertise that are capable of supporting the military's needs for proficiency-based training in critical and less commonly taught languages at various levels of acquisition. Therefore, facilitating the establishment and continued growth of relationships among these institutions, military installations, and DoD entities is an integral part of the LTC program.

To manage and run its initiatives, NSEP employs 8.78 full-time equivalents (FTE), ranging in salary from Federal General Schedule (GS) grade 6 through GS grade 15 (three employees devote partial time to NSEP initiatives, which equates to 0.78 FTE). Using the 2014 GS pay scale for the Washington, DC metro area, NSEP's 8.78 FTEs equate to approximately $795,154 in DoD expenditure annually. To calculate this figure, NSEP used GS step one wage rates for all employees.

NSEA legislates $14,000,000 for Boren Scholarships, Boren Fellowships, and The Language Flagship programs annually (sec. 1910-1911) and $2,000,000 for the EHLS program annually (sec. 1912). In addition, the Intelligence Authorization Act for Fiscal Year 2010, Section 314 (Pub. L. 111-259) directed the establishment of an African language program, a hybrid of Boren and Flagship, at $2,000,000. In addition to these amounts, NSEP receives $10,000,000 annually from DoD appropriations in support of Flagship program efforts.

This final rule will be reported in future status updates of DoD's retrospective review in accordance with Executive Order 13563, “Improving Regulation and Regulatory Review.” DoD's full plan can be accessed at: http://www.regulations.gov/#!docketDetail;D=DOD-2011-OS-0036.

Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has not been designated a “significant regulatory action” under section 3(f) of Executive Order 12866.

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4) requires agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2014, that threshold is approximately $141 million. This document will not mandate any requirements for State, local, or tribal governments, nor will it affect private sector costs.

The Department of Defense certifies that this final rule is not subject to the Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if promulgated, have a significant economic impact on a substantial number of small entities. Therefore, the Regulatory Flexibility Act, as amended, does not require us to prepare a regulatory flexibility analysis.

It has been certified that 32 CFR part 208 does impose reporting or recordkeeping requirements under the Paperwork Reduction Act of 1995. These requirements have been approved by OMB and assigned OMB Control Number 0704-0368, National Security Education Program (Service Agreement Report for Scholarship and Fellowship Awards).

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. This final rule will not have a substantial effect on State and local governments.

The Coast Guard will enforce the special local regulations in 33 CFR 100.1101 for the San Diego Parade of Lights in San Diego Bay Bay, CA in 33 CFR 100.1101, Table 1, Item 5 of that section from 5 p.m. until 8:30 p.m. on December 11, 2016 and December 18, 2016. This enforcement action is being taken to provide for the safety of life on navigable waterways during the event. The Coast Guard's regulation for recurring marine events in the San Diego Captain of the Port Zone identifies the regulated entities and area for this event. Under the provisions of 33 CFR 100.1101, persons and vessels are prohibited from anchoring, blocking, loitering, or impeding within this regulated area, unless authorized by the Captain of the Port, or his designated representative. The Coast Guard may be assisted by other Federal, State, or local law enforcement agencies in enforcing this regulation.

This document is issued under authority of 5 U.S.C. 552(a) and 33 CFR 100.1101. In addition to this document in the Federal Register, the Coast Guard will provide the maritime community with advance notification of this enforcement period via the Local Notice to Mariners, Broadcast Notice to Mariners, and local advertising by the event sponsor.

If the Captain of the Port Sector San Diego or his designated representative determines that the regulated area need not be enforced for the full duration stated on this document, he or she may use a Broadcast Notice to Mariners or other communications coordinated with the event sponsor to grant general permission to enter the regulated area.

The City of Chesapeake, who owns the S168 (Battlefield Blvd. S/SR 168 BUS) Bridge across the Albemarle & Chesapeake Canal, mile 12.0, Atlantic Intracoastal Waterway, Chesapeake (Great Bridge), VA, has requested a temporary deviation from the current operating regulations set out in 33 CFR 117.997(g) to facilitate the 32nd Annual Chesapeake Rotary Christmas Parade.

Under this temporary deviation, the bridge will remain in the closed-to-navigation position from 4:00 p.m. to 6:00 p.m. and from 8:00 p.m. to 10:00 p.m., on December 3, 2016. The closure has been requested to ensure the safety of the increased volume of cars and spectators that will be participating in the 32nd Annual Chesapeake Rotary Christmas Parade. The bridge is a single bascule bridge and has a vertical clearance in the closed-to-navigation position of 8 feet above mean high water.

The Atlantic Intracoastal Waterway (Albemarle and Chesapeake Canal) is used by a variety of vessels including recreational, tug and barge, fishing vessels, and small commercial vessels. The Coast Guard has carefully considered the nature and volume of vessel traffic on the waterway in publishing this temporary deviation.

Vessels able to pass through the bridge in the closed- position may do so at any time. The bridge will open in case of an emergency and there is no immediate alternate route for vessels to pass. The Coast Guard will also inform the users of the waterway through our Local Notice and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessel operators can arrange their transits to minimize any impact caused by the temporary deviation.

In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.

The Virginia Department of Transportation, who owns the Coleman Memorial (US 17) Swing Bridge across the York River, mile 7.0, Yorktown, VA, has requested a temporary deviation from the current operating regulations set out in 33 CFR 117.1025 to facilitate maintenance to the bridge's hydraulic motors, pumps, and hoses.

Under this temporary deviation, the bridge will remain in the closed-to-navigation position from 7:00 a.m. to 8:00 p.m., on December 1, 2016, and December 8, 2016; with an alternate date on December 15, 2016. At all other times, the bridge will operate per 33 CFR 117.1025. The bridge is a swing bridge and has a vertical clearance in the closed-to-navigation position of 60 feet above mean high water.

The York River is used by a variety of vessels including recreational, tug and barge, fishing vessels, and small commercial vessels. The Coast Guard has carefully considered the nature and volume of vessel traffic on the waterway in publishing this temporary deviation.

Vessels able to pass through the bridge in the closed-position may do so at any time. The bridge will not be able to open in case of an emergency. The Coast Guard will also inform the users of the waterway through our Local Notice and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessel operators can arrange their transits to minimize any impact caused by the temporary deviation.

In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.

Sections 112(e) and 114(f) of the Copyright Act, title 17 of the United States Code, create statutory licenses for certain digital performances of sound recordings and the making of ephemeral reproductions to facilitate transmission of those sound recordings. On May 2, 2016, the Copyright Royalty Judges (Judges) adopted final regulations governing the rates and terms of copyright royalty payments under those licenses for the license period 2016-2020 for performances of sound recordings via eligible transmissions by commercial and noncommercial noninteractive webcasters. See 81 FR 26316.

Pursuant to those regulations, at least 25 days before January 1 of each year, the Judges shall publish in the Federal Register notice of a COLA applicable to the royalty fees for performances of sound recordings via eligible transmissions by commercial and noncommercial noninteractive webcasters. 37 CFR 380.10(a)(1)-(2).

The adjustment in the royalty fee shall be based on a calculation of the percentage increase in the CPI-U from the CPI-U published in November 2015 (237.838),1 according to the formula (1 + (Cy−237.838)/237.838) × R2016, where Cy is the CPI-U published by the Secretary of Labor before December 1 of the preceding year and R2016 is the royalty rate for 2016 (i.e., $0.0022 per subscription performance or $0.0017 per nonsubscription performance). The adjustment shall be rounded to the nearest fourth decimal place. 37 CFR 380.10(c) (as revised herein). The CPI-U published by the Secretary of Labor from the most recent index published before December 1, 2016, is 241.729.2 Applying the formula in 37 CFR 380.10(c) and rounding to the nearest fourth decimal place results in no adjustment in the rates for 2017.

The 2017 rate for eligible transmission of sound recordings by commercial webcasters remains unchanged at a rate of $.0022 per subscription performance and $.0017 per nonsubscription performance.

Application of the formula to rates for noncommercial webcasters results in an unchanged rate of $.0017 per performance for all digital audio transmissions in excess of 159,140 ATH in a month on a channel or station.

As provided in 37 CFR 380.1(d), the royalty fee for making ephemeral recordings under section 112 of the Copyright Act to facilitate digital transmission of sound recordings under section 114 of the Copyright Act is included in the section 114 royalty fee and comprises 5% of the total fee.

In consideration of the foregoing, the Judges amend part 380 of title 37 of the Code of Federal Regulations as follows:

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-2015-0439 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 February 3, 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-2015-0439, by one of the following methods:

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

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

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

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

In the Federal Register of August 26, 2015 (80 FR 51759) (FRL-9931-74), 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 5E8362) by Makhteshim Agan of North America, Inc., d/b/a ADAMA, 3120 Highwoods Blvd., Suite 100, Raleigh, NC 27604. The petition requested that 40 CFR 180.427 be amended by establishing a tolerance for residues of the insecticide/miticide tau-fluvalinate in or on wine grapes at 1.0 parts per million (ppm). That document referenced a summary of the petition prepared by Makhteshim Agan of North America, Inc., d/b/a ADAMA, the registrant, which is available in the docket, http://www.regulations.gov. There were no comments received in response to the notice of filing.

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 tau-fluvalinate including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with tau-fluvalinate 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.

Tau-fluvalinate is a member of the pyrethroid class of insecticides. Pyrethroids have historically been classified into two groups, Type I and Type II, based on chemical structure and toxicological effects. Tau-fluvalinate is a Type II pyrethroid. Neurotoxicity was observed throughout the database and clinical signs characteristic of Type II pyrethroids, such as excessive salivation, tremors, pawing, abnormal stance, excessive lacrimation, bulging eyes, ruffling, excessive grooming, vocalization and hyperactivity followed by hypoactivity were seen. Other observed neurotoxic effects included decreased rearing, forelimb grip strength and body temperature, heightened sensitivity to pain, and impaired motor, autonomic, and sensorimotor function.

No increased prenatal susceptibility was observed following developmental toxicity studies in the rat or rabbit. Tau-fluvalinate did not have an effect on fetal development in the prenatal developmental study in rats. In the prenatal developmental study in rabbits, maternal and fetal effects were seen at the highest dose tested. Developmental effects included skeletal anomalies, a lower implantation efficiency, higher incidence of resorption and concurrent lower fetal viability. Maternal effects involved anorexia and general depression. The qualitative susceptibility seen during the prenatal developmental study in rabbits is secondary to maternal toxicity and occurs at the same dose. Evidence of quantitative post-natal sensitivity was observed in the 2-generation reproduction study in rats. Under the conditions of this study, both the F1 and F2 litters experienced tremors during lactation and decreased pup and litter weight in both litters while no effects were noted in the adult animals. However, when considered in the context of the totality of the database, a different pattern emerges regarding this apparent lifestage sensitivity. It appears that the postnatal sensitivity seen in the reproduction study reflects the limited evaluation of adult animals as well as the potential for greater pup exposure through both milk and feed rather than a specific lifestage sensitivity. There are on-going efforts to develop methods to investigate the possibility of increased sensitivity of juvenile rats to pyrethroids as a class at doses near the lowest observed adverse effect level (LOAEL) values. Pending receipt of the additional data, the Agency has conducted an assessment using the available guideline and literature studies. This approach is consistent with assessments performed for other pyrethroid pesticides.

A dermal assessment was not conducted based on the lack of systemic toxicity in the rabbit dermal study at the limit dose and the low potential for dermal absorption. These findings are consistent with the toxicology profile of many pyrethroids. In an acute inhalation neurotoxicity study, neurotoxic effects were observed in the functional observational battery (FOB) including decreased rearing, forelimb grip strength and body temperature in females. This route-specific study provides a robust endpoint for the inhalation route of exposure and was used to estimate human inhalation risks. The standard interspecies extrapolation uncertainty factor is reduced from 10X to 3X due to the human equivalent concentration (HEC) calculation accounting for pharmacokinetic (not pharmacodynamic) interspecies differences. However, due to the lack of a clear no- observed-adverse-effect-level (NOAEL) in the acute inhalation neurotoxicity study, an additional 10X is added to extrapolate a NOAEL from a lowest-observed-adverse-effect-level (LOAEL). The 10X intraspecies factor is also applied. The total uncertainty factor for inhalation exposure is 300X for adults and children >6 years of age. The total inhalation uncertainty factor for children ≤6 years of age is 1,000X since the Food Quality Protection Act safety factor (FQPA SF) of 3X applies.

There was no evidence of carcinogenicity in the combined chronic gavage/carcinogenicity study in rats or the carcinogenicity study in mice. In a battery of mutagenicity studies, there was no evidence of a mutagenic effect.

Specific information on the studies received and the nature of the adverse effects caused by tau-fluvalinate 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 the document titled “Tau-fluvalinate. Human Health Risk Assessment for Registration Review and for Establishment of a Tolerance with No U.S. Registrations for Residues in Wine Grapes” on page 52 in docket ID number EPA-HQ-OPP-2015-0439.

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 no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the LOAEL). 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 reference dose (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://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/assessing-human-health-risk-pesticides.

The database of tau-fluvalinate toxicology studies is complete and provides a robust characterization of the hazard potential for children and adults. In addition to the standard guideline studies, numerous studies from the scientific literature that describe the pharmacodynamic (PD) and pharmacokinetic (PK) profile of the pyrethroids in general have been considered in EPA's assessment. Tau-fluvalinate is rapidly absorbed following an oral dose, and effects are typically observed within the first several hours after dosing. For pyrethroids, as a class, the combination of rapid absorption, metabolism, and elimination precludes accumulation and increased potency following repeated dosing. This is also true of tau-fluvalinate. However, the combined chronic gavage/carcinogenicity neurotoxicity study is more appropriate for point of departure (POD) selection than the acute oral studies, because it is more sensitive. This is likely due to the lower doses tested, and the lower gavage volume used to administer tau-fluvalinate. While acute neurotoxic effects are the most sensitive effects observed in the toxicity database, neurotoxic effects attributable to chronic exposure to tau-fluvalinate have not been identified. The clinical signs in the combined chronic gavage/carcinogenicity neurotoxicity study disappeared each day prior to the next dosing and did not progress in severity across time. This POD is the most protective within the database and will be protective of the acute neurotoxic effects seen in the acute, subchronic and 2-generation reproduction studies in the rat. All exposure durations for the tau-fluvalinate risk assessment are assessed as single-day exposures.

A summary of the toxicological endpoints for tau-fluvalinate used for human risk assessment is shown in Table 1 of this unit.

1. Dietary exposure from food and feed uses. In evaluating dietary exposure to tau-fluvalinate, EPA considered exposure under the petitioned-for tolerances as well as all existing tau-fluvalinate tolerances in 40 CFR 180.427. EPA assessed dietary exposures from tau-fluvalinate 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 tau-fluvalinate. In estimating acute dietary exposure, EPA used food consumption information from the United States Department of Agriculture's (USDA) 2003-2008 National Health and Nutrition Survey/What We Eat in America (NHANES/WWEIA). As to residue levels in food, EPA assumed tolerance-level residues and 100 percent crop treated (PCT) for all registered and proposed commodities.

ii. Chronic exposure. Neurotoxic effects, the most sensitive effects observed in the toxicity database, attributable to chronic exposure to tau-fluvalinate have not been identified (neurotoxic effects do not progress over time); therefore, a quantitative chronic aggregate risk assessment was not conducted.

iii. Cancer. Based on the data summarized in Unit III.A., EPA has concluded that tau-fluvalinate does not pose a cancer hazard to humans. Therefore, a dietary exposure assessment for the purpose of assessing cancer risk is unnecessary.

iv. Anticipated residue and PCT information. EPA did not use anticipated residue or PCT information in the dietary assessment for tau-fluvalinate. Tolerance level residues and 100 PCT were assumed for all food commodities.

2. Dietary exposure from drinking water. As a class of chemicals, the pyrethroids have low water solubility and a high affinity to bind to soils. Given these physical/chemical properties, it is unlikely that dietary exposure from drinking water will be a major pathway of exposure. The existing beehive use and use on wine grapes grown outside of the U.S. will not result in tau-fluvalinate entering drinking water sources. However, the outdoor, non-food uses (including carrots and Brassica/cole crops grown for seed, ornamentals and building perimeters) could potentially result in residues in surface or ground water. The limit of water solubility, 2.4 ppb, is used for tau-fluvalinate as an upper-bound estimated drinking water concentration (EDWC) for this assessment.

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). Tau-fluvalinate is currently registered for the following uses that could result in residential exposures: Outdoor residential settings including outside surfaces (crack and crevice), ant mound treatments (spot application) and use on roses, flowers, houseplants, ground covers, vines, ornamentals, shrubs and trees. EPA assessed residential exposure using the following assumptions: Because a dermal hazard was not identified for tau-fluvalinate, only inhalation exposures were assessed for handlers. The quantitative exposure/risk assessment developed for residential handlers is based on the following scenarios: (1) Applying ready-to-use (RTU) spray for use on gardens/trees, flowers, and ornamentals; (2) Mixing/loading/applying liquids with pump sprayer/hose-end sprayer for use on gardens/trees, flowers, and ornamentals; (3) Mixing/loading/applying liquids with manually pressurized handwand for use on gardens/trees, flowers, and ornamentals; (4) Mixing/loading/applying liquids with backpack for use on gardens/trees, flowers, and ornamentals; (5) Mixing/loading/applying liquids with a sprinkler can for use on gardens/trees, flowers, and ornamentals; and (6) Applying RTU spray to spot or crack and crevice treatment outdoors.

Although there is potential for post-application exposure to individuals as a result of being in an environment that has been previously treated with tau-fluvalinate, post-application inhalation exposure is anticipated to be negligible due to the combination of low vapor pressure for tau-fluvalinate and the expected dilution in outdoor air. In addition, because no dermal POD was selected for tau-fluvalinate (i.e., there is no dermal hazard), a quantitative residential dermal post-application exposure assessment was not performed.

Post-application non-dietary ingestion exposure was also not quantitatively assessed for young children. Unlike treated grass at home or in recreational areas or indoor floor surfaces, for the tau-fluvalinate registered outdoor uses (e.g., flowers, trees, crack and crevice), the potential for exposure via non-dietary ingestion for young children is greatly diminished. Since the extent to which young children engage in the types of activities associated with these areas (e.g., gardening) or utilize these areas for prolonged periods of play is low, significant non-dietary ingestion exposure is not expected.

Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found at http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/standard-operating-procedures-residential-pesticide.

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.”

The Agency has determined that the pyrethroids and pyrethrins share a common mechanism of toxicity http://www.regulations.gov; EPA-HQ-OPP-2008-0489-0006. The members of this group share the ability to interact with voltage-gated sodium channels ultimately leading to neurotoxicity. The cumulative risk assessment (CRA) for the pyrethroids/pyrethrins was published on November 9, 2011 and is available at http://www.regulations.gov; EPA-HQ-OPP-2011-0746. No cumulative risks of concern were identified, allowing the agency to consider new uses for pyrethroids. For information regarding EPA's efforts to evaluate the risk of exposure to this class of chemicals, refer to http://www.epa.gov/oppsrrd1/reevaluation/pyrethroids-pyrethrins.html.

Tau-fluvalinate was included in the 2011 pyrethroid CRA. In the cumulative assessment, residential exposure was the greatest contributor to the total exposure. There are currently registered tau-fluvalinate products for outdoor residential uses that have not been previously assessed and were not included in the CRA. In order to determine if the currently registered tau-fluvalinate residential uses will significantly contribute to or change the overall findings in the pyrethroid CRA, the Agency performed a quantitative cumulative screening assessment. This assessment used the currently registered application rates for tau-fluvalinate along with the previous assumptions as used in the 2011 CRA (i.e., unit exposures, body weight, and the relative potency factor (RPF) for tau-fluvalinate). The resulting exposures were then compared to the pyrethroid CRA index point of departure (index POD) to calculate the screening MOEs. These screening MOEs were then be directly compared to the MOEs that were calculated in the CRA. If the screening MOEs are similar to, or are greater than, the CRA MOEs, then it can be concluded that any currently registered residential uses will not have an impact on the pyrethroid CRA.

The outdoor garden uses resulting in the highest residential exposures for tau-fluvalinate are selected for the screening assessment (specifically, the backpack sprayer and RTU hose-end sprayer garden scenarios). As there is no post-application inhalation or child incidental oral exposures expected from the garden uses, and there is no dermal hazard for tau-fluvalinate, it is only necessary to perform an adult handler inhalation assessment.

The resulting screening MOEs (adult handler) for tau-fluvalinate garden backpack and hose end sprayer scenarios are 1,300,000 and 61,000, respectively. In the CRA, the garden risk driver was identified as the tau-fluvalinate backpack use and the MOE for that scenario was 1,300. However, since the 2011 CRA, it has been determined that there is no dermal hazard for tau-fluvalinate. With the dermal exposures removed, that MOE would now be 780,000 and would no longer be considered the highest risk driver. Therefore, the next highest risk driver for the CRA garden scenario is used which is the cypermethrin backpack use with a total MOE of 1,400. Since the screening MOEs (1,300,000 and 260,000) are much greater than the CRA MOE (1,400), it can be concluded that the currently registered tau-fluvalinate residential uses will not significantly impact the overall findings in the 2011 pyrethroid CRA.

Dietary exposures make a minor contribution to the total pyrethroid exposure. The dietary exposure assessment performed in support of the pyrethroid cumulative was much more highly refined than that performed for the single chemical. The proposed tolerance for residues of tau-fluvalinate on imported wine grape will make an insignificant contribution to dietary risk to the pyrethroids as a whole.

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 FQPA Safety Factor (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. Prenatal and postnatal sensitivity. After reviewing the extensive body of peer-reviewed literature on pyrethroids, the Agency has no residual uncertainties regarding age-related sensitivity for women of child bearing age as well as for all adult populations and children >6 years of age, based on the absence of pre-natal sensitivity observed in 76 guideline studies for 24 pyrethroids and the scientific literature. Additionally, no evidence of increased quantitative or qualitative susceptibility was seen in the pyrethroid scientific literature related to PD. The Agency is retaining a 3X FQPA Safety Factor to protect for exposures of children ≤6 years of age based on the increased quantitative susceptibility seen in studies on pyrethroid PKs and the increased quantitative juvenile susceptibility observed in high dose studies in the literature.

Although sensitivity was observed in the 2-generation reproduction study, there is a clear NOAEL for the effects (tremors), and the PODs selected for risk assessment are 10-fold lower than where sensitivity was observed, and are therefore protective. When considered within the context of the totality of the database, EPA believes that the apparent sensitivity in the multi-generation reproduction toxicity study in rats is a reflection of the study's design rather than a lifestage sensitivity per se. In addition, the LOAELs from the maternal rat prenatal developmental study and the offspring 2-generation reproduction study are ~10 mg/kg/day. There is no sensitivity observed across the rat prenatal developmental and 2-generation reproduction studies.

3. Conclusion. EPA has determined that reliable data show the safety of infants and children would be adequately protected if the FQPA SF were reduced to 1X for adults and the general population and 3X to protect for exposures of children ≤6 years of age based on the increased quantitative susceptibility seen in studies on pyrethroid PKs and the increased quantitative juvenile susceptibility observed in high dose studies in the literature. That decision is based on the following findings:

i. The toxicology database is adequate for the evaluation of risks to infants and children. Acceptable studies include: Rat and rabbit developmental toxicity studies, a rat multi-generation reproduction study and chronic toxicity/carcinogenicity studies in mice and rats. In addition, acceptable acute (non-guideline) and subchronic (guideline) neurotoxicity studies in the rat are adequate to evaluate the neurotoxicity of tau-fluvalinate.

EPA is making best use of the extensive scientific knowledge about the adverse outcome pathway of pyrethroids in the risk assessments for this class of pesticides. In this way, information on a subset of pyrethroids can be used to help interpret and understand the toxicological profile for other members of the class. In that regard, a group of pesticide registrants and product formulators known as the Council for the Advancement of Pyrethroid Human Risk Assessment (CAPHRA) has been conducting multiple experiments with permethrin and deltamethrin as model Type I and Type II compounds, respectively, in order to develop an initial extensive database of in vitro and in vivo toxicology studies and highly refined physiologically-based pharmacokinetic (PBPK) models. In light of the literature studies indicating a possibility of increased sensitivity in juvenile rats at high doses, the agency is expecting additional in vitro and in vivo data to help elucidate the biological processes underlying the juvenile sensitivity reported in the peer reviewed literature. In 2010, the agency requested proposals for study protocols that could identify and quantify potential juvenile sensitivity and received a single response from the Pyrethrin and Pyrethroids Technical Working Group (PPTWG), a conglomerate of pyrethroid registrants. The PPTWG protocol has been reviewed, the initial study proposal was refined, and the CAPHRA submitted its updated research. Currently, the CAPHRA is continuing to: (1) Develop rat and human PBPK models, including additional PK data, and (2) conduct in vivo behavioral testing using auditory startle testing in rats and plans to submit additional data to the agency. For the reasons discussed in Unit III.D.2., the uncertainty regarding the protectiveness of the intraspecies uncertainty factor raised by the literature studies and the absence of the requested data warrant application of an additional 3X for risk assessments for infants and children under 6 years of age.

ii. As with other pyrethroids, tau-fluvalinate causes neurotoxicity from interaction with sodium channels leading to clinical signs of neurotoxicity. Neurotoxicity was observed in several of the toxicity studies for the active ingredient; however, concern is low, because the selected endpoints are protective of the observed effects. The effects are well characterized and adequately assessed by the available guideline and non-guideline studies.

iii. There were no indications of fetal toxicity in the rat developmental toxicity study. In the rabbit developmental toxicity study, there were fetotoxic effects, as indicated by a lower implantation efficiency, higher incidence of resorption and concurrent lower fetal viability in the high-dose group. However, effects were likely secondary to maternal toxicity at the same dose (125 mg/kg/day). There were signs of post-natal sensitivity in the tau-fluvalinate 2-generation reproduction study in rats. The parental generation did not experience any systemic effects up to the highest dose tested, where there were tremors during lactation in both F1 and F2 litters, as well as decreased pup body and litter weights in both generations. The degree of concern for these effects in infants is low, because the offspring effects have clearly defined NOAELs/LOAELs and the POD selected for risk assessment is protective of these effects.

iv. There are no residual uncertainties in the exposure database. Dietary exposures to tau-fluvalinate are estimated using tolerance level residues and 100 PCT. The high-end EDWC for tau-fluvalinate is based on the limit of solubility in water. Adequate exposure data are available to assess the residential exposures. These assessments will not underestimate the exposure and risks posed by tau-fluvalinate.

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 tau-fluvalinate will occupy 20% of the aPAD for adults 50 to 99 years old, the population group receiving the greatest exposure.

2. Chronic risk. Based on the data summarized in Unit III.A., there is no increase in hazard with increasing dosing duration. Furthermore, chronic dietary exposures will be lower than acute exposures. Therefore, the acute aggregate assessment is protective of potential chronic aggregate exposures.

3. Short-term risk. Tau-fluvalinate is currently registered for uses that could result in short-term residential exposure, and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water with short-term residential exposures to tau-fluvalinate.

An Aggregate Risk Index (ARI) approach was used to aggregate the dietary and residential (inhalation) exposures since the levels of concern are not the same for those exposures (100 and 300, respectively). Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposures result in an aggregate ARI of 74 for adults. Because EPA's level of concern for tau-fluvalinate is an ARI of 1 or below, this ARI is not of concern.

4. Intermediate-term risk. Intermediate-term aggregate exposure takes into account intermediate-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level).

Because no intermediate-term adverse effect was identified, tau-fluvalinate is not expected to pose an intermediate-term risk.

5. Aggregate cancer risk for U.S. population. Based on the lack of evidence of carcinogenicity in two adequate rodent carcinogenicity studies, tau-fluvalinate is not expected to pose a cancer risk to humans.

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 tau-fluvalinate residues.

Acceptable methods are available for enforcement and data collection purposes for both plant and animal commodities. The Pesticide Analytical Manual (PAM) Volume II lists Method I, a GC method with electron capture detection (ECD), for the enforcement of tolerances for fluvalinate in/on plant and animal commodities.

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 tau-fluvalinate.

Finally, EPA has revised the tolerance expression to clarify (1) that, as provided in FFDCA section 408(a)(3), the tolerance covers metabolites and degradates of tau-fluvalinate not specifically mentioned; and (2) that compliance with the specified tolerance levels is to be determined by measuring only the specific compounds mentioned in the tolerance expression.

Therefore, a tolerance is established for residues of tau-fluvalinate, in or on grape, wine at 1.0 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:

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 Publishing Office's e-CFR site at http://www.ecfr.gov/cgi-bin/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2016-0049 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 February 3, 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-2016-0049, by one of the following methods:

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

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

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

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

In the Federal Register of April 25, 2016 (81 FR 24044) (FRL-9944-86) and May 19, 2016 (81 FR 31581) (FRL-9946-02), EPA issued documents pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of pesticide petitions (PPs) by DuPont (PP# 5F8435); Interregional Research Project Number 4 (PP# 5E8437) and Syngenta (PP# 5F8441), respectively.

The petition, 5F8437, requested that 40 CFR 180.685 be amended by establishing tolerances for residues of the fungicide oxathiapiprolin, 1-[4-[4-[5-(2,6-difluorophenyl)-4,5-dihydro-3-isoxazolyl]-2-thiazolyl]-1-piperidinyl]-2-[5-methyl-3-(trifluoromethyl)-1H-pyrazol-1-yl]-ethanone, in or on basil, dried leaves at 80 parts per million (ppm); basil, fresh leaves at 10 ppm; Brassica head and stem vegetable group 5-14 at 1.5 ppm; Brassica leafy greens subgroup 4-14B at 10 ppm; caneberry subgroup 13-07A at 0.5 ppm; leafy greens subgroup 4-14A at 15 ppm; and stalk and stem vegetable subgroup 22A at 2 ppm. The notice of filing for petition, PP# 5E8437, proposed a tolerance for individual crops included in designated crop group/subgroups under a proposed rule, “Tolerance Crop Grouping Program IV” on November 14, 2014 (79 FR 68153). This rule proposed certain revisions to EPA's pesticide tolerance crop grouping regulations. The final rule establishing tolerances for these crop groups/subgroups “Pesticide Tolerance Crop Grouping Program Amendment IV” published on May 3, 2016 (81 FR 26471).

The Syngenta petition, 5F8441, requested that 40 CFR 180.685 be amended by establishing tolerances for residues of the fungicide oxathiapiprolin, 1-[4-[4-[5-(2,6-difluorophenyl)-4,5-dihydro-3-isoxazolyl]-2-thiazolyl]-1-piperidinyl]-2-[5-methyl-3-(trifluoromethyl)-1H-pyrazol-1-yl]-ethanone, in or on: citrus oil at 2.0 ppm; citrus, pulp at 0.09 ppm; fruit, citrus, group 10-10 at 0.06 ppm; potato, wet peel at 0.07 ppm; and requested revising the existing 0.01 ppm tolerance on vegetable, tuberous and corm, subgroup 1C to 0.04 ppm.

The Dupont petition, 5F8435, requested that 40 CFR 180.685 be amended by establishing tolerances for residues of the fungicide oxathiapiprolin, 1-[4-[4-[5-(2,6-difluorophenyl)-4,5-dihydro-3-isoxazolyl]-2-thiazolyl]-1-piperidinyl]-2-[5-methyl-3-(trifluoromethyl)-1H-pyrazol-1-yl]-ethanone, in or on: soybean at 0.01 ppm, and sunflower at 0.01 ppm.

A summary of the petitions prepared by IR4 and the registrants, DuPont and Syngenta, are available in the docket, http://www.regulations.gov. One comment was received on the notice of filings. EPA's response to this comment is discussed in Unit IV.C.

Based upon review of the data supporting the subject petitions, EPA has revised the proposed tolerance level for certain crops and corrected commodity definitions, as needed, to be consistent with current EPA policy. The reason for these changes are explained in Unit IV.D.

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 oxathiapiprolin including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with oxathiapiprolin follows.

EPA has evaluated the available toxicity data and considered their 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. In the toxicity studies for oxathiapiprolin, no treatment-related effects were seen in any species at doses up to the limit dose (1,000 millgrams/kilogram (mg/kg)/day). No treatment-related effects were seen in subchronic or chronic oral toxicity (rats, mice, or dogs), dermal toxicity, neurotoxicity, or immunotoxicity studies. Additionally, there was no evidence of carcinogenicity in cancer studies with rats or mice. No treatment-related effects were seen in maternal or fetal animals in rat or rabbit developmental toxicity studies. Treatment-related effects were observed in offspring animals in rat reproduction studies (decreased body weight and delayed preputial separation); however, the effects were only observed at doses above the limit dose. Such high doses are not relevant for human health risk. The lack of observed treatment-related oxathiapiprolin toxicity effects is consistent with the low to moderate oral absorption and lack of bioaccumulation reported in the rat metabolism studies. In acute lethality studies, exposure to oxathiapiprolin resulted in low toxicity via the oral, dermal, and inhalation routes of exposure. Oxathiapiprolin was not a dermal or eye irritant, or a skin sensitizer.

Specific information on the studies received and the nature of the adverse effects caused by oxathiapiprolin 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, “Oxathiapiprolin—New Active Ingredient Human Health Risk Assessment of Uses on Turf, Ornamentals, and a Number of Crops” dated June 25, 2015, in docket ID number EPA-HQ-OPP-2014-0114.

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 no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the LOAEL). 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 reference dose (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://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/assessing-human-health-risk-pesticides.

The majority of the toxicity studies for oxathiapiprolin did not demonstrate treatment-related effects, with the exception of the reproduction study. The effects in the reproduction study were minimal and seen at doses (above the limit dose) not relevant for human exposure. There were no adverse acute or chronic effects identified for any population groups (including infants and children). Therefore, due to the limited toxicity in the oxathiapiprolin toxicological database, toxicity endpoints and points of departure were not selected for oxathiapiprolin exposure scenarios and a quantitative risk assessment was not conducted.

1. Dietary exposure from food and feed uses. In evaluating dietary exposure to oxathiapiprolin, EPA considered exposure under the petitioned-for tolerances as well as all existing oxathiapiprolin tolerances in 40 CFR 180.685. There is likely to be dietary exposure to oxathiapiprolin from its use as a pesticide on food. Should exposure occur, however, minimal to no risk is expected for the general population, including infants and children, due to the low toxicity of oxathiapiprolin.

2. Dietary exposure from drinking water. Exposure to oxathiapiprolin via drinking water from the proposed uses is expected to be minimal due to rapid foliar uptake and limited quantities available in spray drift. No adverse effects were observed in the submitted toxicological studies for oxathiapiprolin regardless of the route of exposure.

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).

Oxathiapiprolin is not proposed or registered for any specific use pattern that would result in residential handler exposure. However, some of the uses could involve commercial application in areas where residential post-application activities could occur (i.e., individuals playing on treated golf courses, commercial landscapes or treated ornamentals purchased at a retail location). Since no adverse effects were observed for oxathiapiprolin in the submitted toxicological studies (regardless of the route of exposure), quantitative residential handler or post-application exposure assessments are not needed.

Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found at: http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/standard-operating-procedures-residential-pesticide.

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.” EPA has not found oxathiapiprolin to share a common mechanism of toxicity with any other substances, and oxathiapiprolin does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that oxathiapiprolin does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's Web site at: http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/cumulative-assessment-risk-pesticides.

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 FQPA Safety Factor (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. Prenatal and postnatal sensitivity. No evidence of increased quantitative or qualitative susceptibility was seen in developmental toxicity studies in rats and rabbits. No treatment related effects were seen in maternal or fetal animals in the studies. However, there was evidence of increased quantitative susceptibility in reproduction studies in rats at doses above the limit dose. Decreased pup weight and delayed sexual maturation (preputial separation) were seen in the studies in the absence of maternal toxicity.

3. Conclusion. EPA evaluated the available toxicity and exposure data on oxathiapiprolin and considered their validity, completeness, and reliability, as well as the relationship of this information to human risk. EPA considers the toxicity database to be complete and has identified no residual uncertainty with regard to prenatal and postnatal toxicity or exposure. No hazard was identified based on the available studies; therefore, EPA concludes that there are no threshold effects of concern to infants, children, or adults from oxathiapiprolin. As a result, EPA concludes that no additional margin of exposure (safety) is necessary.

Taking into account the available data for oxathiapiprolin, EPA has concluded that given the lack of toxicity of this substance, no risks of concern are expected. Therefore, 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 oxathiapiprolin.

Method 30422 (Supplement No. 1) was developed for plant commodities, and Method 31138 was developed for livestock commodities. Residues of oxathiapiprolin and associated metabolites are extracted from crop or livestock commodity samples using a solution of formic acid, water and acetonitrile, and diluted with acetonitrile and water. Both methods use liquid chromotography with tandem mass spectrometry (LC/MS/MS), specifically reverse-phase liquid chromatography (LC), and detection by electrospray tandem mass spectrometry (MS/MS).

The FDA multi-residue methods are not suitable for detection and enforcement of oxathiapiprolin residues or associated metabolites. However, the European Multiresidue Method (DFG Method S19) and the QuEChERS Multiresidue Method have shown success in some matrices.

Adequate enforcement methodology (LC/MS/MS) 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 maximum residue limits (MRLs) for oxathiapiprolin.

A comment was received from an anonymous commenter objecting to EPA “approving additional uses of oxathiapiprolin that add to the thousands of existing toxic chemical residues as well as the undetermined synergistic effects these toxicants pose to America's population.” The existing legal framework provided by section 408 of the Federal Food, Drug, and Cosmetic Act (FFDCA) states that tolerances may be set when the pesticide meets the safety standard imposed by that statute. As required by that statute, EPA conducted a comprehensive assessment of oxathiapiprolin, including its potential for carcinogenicity. Based on its assessment of the available data, the Agency believes that given the observed lack of toxicity of this chemical, no risks of concern are expected. Therefore, 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 oxathiapiprolin.

In the notice of filing for petition 5E8437, the titles of the designated new commodity group and subgroups are as listed in the “Tolerance Crop Grouping Program IV” proposal of November 14, 2014 (79 FR 68153). In the final rule which published on May 3, 2016, “Pesticide Tolerances Crop Grouping Program Amendment IV,” EPA revised the crop group/subgroup titles by roughly retaining the same name and number as the pre-existing group/subgroup, except the number is followed by a hyphen and the final digits of the year established. Hence, the title of the requested “Brassica leafy greens subgroup 4-14B” (due to the May 3, 2016 final rule as noted above) becomes “Brassica leafy greens subgroup 4-16B.” Likewise, the requested “Leafy greens subgroup 4-14A” becomes “Leafy greens subgroup 4-16A;” and the title of the requested “Brassica head and stem vegetable group 5-14” was revised to “Vegetable, Brassica head and stem, group 5-16.”

To be consistent with current EPA policy, the commodity definitions were corrected for the following crops: vegetable, stalk and stem, subgroup 22A to stalk and stem vegetable subgroup 22A; citrus fruit, crop group 10 10 to fruit, citrus, group 10-10; citrus oil to citrus, oil; citrus pulp to citrus, dried pulp; soybean to soybean, seed; and sunflower to sunflower, seed.

For certain proposed crop tolerances, the Agency corrected the proposed tolerance levels. For caneberry subgroup 13-07A, the corrected tolerance level includes an additional significant figure (0.50 ppm rather than the proposed 0.5 ppm). This is to avoid the situation where rounding of an observed residue to the level of precision of the tolerance expression would be considered non-violative (such as 0.54 ppm being rounded to 0.5 ppm). For the same reason, the corrected tolerance for stalk and stem vegetable subgroup 22A is 2.0 ppm instead of the proposed 2 ppm.

Therefore, tolerances are established for residues of the fungicide oxathiapiprolin, 1-[4-[4-[5-(2,6-difluorophenyl)-4,5-dihydro-3-isoxazolyl]-2-thiazolyl]-1-piperidinyl]-2-[5-methyl-3-(trifluoromethyl)-1H-pyrazol-1-yl]-ethanone, in or on basil, dried leaves at 80 ppm; basil, fresh leaves at 10 ppm; Brassica leafy greens subgroup 4-16B at 10 ppm; caneberry subgroup 13-07A at 0.50 ppm; leafy greens subgroup 4-16A at 15 ppm; citrus, dried pulp at 0.09 ppm; citrus, oil at 2.0 ppm; fruit, citrus, group 10-10 at 0.06 ppm; potato, wet peel at 0.07 ppm; soybean, seed at 0.01 ppm; stalk and stem vegetable subgroup 22A at 2.0 ppm; sunflower, seed at 0.01 ppm and vegetable, Brassica, head and stem, group 5-16 at 1.5 ppm. The existing 0.01 ppm tolerance on vegetable, tuberous and corm, subgroup 1C is revised to 0.04 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:

The NFIP enables property owners to purchase Federal flood insurance that is not otherwise generally available from private insurers. In return, communities agree to adopt and administer local floodplain management measures aimed at protecting lives and new construction from future flooding. Section 1315 of the National Flood Insurance Act of 1968, as amended, 42 U.S.C. 4022, prohibits the sale of NFIP flood insurance unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed in this document no longer meet that statutory requirement for compliance with program regulations, 44 CFR part 59. Accordingly, the communities will be suspended on the effective date in the third column. As of that date, flood insurance will no longer be available in the community. We recognize that some of these communities may adopt and submit the required documentation of legally enforceable floodplain management measures after this rule is published but prior to the actual suspension date. These communities will not be suspended and will continue to be eligible for the sale of NFIP flood insurance. A notice withdrawing the suspension of such communities will be published in the Federal Register.

In addition, FEMA publishes a Flood Insurance Rate Map (FIRM) that identifies the Special Flood Hazard Areas (SFHAs) in these communities. The date of the FIRM, if one has been published, is indicated in the fourth column of the table. No direct Federal financial assistance (except assistance pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act not in connection with a flood) may be provided for construction or acquisition of buildings in identified SFHAs for communities not participating in the NFIP and identified for more than a year on FEMA's initial FIRM for the community as having flood-prone areas (section 202(a) of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4106(a), as amended). This prohibition against certain types of Federal assistance becomes effective for the communities listed on the date shown in the last column. The Administrator finds that notice and public comment procedures under 5 U.S.C. 553(b), are impracticable and unnecessary because communities listed in this final rule have been adequately notified.

Each community receives 6-month, 90-day, and 30-day notification letters addressed to the Chief Executive Officer stating that the community will be suspended unless the required floodplain management measures are met prior to the effective suspension date. Since these notifications were made, this final rule may take effect within less than 30 days.

National Environmental Policy Act. FEMA has determined that the community suspension(s) included in this rule is a non-discretionary action and therefore the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) does not apply.

Regulatory Flexibility Act. The Administrator has determined that this rule is exempt from the requirements of the Regulatory Flexibility Act because the National Flood Insurance Act of 1968, as amended, Section 1315, 42 U.S.C. 4022, prohibits flood insurance coverage unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed no longer comply with the statutory requirements, and after the effective date, flood insurance will no longer be available in the communities unless remedial action takes place.

Regulatory Classification. This final rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 13132, Federalism. This rule involves no policies that have federalism implications under Executive Order 13132.

Executive Order 12988, Civil Justice Reform. This rule meets the applicable standards of Executive Order 12988.

Paperwork Reduction Act. This rule does not involve any collection of information for purposes of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

Accordingly, 44 CFR part 64 is amended as follows:

The NFIP enables property owners to purchase Federal flood insurance that is not otherwise generally available from private insurers. In return, communities agree to adopt and administer local floodplain management measures aimed at protecting lives and new construction from future flooding. Section 1315 of the National Flood Insurance Act of 1968, as amended, 42 U.S.C. 4022, prohibits the sale of NFIP flood insurance unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed in this document no longer meet that statutory requirement for compliance with program regulations, 44 CFR part 59. Accordingly, the communities will be suspended on the effective date in the third column. As of that date, flood insurance will no longer be available in the community. We recognize that some of these communities may adopt and submit the required documentation of legally enforceable floodplain management measures after this rule is published but prior to the actual suspension date. These communities will not be suspended and will continue to be eligible for the sale of NFIP flood insurance. A notice withdrawing the suspension of such communities will be published in the Federal Register.

In addition, FEMA publishes a Flood Insurance Rate Map (FIRM) that identifies the Special Flood Hazard Areas (SFHAs) in these communities. The date of the FIRM, if one has been published, is indicated in the fourth column of the table. No direct Federal financial assistance (except assistance pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act not in connection with a flood) may be provided for construction or acquisition of buildings in identified SFHAs for communities not participating in the NFIP and identified for more than a year on FEMA's initial FIRM for the community as having flood-prone areas (section 202(a) of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4106(a), as amended). This prohibition against certain types of Federal assistance becomes effective for the communities listed on the date shown in the last column. The Administrator finds that notice and public comment procedures under 5 U.S.C. 553(b), are impracticable and unnecessary because communities listed in this final rule have been adequately notified.

Each community receives 6-month, 90-day, and 30-day notification letters addressed to the Chief Executive Officer stating that the community will be suspended unless the required floodplain management measures are met prior to the effective suspension date. Since these notifications were made, this final rule may take effect within less than 30 days.

National Environmental Policy Act. FEMA has determined that the community suspension(s) included in this rule is a non-discretionary action and therefore the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) does not apply.

Regulatory Flexibility Act. The Administrator has determined that this rule is exempt from the requirements of the Regulatory Flexibility Act because the National Flood Insurance Act of 1968, as amended, Section 1315, 42 U.S.C. 4022, prohibits flood insurance coverage unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed no longer comply with the statutory requirements, and after the effective date, flood insurance will no longer be available in the communities unless remedial action takes place.

Regulatory Classification. This final rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 13132, Federalism. This rule involves no policies that have federalism implications under Executive Order 13132.

Executive Order 12988, Civil Justice Reform. This rule meets the applicable standards of Executive Order 12988.

Paperwork Reduction Act. This rule does not involve any collection of information for purposes of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

Accordingly, 44 CFR part 64 is amended as follows:

The Board initiated this rulemaking proceeding in response to the service problems that began to emerge in the railroad industry in late 2013. Those service problems affected the transportation of a wide range of commodities, including grain, fertilizer, ethanol, coal, automobiles, chemicals, propane, consumer goods, crude oil, and industrial commodities.

In response to the service challenges, the Board held two public hearings, in April 2014 in Washington, DC, and in September 2014 in Fargo, ND, to allow interested persons to report on service problems, to hear from rail industry executives on plans to address rail service problems, and to explore options to improve service. During and after these hearings, parties expressed concerns about the lack of publicly available information related to rail service and requested access to performance data from the railroads to better understand the scope, magnitude, and impact of the service issues,1 as well as the underlying causes and the prospects for recovery.

Based on these concerns and to better understand railroad operating conditions, the Board issued an order on October 8, 2014, requiring all Class I railroads and the Class I railroad members of the CTCO to file weekly reports containing specific service performance data. See U.S. Rail Serv. Issues—Data Collection (Interim Data Order), EP 724 (Sub-No. 3) (STB served Oct. 8, 2014).2 Railroads were asked to report weekly average train speeds, weekly average terminal dwell times, weekly average cars online, number of trains held short of destination, and loading metrics for grain and coal service, among other information. The data were intended to give both the Board and its stakeholders access to current information about the operations and performance of the Class I railroads and the fluidity of the Chicago gateway. In addition, the data were expected to assist rail shippers in making logistics decisions, planning operations and production, and mitigating potential losses.

On October 22, 2014, the Class I railroads and the Association of American Railroads (on behalf of the CTCO) filed the first set of weekly reports in response to the Interim Data Order. As requested by the Board, each carrier provided an explanation of its methodology for deriving performance data in response to each request. Generally, the reports corresponded to the elements of the Interim Data Order; however, some railroads approach individual requests differently, leading to variations in the reported data. The different approaches are due primarily to the railroads' disparate data-keeping systems, different railroad operating practices, and/or unintended ambiguities in certain requests. Certain railroads have also departed from the Board's prescribed reporting in order to maintain consistency with their own weekly data runs and analyses.

The weekly filings have allowed the Board and its stakeholders to monitor the industry's performance and have allowed the Board to develop baseline data. Based on the Board's experience with the reporting to date, and as expressly contemplated in the Interim Data Order, the Board proposed new regulations for permanent reporting by the members of the Class I railroad industry and the CTCO, through its Class I members. See U.S. Rail Serv. Issues—Performance Data Reporting (NPR), EP 724 (Sub-No. 4) (STB served Dec. 30, 2014).

The proposed reporting requirements in the NPR included many of the requests contained in the Interim Data Order. The NPR proposed nine weekly metrics that would apply to Class I railroads: (1) System average train speed; (2) weekly average terminal dwell time; (3) weekly average cars online; (4) weekly average dwell time at origin and interchange; (5) weekly total number of loaded and empty trains held short of destination or scheduled interchange; (6) daily average number of loaded and empty cars operating in normal movement which have not moved in specified periods of time; (7) weekly total number of grain cars loaded and billed, by state; (8) for grain cars, the total overdue car orders, average days late, total new grain car orders in the past week, total orders filled in the past week, and number of orders cancelled in the past week; and (9) weekly total coal unit train loadings or carloadings by region. The NPR also proposed metrics pertaining to service in Chicago as well as reporting on major rail infrastructure projects. Finally, the NPR proposed to exempt Kansas City Southern Railway Company from filing state-specific information in response to Request Nos. 7 and 8, due to the nature of its grain business and its very limited number of customers in a small number of states in its service territory.

Following receipt of comments in response to the NPR, the Board issued an order announcing that it would waive its ex parte communications rules in order to allow Board staff to hold meetings with interested parties to develop a more complete record with regard to technical issues in this proceeding. See U.S. Rail Serv. Issues—Performance Data Reporting, EP 724 (Sub-No. 4) (STB served Nov. 9, 2015) (with Board Member Begeman concurring in part). Following the meetings, the Board posted a summary of each meeting in this docket and then parties provided additional comments on the summaries. As a result of the comments and meetings, the Board issued a supplemental notice of proposed rulemaking. See U.S. Rail Serv. Issues—Performance Data Reporting (SNPR), EP 724 (Sub-No. 4) (STB served Apr. 29, 2016), corrected, (STB served May 13, 2016). The SNPR proposed changes to six of the proposed reporting metrics in the NPR (Request Nos. 1, 4, 5, 6, 8, and 9), modifications to the reporting week and definition of a unit train, and the addition of three new metrics (Request Nos. 10, 11, and 12) (grain shuttle/dedicated grain trips per month, weekly originated carloads by commodity, and car order fulfillment percentage for 10 car types). See SNPR, slip op. at 24-26. With regard to Request No. 7 and No. 8, KCS was not required to report information by state, but instead only system-wide data. See NPR, slip op. at 7; SNPR, slip op. at 28.

In response to the SNPR, the invitation for stakeholder meetings, and the NPR, the Board received a significant volume of comments and proposals from stakeholders. We have carefully reviewed those comments, proposals, and meeting summaries in order to identify both general themes regarding service reporting and better technical methods for collecting information.

The primary purpose of this rulemaking has been to develop a set of performance data that will allow the agency to monitor current service conditions in the industry and to identify trends or aberrations, which may indicate problems. The cumulative data will give the Board reference points for measuring an individual railroad against its past performance. A corollary benefit is that shippers and other stakeholders will have access to the reported data to assist in their business decisions and supply-chain planning. At the same time, the Board has sought to make sure that any rule adopted regarding service data results in the collection of information that will be useful to the agency and its stakeholders. The Board believes that the final rule adopted here is an appropriate balance of considerations that will provide helpful information to both the agency and the public.

These rules will be effective on January 29, 2017. Carriers will begin reporting on Wednesday, February 8, 2017.3 The data required under 49 CFR 1250.2 and 1250.3(a) must be emailed to [email protected], in Microsoft Excel or other format specified by the Board's Office of Public Assistance, Governmental Affairs, and Compliance (OPAGAC). The narrative data required under 49 CFR 1250.3(b) and 1250.4 must be reported to the Director of OPAGAC and emailed to [email protected]. Any updates to the method and form for reporting data will be posted on the Board's Web site.

The following parties provided comments in this proceeding, either in the form of written comments or oral comments during the ex parte meetings that were then summarized and posted by the Board, or both:

Alliance for Rail Competition et al.; American Chemistry Council; Association of American Railroads (AAR); BASF Corporation; BNSF Railway Company (BNSF); Canadian Pacific Railway Company (CP); Chicago Metropolitan Agency for Planning (CMAP); CSX Transportation, Inc. (CSXT); Freight Rail Customer Alliance; Highroad Consulting, Ltd. (HRC); Kansas City Southern Railway Company (KCS); Thomas F. McFarland and Gordon P. MacDougall; National Corn Growers Association; National Grain and Feed Association (NGFA); National Industrial Transportation League (NITL); Norfolk Southern Railway Company (NSR); South Dakota Corn Growers Association; The Fertilizer Institute (TFI); Texas Trading and Transportation Services, LLC, et al.; Union Pacific Railway Company (UP); U.S. Department of Agriculture; U.S. Department of Transportation; and Western Coal Traffic League, et al. (WCTL). The Honorable John Thune, Chairman, Senate Committee on Commerce, Science, and Transportation, submitted comments in this proceeding as well.

Below we generally summarize the comments received on the SNPR, 4 and explain the changes being adopted in this final rule. Although not all comments and recommendations will be adopted, all of the many comments parties have submitted were carefully reviewed and considered in deciding on the final rule.

AAR's position is that the Board should state a valid regulatory purpose for the rule before adding to the cumulative regulatory burden on the railroads. (AAR SNPR Comments 5.) AAR argues that the rules are not necessary for improving rail service, expressing the view that rail service improved in 2013-2014 “because of efforts of railroads to serve their customers.” (Id. at 6.) Finally, AAR asserts that the SNPR “does not articulate how the proposed rules would be useful in carrying out the specific statutory provisions the Board cites” and argues that each statutory provision requires “particularized findings related to the specific transportation at issue beyond the proposed data collection.” (Id.)

As the Board stated in the SNPR, “the need and justification for a permanent reporting rule is clear.” Slip op. at 22. Under the Interstate Commerce Act, the Board has broad authority to require reports by rail carriers under 49 U.S.C. 1321, 11145. The statute also makes clear that service adequacy is a key part of the Board's mandate, beginning with the provisions of the rail transportation policy (RTP) of 49 U.S.C. 10101. See SNPR, slip op. at 22. The RTP states that, in regulating the railroad industry, it is policy of the United States Government to minimize the need for regulatory control, 49 U.S.C. 10101(2), promote a safe and efficient rail transportation system, 49 U.S.C. 10101(3), ensure the development of a sound rail transportation system to meet the needs of the public, 49 U.S.C. 10101(3), and encourage efficient management of railroads, 49 U.S.C. 10101(9). The Board finds that having data that will allow it to monitor service across the rail network advances these RTP goals. The data will help promote the RTP by allowing the agency, as well as shippers and other stakeholders, to more quickly identify and react to service issues than it would otherwise have the ability to do.

As also explained in the SNPR, slip op. at 22, the Board has the responsibility for monitoring the adequacy of service under specific statutory provisions, including service emergencies under 49 U.S.C. 11123. The Board's powers under section 11123 are extensive 5 and can be initiated by the agency. The potential triggers for Board action, such as “congestion of traffic” and “other failure of traffic movement” (49 U.S.C. 11123(a)), are clearly implicated by the collection of service metrics, and the Board has explained that reporting would “improve the Board's ability to identify and help resolve future regional or national service disruptions more quickly.” SNPR, slip op. at 22. Service issues can also be relevant when the Board considers whether railroad service practices are reasonable (49 U.S.C. 10702), whether to force a line sale in the event of inadequate service (49 U.S.C. 10907), and whether railroads are fulfilling their common carrier obligations (49 U.S.C. 11101) or providing safe and adequate car service (49 U.S.C. 11121). See SNPR, slip op. at 22 (explaining that “permanent reporting . . . would aid the Board and industry stakeholders in identifying whether railroads are adequately meeting those statutory requirements.”). Accordingly, we disagree with AAR's suggestion that the Board has not articulated a justification for the data's usefulness.

The Board also finds no merit to the AAR's suggestion that the data reporting would be unhelpful in determining if some of the statutory provisions listed by the Board are met. The AAR argues that these statutory provisions require “particularized findings” that would necessitate more granular information than would be provided for by the reported data. However, even if more granular information would be required for the Board to act in a particular circumstance, the Board has explained that the reporting will assist it in determining whether to request more granular data or information. SNPR, slip op. at 22. Likewise, AAR's suggestion that baseline service metrics would be “irrelevant” in common carrier or forced sale-cases limits—in advance—what service information shippers and carriers would find probative in such cases.6

The Board believes that the long-term utility of the data collection in this final rule outweighs the additional burden placed on the rail industry. It will also help promote the RTP as outlined above.

Railroad Interests. The railroads generally oppose metrics focused on particular commodities, train types, or geographic regions. AAR reiterates that a few “macro-level reporting metrics would best serve the Board's goals of maintaining access to information . . . while balancing the burdens imposed on railroads.” (AAR SNPR Comments 2.) As such, AAR advocates that the Board's final rule be based on macro-level data that is presently reported to the AAR. It asserts that such macro-level metrics best reflect trends and relative changes in service performance while granular reporting is confusing, potentially misleading, and less useful for comparisons over time. (Id.) AAR also states that shipper groups have failed to explain how they actually use the data. (AAR SNPR Reply 2-3.) Finally, AAR warns that the Board “should be aware that this data inevitably will be . . . cited to the Board as evidence that one railroad is underperforming its peers regardless of whether that conclusion is correct.” (Id. at 3.)

NSR agrees that service performance metrics tailored to specific commodities may create a misleading picture of overall service and asserts that the burdens of such reporting outweigh the benefits. (NSR SNPR Comments 3.) UP and CP likewise assert that the final rule should only include network-specific metrics. (CP SNPR Comments 2; UP SNPR Comments 2-3.) UP asserts that the more detailed metrics are too narrow to provide more meaningful information, and can be required based on service issues. (UP SNPR Comments 2-3.) In addition, UP again opposes NGFA's request for additional grain reporting. (UP SNPR Reply 1-3.).7

Shipper Interests and Other Stakeholders. NGFA disagrees with the Board's statement in the SNPR that “the burden of more granular metrics [than those proposed in the SNPR] outweigh(s) their value as a tool for identifying regional or national system-wide problems” and argues that the Board must instead increase the granularity of the rail service performance data it collects. (NGFA SNPR Comments 3, 3-5.) NGFA asserts that the Board should “consider the benefits of some additional specific data to rail customers in monitoring service, given the diverse and differing rail transportation service that applies to different types of grain-based agricultural products.” (Id. at 3.) NGFA cites findings made in a 2015 National Academy of Sciences/Transportation Research Board report and a 2008 Laurits R. Christensen Associates Inc. report 8 while arguing that: (1) The data the Board proposes to collect are too aggregated to provide meaningful insights into service quality; (2) system-wide performance data is less useful to shippers than data based on route, corridor, or commodity, which are important for identifying and rectifying service issues; and (3) variability in service, which tended to be greater in grain and coal units, can be more costly and problematic than absolute service levels. (Id. at 4-5.)

Final Rule. As noted above, the Board's objective in the proceeding is to obtain weekly data that allows the agency to monitor the railroad industry's current performance and to build a data set that will allow the Board to observe trends and make comparisons against past performance. The set of requests being adopted today advances these objectives and strikes an appropriate balance of augmenting the Board's ability to better monitor rail service trends without burdening railroads with excessive reporting requirements. The Board is thus declining to either adopt the railroad industry's request to alter the reporting to the “macro level” data presently reported to AAR or to adopt, for the most part,9 the shippers' requests for additional “granular” data covering discrete subsets of traffic, specific corridors, or local operations.

The SNPR proposes defining the reporting week as 12:01 a.m. Saturday to 11:59 p.m. Friday with reports due the following Wednesday.

Railroad Interests. The railroads generally agree with the proposal in the SNPR, with one exception. AAR urges the Board to modify its proposed reporting week for Request No. 11 (weekly carloadings) to conform to the reporting week that railroads have historically used to report the same data to AAR. “That data has been based on a week ending at 11:59 p.m. Saturday, which permits the weekly report to capture most of the traffic originated during the week by customers who complete their car loading activities by Friday at close of business.” (AAR SNPR Comments 7.) AAR notes that it has identified no compelling reason why the weekly carloadings data must match the other service metrics. (Id.)

In response to NGFA's criticisms of the Wednesday reporting day, AAR states that NGFA provides no support for its assertion that a Monday reporting day is essential. (AAR SNPR Reply 2.) UP also states that it needs until Wednesday afternoon to capture, validate, analyze/process, and compile the information from different sources that goes into its reports. (UP SNPR Reply 3-4.)

Shipper Interests and Other Stakeholders. NITL does not oppose the SNPR's proposed reporting week. (NITL SNPR Comments 2-3.) NGFA also does not oppose the proposed reporting week, but urges the Board to require the weekly reports be filed no later than Monday. (NGFA SNPR Comments 7.)

Final Rule. Except with respect to Request No. 11 (weekly carloadings), the Board will adopt the reporting week and reporting day proposed in the SNPR as the final rule. The 12:01 a.m. Saturday to 11:59 p.m. Friday reporting week comports with the railroad industry's internal reporting practices. Allowing railroads to report data on Wednesday gives them sufficient opportunity to collect, review, and assemble the data prior to submission. For purposes of Request No. 11, and consistent with AAR's suggestion, the Board will modify the reporting week proposed in the SNPR to 12:01 a.m. Sunday to 11:59 p.m. Saturday with a Wednesday reporting day. This is consistent with how the industry has historically reported and currently reports weekly carloadings to AAR. The Board does not foresee any issue with the fact that this metric would cover a different weekly period (by one day) than the other metrics.

The SNPR proposes that, rather than having a single definition for unit train, each carrier be allowed to report unit train data based on how it assigns train symbols (or codes) in accordance with its own business practices.

Railroad Interests. Railroad interests generally support the SNPR's definition of unit train, stating that “it will ensure that data collected matches railroads' and their customers' understanding of the traffic.” (AAR SNPR Comments 4; see also UP SNPR Comments 1-2; BNSF SNPR Comments 2.)

Shipper Interests and Other Stakeholders. Shipper interests generally do not oppose the definition of unit train proposed in the SNPR. (NGFA SNPR Comments 7; NITL SNPR Comments 2-3.) However, they ask that the Board draw special attention to the definitions of unit train on its Web site to offer clear guidance on how each railroad defines unit train. (NGFA SNPR Comments 7; NITL SNPR Comments 2-3.) NGFA also requests that the Board require each carrier to provide updates if and when it changes its unit train definition. (NGFA SNPR Comments 7.)

Final Rule. The Board will adopt the SNPR proposal for defining a unit train as the final rule. In their initial filings under the final rule, the Board will require railroads to explain their practices of making “unit train” designations in the ordinary course of business. This information will be accessible to the public on the Board's Web site with other service performance data, so that the public will understand how each carrier is defining “unit train.” Railroads will also be required to inform the Board if their practices change in the future, by electronically submitting to OPAGAC a written explanation of the change at the time it goes into effect. The Board's Web site will be updated accordingly.

For Request No. 1, the SNPR proposes requiring carriers to provide system-average train speed, measured for line-haul movements between terminals and calculated by dividing total train-miles by total hours operated, for: (a) Intermodal; (b) grain unit; (c) coal unit; (d) automotive unit; (e) crude oil unit; (f) ethanol unit; (g) manifest; (h) fertilizer unit; and (i) system. The SNPR modifies the proposal in the NPR by adding categories for “fertilizer unit” and “system” and removing the category for “all other.”

For Request No. 2, the SNPR proposes requiring carriers to provide weekly average terminal dwell time for each carrier's system and its 10 largest terminals. For Request No. 3, the SNPR proposes requiring carriers to provide weekly average cars online for several car types, other, and total. The SNPR makes no changes to Request No. 2 and Request No. 3 in the NPR.

Railroad Interests. Railroad interests generally do not object to Request Nos. 1-3, though they again emphasize that permanent reporting should be limited to those metrics that provide a “meaningful view of network health.” (UP SNPR Comments 2-3; see also CP SNPR Comments 1; AAR SNPR Reply 8.) UP states that this would include Request Nos. 1-4. (UP SNPR Comments 2-3.) Other carriers identify Request Nos. 1-3, with the potential addition of a weekly carloadings metric, as sufficient to monitor overall network fluidity. (CP NPR Comments 2; AAR NPR Comments 12.) In response to NGFA's requests for additional categories under Request No. 3 (Cars Online), UP counters that NGFA provides no justification for either its hazardous material reporting or for what it alleges is an “impracticable” request that industry-placed cars also be included. (UP SNPR Reply 4-5.)

Finally, the railroads generally oppose the addition of fertilizer to Request No. 1 and to all other metrics that would require carriers to report data on fertilizer unit trains or carloads. AAR argues that commodity specific reporting, including fertilizer, is not useful for comparing service metrics for traffic that moves in different service and equipment. (AAR SNPR Comments 7-8.) It states that although there is no single definition of fertilizer, the Board's proposed definition is overbroad and erroneously includes commodities which are not fertilizers. (Id.; see also CSXT SNPR Comments 1.) CSXT adds that it can accommodate some of the fertilizer data the Board seeks, but using the Board's proposed Standard Transportation Commodity Codes (STCCs) would be difficult and misleading. (CSXT SNPR Comments 1.) NSR reports that in 2015 it moved less than 11% of its fertilizer traffic in unit train service and consequently believes that the data should not be separately reported. (NSR SNPR Comments 1.) It asserts that fertilizer shippers can monitor macro-level service data trends to gauge fertilizer service. (Id.)

UP argues that the Board should not adopt new fertilizer metrics based on past service issues that no longer exist. (UP SNPR Comments 3.) Regarding fertilizer unit train reporting, UP argues that, because a small amount of fertilizer moves in unit train service (one in seven UP fertilizer shipments), the proposed metric would not provide useful information to the Board or allow the Board to reach meaningful conclusions about service. (Id. at 3-4.) UP expresses concern that separate reporting on fertilizer unit trains could expose confidential, customer-specific volume information. (Id. at 4.) UP states that fertilizer accounted for only 2% of UP total carloadings in 2015. (Id.) UP argues that there is no reason for separate reporting because (1) the rail network is fluid and currently has the resources to handle demand, and (2) the Board should avoid requiring commodity-specific reporting absent evidence distinguishing a specific commodity from other, non-reported commodities. (Id. at 4-5.) Finally, UP argues that fertilizer carloading reporting would create an unnecessary burden and introduce inconsistencies with historical records. (Id. at 5.)

Shipper Interests & Other Stakeholders. Shipper interests are generally supportive of the SNPR changes to the first three metrics. NITL strongly supports the addition of “system” and “fertilizer” components to Request No. 1. (NITL SNPR Comments 3.) WCTL continues to support the inclusion of coal unit trains in Request Nos. 1-2. (WCTL SNPR Comments 3.) NGFA continues to advocate for more granular grain unit reporting, however, it narrows its request from its NPR comments to add only vegetable oils and vegetable meals to the existing grain categories in Request Nos. 1-2. (NGFA SNPR Comments 5, 8.) NGFA supports Request No. 3, but urges the Board to add a requirement that “carriers subdivide the `tank car' reporting requirement to include subcategories for cars hauling `hazmat' and `non-hazmat,'” plus require reporting of cars that are industry-placed. (NGFA SNPR Comments 8-9.)

Finally, for Request No. 1 and all other metrics requiring carriers to report data on fertilizer unit trains, TFI recognizes that fertilizer shipments are not evenly distributed across carriers and agrees with UP that reporting fertilizer unit trains may raise confidentiality concerns among railroads with limited shipments. Accordingly, TFI states that it “no longer advocates for the reporting of fertilizer unit trains.” (TFI SNPR Reply 2, 6.)

Final Rule. For Request No. 1, the Board will adopt the SNPR proposal with one modification as the final rule. We will exclude fertilizer unit trains from average train speed reporting. As noted above, TFI withdrew its request for unit train metrics for fertilizer movements. Additionally, the railroad industry explained that most fertilizer shipments move in manifest service and only a very small annual volume moves in unit trains. Thus, maintaining a fertilizer unit train speed metric would not advance the Board's objectives. Also for Request No. 1, the Board will adopt the SNPR proposal to add an overall “system” component, which aligns the request with current AAR reporting and provides a fuller picture of service performance. For Request No. 2 and No. 3, the Board will adopt the SNPR proposal as the final rule.

The Board will deny NGFA's request to incorporate vegetable oils and vegetable meals into Request Nos. 1-2. Most carloads of vegetable oils move in manifest service as opposed to unit train service. (AAR SNPR Reply 4-5.) NGFA has not demonstrated a strong need for such a specifically tailored metric. Moreover, NGFA fails to explain why the railroads' reporting of system average train speed for manifest trains does not capture the velocity of vegetable oil and vegetable meal traffic, such that a specifically tailored metric is necessary. Similarly, NGFA fails to demonstrate that weekly average terminal dwell time does not adequately reflect terminal dwell for cars of vegetable oils and vegetable meals.10

The SNPR proposes requiring carriers to provide weekly average dwell time at origin for loaded shipments sorted by grain unit, coal unit, automotive unit, crude oil unit, ethanol unit, fertilizer unit, all other unit trains, and manifest. The SNPR modifies the proposal in the NPR by adding the fertilizer unit and manifest categories and deleting the interchange component, which would have required carriers to report dwell times for trains at interchanges between carriers.

Railroad Interests. As discussed above, the railroads generally oppose the requirement to report data on fertilizer unit trains. They also oppose the addition of the manifest category to Request No. 4 because an origin dwell metric is inconsistent with how manifest trains operate. (BNSF SNPR Comments 3 n.1; AAR SNPR Comments 8-9; UP SNPR Comments 10.) AAR comments that the data item is ambiguous, explaining that manifest trains “are not `released' to a line-haul carrier at `origin.' Manifest trains are made up at a railroad's yard and moved after the air brake test is completed.” (AAR SNPR Comments 8-9.) In response to NGFA's request to require carriers to provide industry spot and pull (ISP) reports, UP asserts that shippers already have access to this information for their own traffic and no public interest would be served by public reporting of this customer-specific information. (UP SNPR Reply 3.)

Shipper Interests and Other Stakeholders. WCTL opposes the deletion of the interchange component. (WCTL SNPR Comments 3-4.) It states that customers depending on movements with interchanges found that “interchange dwell can be a telling measure of how the railroads are performing with their interchange partners, their available resources, and whether their systems are constrained.” (Id. at 4.) WCTL argues that deleting the interchange component removes a potentially important source of data, invites carries to engage in finger pointing, and deprives shippers of insight into where delays actually occur. (Id.)

NGFA urges the Board to require carriers to “provide ISP reports upon one-time written request from rail customers.” (NGFA SNPR Comments 9.) It argues the ISP reports are an important source of data because they are a truer reflection of service than the current metrics which only reflect velocities from terminal-to-terminal. (NGFA SNPR Comments 6.) NGFA asserts that ISP reports better indicate the service shippers and receivers are actually receiving. (Id.) NGFA also asks the Board to expand the metric to include vegetable oils and vegetable meals to the existing grain category. (NGFA SNPR Comments 9.)

Final Rule. For Request No. 4, the Board will adopt the SNPR proposal with two modifications as the final rule. First, for the reasons discussed above, we will delete the fertilizer unit component. Second, we will remove the manifest component, which would have required carriers to report dwell time for manifest trains. As explained by the railroad interests, manifest trains are not released in the same manner as unit trains at shipper origins, and therefore do not “dwell” in the same sense that unit trains do.

The Board will adopt the proposed change in the SNPR of not including the interchange component. We continue to believe that the “interchange” component would not materially enhance the Board's perspective on rail service, in light of other performance data that will be collected under these final rules, such as dwell at origin, terminal dwell, trains holding, and cars that have not moved in 48 hours or longer. Moreover, the Board is sensitive to the potential burden that the “interchange” component would create because railroads do not share a common understanding as to when a train is considered to be “released” or “accepted” at interchange or maintain common practices for measuring a train's idle time at interchange. See SNPR, slip op. at 10.

The Board will not mandate that railroads report to shippers upon request their respective ISP percentages for their local service design plans. NGFA's basis for seeking such reporting appears to be its view that other metrics contained in the SNPR are too general to allow the Board (and shippers) to assess local service. However, NGFA desires a level of data granularity—tracking at the local level—that exceeds the Board's objectives in monitoring service performance of the Class I railroads. Additionally, NGFA does not address the reporting burden that the volume of shipper requests would impose upon the industry.

Lastly, for the reasons explained above, the Board will decline NGFA's request to expand this metric to include vegetable oils and vegetable meals. Additionally, because these commodities typically do not move in unit train configurations, dwell time at origin would not be a meaningful metric.

The SNPR proposes requiring carriers to provide the weekly average number of trains holding per day, sorted by train type (intermodal, grain unit, coal unit, automotive unit, crude oil unit, ethanol unit, fertilizer unit, other unit, and manifest) and by cause (crew, locomotive power, or other). To arrive at these figures, railroads would be instructed to run a daily same-time snapshot and then calculate the weekly averages. The SNPR modifies the proposal in the NPR in several ways. It removes the proposed requirement that railroads report trains held short of destination or scheduled interchange for longer than six hours. It also removes the “all other” train type and the “track maintenance” and “mechanical causes” that were included in the NPR. The SNPR adds “fertilizer unit” and “manifest train” types, and the instruction to run a daily same-time snapshot and then calculate the weekly average.

Railroad Interests. CSXT reiterates that it will be a highly manual process to comply with this metric, including the fertilizer component. However, it states that the SNPR proposal is a “tremendous” improvement from the NPR and supports deletion of the six-hour component and the more limited list of causes. (CSXT SNPR Comments 3.)

Since it was proposed in the NPR, BNSF has urged the Board to discontinue this metric, arguing it is not a reliable indicator of railroad performance. (BNSF SNPR Comments 3-4.) BNSF previously expressed that it can only provide a snapshot measure, as proposed here, but is concerned that the snapshot method overstates its numbers. (BNSF Mtg. Summary 2.) BNSF asserts that issues with the metric are exacerbated by the proposal in the SNPR to remove the six-hour category. (BNSF SNPR Comments 4.) BNSF also states, in response to the removal of the interchange component, that its current data set does not distinguish between trains that are held short of destination, interchange, or otherwise. (Id.)

Shipper Interests and Other Stakeholders. Shippers urge the Board to revisit the decision to eliminate two reportable causes and require more specific reasons for delay rather than “other.” (NITL SNPR Comments 3; WCTL SNPR Comments 5.) NITL asserts that it recognizes the carriers' concern that trains held as part of normal operations will be captured in this metric, but argues that “in the search for the root causes of `abnormal' operating conditions . . . having more knowledge . . . is preferable.” (NITL SNPR Comments 3; see also WCTL SNPR Comments 5.) NGFA also opposes the elimination of causes and supports BNSF's suggestion to allow data that would identify trains being held on the network for railroad-caused reasons, but urges the Board not to eliminate the metric. (NGFA SNPR Reply 4-5.) NGFA asks the Board to expand the metric to include vegetable oils and vegetable meals to the existing grain category. (NGFA SNPR Comments 9.)

Final Rule. For Request No. 5, the Board will adopt the SNPR proposal as the final rule with one modification. For the reasons discussed above, the fertilizer unit train component will be deleted.

Both railroad and shipper commenters generally support the modification proposed in the SNPR of converting this metric into a weekly average of a daily snapshot of trains holding on each railroad's network, which is consistent with the way the industry monitors fluidity. The Board originally created the six-hour category to capture trains holding outside of their operating plan. However, railroads argued that the category was ineffective because some trains are held for six hours or longer as part of their operating plan. Railroads also argued that it was problematic from a data tracking standpoint because their internal metrics were not programmed to be compatible with the six-hour or longer filter. (BNSF NPR Comments 5-7; UP NPR Comments 15-16.) Accordingly, we will proceed to eliminate it from the final rules. The Board recognizes BNSF's concern that, even by eliminating the six-hour category, the trains holding metric will still capture trains being held as part of their operating plan. Nevertheless, the data will provide value over the course of time by allowing the agency to monitor trends and spot aberrations.

With regard to categorization of trains being held by cause, the Board seeks to simplify reporting, as proposed in the SNPR. Although the “equipment malfunction” and “track maintenance” categories proposed in the NPR could be indicative of general service problems, the Board believes that the “crew shortages” and “locomotive shortages” categories proposed in the SNPR are more significant indicators of systemic, long-term service issues. Thus, the Board will reduce the number of assigned causes.

Lastly, for the reasons explained above, the Board will decline NGFA's request to expand this metric to cover vegetable oils and vegetable meals. Additionally, because these commodities typically do not move in unit train configurations, the reported data would not be meaningful as a measure of fluidity as to vegetable oils and vegetable meal.

The SNPR proposes requiring carriers to provide the weekly average number of loaded and empty cars, operating in normal movement and billed to an origin or destination, which have not moved in 48 hours or more, sorted by service type (intermodal, grain, coal, crude oil, automotive, ethanol, fertilizer, or all other). The SNPR modifies the proposal in the NPR by deleting the category for cars that have not moved in more than 120 hours. The SNPR also changes the categorization of such cars held from a period of “greater than 48 hours, but less than or equal to 120 hours,” to a period of “48 hours or more.” Finally, the SNPR modifies the NPR's requirement for a daily average of loaded and empty cars held to a weekly average and adds a fertilizer component.

Railroad Interests. BNSF reiterates that there is public confusion regarding the differences in hold times for cars for different commodities under this metric. (BNSF SNPR Comments 4.) It asserts that these “differences in commodity categories are driven in large part by the ratio of unit train and single car service in the commodity fleet rather than service disruptions or other performance issues.” (Id. at 4-5.) In particular, BNSF explains that approximately half of its grain fleet is in shuttle, or unit train, service, whereas the majority of its crude and coal carloads move in unit train service; because unit trains are built for speed and efficiency, while manifest trains require more holding time, BNSF argues that the data between grain and crude oil will differ. (Id.)

Shipper Interests and Other Stakeholders. Shippers are generally supportive of the SNPR changes to Request No. 6. (WCTL SNPR Comments 3; NITL SNPR Comments 3; NGFA SNPR 9-10.) NGFA requests that the Board include a component for cars placed in interchange that are being held. (NGFA SNPR Comments 10.) NGFA also asks the Board to expand the metric to include vegetable oils and vegetable meals to the existing grain category. (Id.) TFI supports the inclusion of a separate fertilizer component for this metric, which captures carload (as opposed to unit train) data. However, TFI proposes to narrow the definition of fertilizer to 14 seven-digit STCCs. (TFI SNPR Reply 4.)

Final Rule. For Request No. 6, the Board will adopt the SNPR proposal as the final rule with an adjustment to the previously proposed definition of fertilizer. Parties agreed that the 120 hours or greater category proposed in the NPR was superfluous because concern arises when a railcar has not moved for 48 hours. See SNPR, slip op. at 12. As with Request No. 5, the Board will instruct carriers to use a same-day snapshot approach to develop a weekly average of cars that hit the 48-hour threshold, broken out by service type (intermodal, grain, coal, crude oil, automotive, ethanol, fertilizer, or all other). The Board will also adopt the requirement for reporting of cars in fertilizer service, but will define fertilizer by the 14 STCCs provided by TFI (2871236, 2871235, 2871238, 2819454, 2812534, 2818426, 2819815, 2818170, 2871315, 2818142, 2818146, 2871244, 2819173, and 2871451).

Although AAR and some railroads note that fertilizer represents a relatively small fraction of overall rail traffic, the Board believes that it is necessary to help monitor the rail fertilizer supply chain because of its critical importance to the nation's agricultural production. As became apparent to the Board at the April 2014 hearing, disruption of the rail fertilizer supply chain arising from service issues threatened to impede spring planting throughout the Midwest. In order to focus attention on restoring the supply chain, the Board directed certain railroads to report on their progress moving fertilizer over a six-week period. See generally U.S. Rail Serv. Issues, EP 724 (Sub-No. 1) (STB served Apr. 15, 2014). Reporting of fertilizer as a stand-alone category of cars holding for 48 hours or longer will allow the Board to monitor the fluidity of this commodity, which is a key element in agricultural production, and facilitate early Board intervention, if appropriate. Lastly, for the reasons explained above, the Board will decline NGFA's request to expand this metric to include vegetable oils and vegetable meals. NGFA has not explained the heightened importance that would warrant separate reporting of these commodities, as has been shown for fertilizer.

The SNPR proposes requiring carriers to provide the weekly total number of grain cars loaded and billed, reported by state, and aggregated for the following STCCs: 01131 (barley), 01132 (corn), 01133 (oats), 01135 (rye), 01136 (sorghum grains), 01137 (wheat), 01139 (grain, not elsewhere classified), 01144 (soybeans), 01341 (beans, dry), 01342 (peas, dry), and 01343 (cowpeas, lentils, or lupines). It also proposes requiring carriers to report on the total cars loaded and billed in shuttle service (or dedicated train service) versus total cars loaded and billed in all other ordering systems, including private cars. The SNPR makes no changes to Request No. 7 in the NPR.

Railroad Interests. The railroads did not provide specific additional comment on this metric in response to the proposed metric in the SNPR.

Shipper Interests and Other Stakeholders. NGFA generally supports the SNPR; however, it asks the Board to expand the metric to include vegetable oils and vegetable meals to the existing grain category. (NGFA SNPR Comments 10; see also NITL SNPR Comments 3.)

Final Rule. For Request No. 7, the Board will adopt the SNPR proposal, which was unchanged from the NPR, as the final rule. For the reasons discussed above, the Board will decline NGFA's request to expand this metric to include vegetable oils and vegetable meals.

The SNPR proposes requiring carriers to provide, for the same STCCs in Request No. 7, a report by state for the following for cars in manifest service: (a) The running total number of orders placed; (b) the running total of orders filled; and (c) for orders which have not been filled, the number of orders that are 1-10 days past due and 11+ days past due. The SNPR significantly modifies the NPR requirements, which were to report: (a) The total number of overdue car orders; (b) the average number of days late for all overdue grain car orders; (c) the total number of new orders received during the past week; (d) total number of orders filled during the past week; and (e) the number of orders cancelled during the past week.

Railroad Interests. The railroads generally commented that they could report the requested data, subject to various individual limitations in their data systems. NSR explains that it only operates a small portion of its grain transportation on the basis of grain car orders so it would have limited and unrepresentative data in its response. (NSR SNPR Comments 2.) CSXT states that it could generate the required data unless the metric includes unit train placements as car orders. (CSXT SNPR Comments 3.) CSXT also emphasizes that commercial practices of railroads differ substantially between carriers and cautions against comparing data between railroads. (Id.) Finally, CSXT notes that it does not roll-over car orders from week-to-week and thus will not show any orders in the 11+ days category. (Id.)

Shipper Interests and Other Stakeholders. NGFA suggests that the Board consider requiring each reporting carrier to report the definition of its car-ordering system for shuttles and manifest traffic. (NGFA SNPR Comments 11.) It also recommends that the Board require each “carrier to report whether it placed or pulled cars that were ordered or cancelled as a result of a railroad spotting more cars than the facility requested.” (Id.) NGFA also requests that the Board expand the metric to include vegetable oils and vegetable meals to the grain category. (Id.)

Final Rule. For Request No. 8, the Board will adopt the SNPR proposal as the final rule. This request allows the Board to monitor car order fulfillment for shippers of agricultural products whose traffic moves in manifest (as opposed to unit train) service. Although the Board acknowledges the limitations that CSXT and NSR have noted, the Board believes that, overall, this data will allow the effective monitoring of grain traffic in manifest service over time. With respect to NGFA's suggestion to refine this request by requiring carriers to report certain definitions, such a proposal seems more responsive to the NPR's proposal than the SNPR's proposal, and in any event is not in line with the Board's intent to simplify this request. See SNPR, slip op. at 14 (“the Board proposes a simpler approach by asking that railroads report running totals of grain car orders placed versus grain car orders filled by State for cars moving in manifest service”). With respect to NGFA's request for additional data on cars ordered or cancelled, such a proposal does not enhance the Board's view of grain car order fulfilment. Moreover, it is unclear that railroads track the data that NGFA seeks.

Also, for the reasons explained above, the Board will decline NGFA's request to expand this metric to include vegetable oils and vegetable meals.

The SNPR proposes requiring carriers to provide the weekly average coal unit train loadings or carloadings versus planned loadings by coal production region. The SNPR modifies the proposal in the NPR by generally returning to the form of the corresponding request (Request No. 10) from the Interim Data Order, and adding the requirement to compare actual loadings against railroad service plans.

Railroad Interests. UP asserts that it develops neither its own loading expectations, nor independent daily or weekly planned coal loadings. (UP SNPR Reply 11.) UP states that, to the extent that it has a coal loading plan, the plan is based on confidential customer information. (Id. at 10.) As such, UP raises concerns that disclosing any planned weekly loadings could reveal confidential customer information where UP has few coal customers. UP would require a waiver from the Board so that it could aggregate data to prevent revealing that information. (Id.) That concern aside, UP argues that comparing planned to actual weekly carloadings provides limited insight into railroad performance because actual carloadings are too dependent upon factors outside the railroad's control. (Id.) AAR also questions the usefulness of including a comparison to plan, arguing that it may present unreliable data because plans fluctuate based on customer preference, commercial factors, equipment, and other issues. (AAR SNPR Comments 9.) AAR stresses that coal traffic primarily moves subject to contracts beyond the Board's jurisdiction. (Id.)

Shipper Interests and Other Stakeholders. WCTL and others support the addition of the comparison-to-plan component to Request No. 9. (WCTL SNPR Comments 2-3; NITL SNPR Comments 3.) WCTL states that including the comparison-to-plan component is superior to the metric proposed in the NPR and “provides direct and frequent information regarding whether the railroads are meeting the service needs of their customers and even the carriers' own loading plans [and] whether such divergences are continuing or increasing.” (WCTL SNPR Comments2-3.) WCTL disagrees with concerns raised by UP that this metric could divulge confidential shipper information, asserting that no specific information would need to be divulged and no shipper has complained under the Interim Data Order. (WCTL SNPR Reply 3.) WCTL also argues that “weekly plan reporting is useful precisely because it reflects the requirements of one of the highest volume commodities on all of the railroads and whether the railroads are able to meet that demand” and is potentially a valuable data point because the fluidity of coal routes can impact other shippers. (Id. at 3-4.) WCTL also asserts that, despite UP's claim that it has no coal loading plans, it “requires all coal customers to use the [National Coal Transportation Association] coal forecasting tool, which generally results in a railroad-approved monthly loading plan.” (Id. at 4.) Finally, WCTL suggests that, where railroads have a single shipper, they be permitted to withhold the data and make a notation that confidential information might be revealed. (Id.)

Final Rule. For Request No. 9, the Board will adopt the SNPR proposal as the final rule. The Board believes that there is value in having railroads report their performance versus their plan on a weekly basis for coal loadings. This data will not only allow the agency to track actual loadings, but also to see whether railroads are meeting their own targets. The Board understands the point made by UP that a loading plan is not necessarily static, but is simply a target based on a variety of inputs, which can and does change as surrounding circumstances change. Even so, there is value in seeing whether railroads are meeting, exceeding, or falling short of plans, as it provides context to the reporting of weekly average loadings. To the extent that reporting information about planned loadings under this metric would implicate confidential information, railroads may include a notation in their weekly filing that they are not providing the plan data along with a brief explanation for the data's absence. Finally, AAR's argument that coal traffic primarily moves subject to contracts beyond the Board's jurisdiction does not take into account our statutory responsibility to advance the goals of the RTP, which (as discussed above) includes monitoring service in order to ensure the fluidity of the national rail network. 49 U.S.C. 10101(3), (4). The Board is not asserting jurisdiction regarding the rights and obligations of shippers and carriers associated with coal moving under contracts; rather, the Board is taking action to gain a better understanding of and insight into the general flow of traffic on the system.

The SNPR adds this metric not included in the NPR seeking the average grain shuttle (or dedicated grain train) trips per month. The SNPR explains that because some Class I railroads operations do not support this reporting, the Board anticipates issuing a waiver decision with the final rules that would permit other Class I railroads to satisfy their obligations under Request No. 10 by reporting average grain unit train trips per month for their total system, including this data in their first report of each month, covering the previous calendar month. Such reports would not include planned trips per month or data by region. Under the SNPR, for purposes of reporting under this item, other Class I railroads would report for all grain unit train movements, regardless of whether or not they maintain a grain shuttle or dedicated train program.

Railroad Interests. Several railroads state that they do not operate grain shuttles or grain trains that cycle so they cannot provide data on the average trips per month for those services. (UP SNPR Comments 12; CSXT SNPR Comments 4; NSR SNPR Comments 2.) NSR explains that it would not have any average data to report because it does not cycle grain trains, but states that it could report a gross total of the number of grain unit train trips per month. (NSR SNPR Comments 2.) CSXT states that because it does not manage grain transportation regionally, it will only be able to report average trips per month system-wide. (CSXT SNPR Comments 4.) UP notes that it does not control the origins and destinations of its shuttle trains and that origins and destinations routinely shift, making it difficult to report planned trips per month. (UP SNPR Comments 12.) AAR also states that some railroads cannot report the requested data, and argues that the Board should not adopt a rule that requires some carriers to immediately seek waivers. (AAR SNPR Comments 9.)

Shipper Interests and Other Stakeholders. Shippers generally support the addition of this metric. (NITL SNPR Comments 3; NGFA SNPR Comments 11). NGFA expresses concern that monthly reporting of this metric is insufficient and asks that the Board require weekly reporting instead. (NGFA SNPR Comments 12.) NGFA also urges the Board not to grant waivers from this requirement because it knows of no Class I carrier that would not be able to track shuttle or dedicated grain trips by region or corridor. (Id.) However, NGFA states that if the Board does allow for waivers, that process should be transparent. (Id.) In its reply, NGFA reiterates its position that shuttle trains and dedicated grain trips should be reported by corridor and region. (NGFA SNPR Reply 3.)

Final Rule. For Request No. 10, the Board will adopt the SNPR proposal as the final rule modified to apply only to those carriers operating grain unit trains in shuttle service. The Board will eliminate the requirement for carriers with dedicated grain trains to report trips per month because the disparate data carriers could provide on that type of service would not provide the Board insight into service beyond the velocity data collected elsewhere in this final rule.11 In the first report of each month, railroads operating grain shuttles will be required to report their average train trips per month for their system and key destination regions versus planned trips per month for their system and key regions for the previous month. Underlying this request is the Board's need for information about how railroads are performing with respect to the agricultural sector. The service problems that emerged during the winter of 2013-2014 resulted in significant backlogs of unfilled grain car orders and increased train cycle times, indicating that railroads were experiencing severe congestion and failing to meet shipper demand. U.S. Rail Serv. Issues—Grain, EP 724 (Sub-No. 2), slip op. at 1 (STB served June 20, 2014). Thus, in the Interim Data Order the Board requested grain car order fulfillment data, and data on train round trips versus the railroad's service plan. This data proved very useful in monitoring the progress of BNSF and CP as they improved operations on an actual basis and against their service plan. The “turns versus plan” data will allow the Board to assess how railroads operating grain shuttles are meeting their own expectations.

The SNPR proposes the creation of a second metric not included in the NPR. Under this metric, railroads would be required to provide weekly originated carloads by 23 commodity categories.

Railroad Interests. The railroads generally support the addition of this metric. (See UP SNPR Comments 12; see also CP NPR Comments 2.) UP states that the Board can improve the metric by adding a requirement that carriers report “weekly carloads originated and carloads received in interchange[, which] . . . would be consistent with weekly carloadings data reported by the AAR.” (Id. at 12-13.)

However, as discussed above, the railroads oppose the inclusion of fertilizer in this metric. They assert that creating a line-item for fertilizer will require substantial system changes (AAR SNPR Comments 8; BNSF SNPR Comments 5), and point out that fertilizer is not one of the commodity groups currently reported to the AAR on a weekly basis. (AAR SNPR Comments 8; BNSF SNPR Comments 5-6.) UP states that fertilizer accounted for only 2% of its carloadings in 2015. (UP SNPR Comments 4.) CSXT argues that including fertilizer here would “compromise the usefulness of a long-standing economic indicator that has been followed . . . for decades.” (CSXT SNPR Comments 4.)

Shipper Interests and Other Stakeholders. Shippers generally support the addition of this metric. (NITL SNPR Comments 3-4; NGFA SNPR Comments 12-13.) NITL states that it shows some understanding of shippers' requests for additional granularity in commodity groups. (NITL SNPR Comments 4.) NGFA again asks the Board to expand the metric to include vegetable oils and vegetable meals to the existing grain category. (NGFA SNPR Comments 13.) TFI again states that the definition of fertilizer could be narrowed to the same 14 seven-digit STCCs that it proposed for Request No. 6. (TFI SNPR Reply 4.)

Final Rule. For Request No. 11, the Board will adopt the SNPR proposal with two modifications as the final rule. First, per UP's suggestion, the Board will expand the metric to include separate reporting of weekly cars received in interchange, which the railroads are already reporting to the AAR. Second, the Board will require railroads to report, as a separate line item, weekly originated carloads and cars received in interchange for fertilizer, as defined by the 14 seven-digit STCCs proposed by TFI and defined above.

Through this metric, the Board seeks to gain specific data for carloadings and interchange traffic that will allow it to better monitor this commodity group. However, the Board understands the railroads' concern that including fertilizer could disrupt the continuity of reporting cars originated and received in interchange, as presently reported to AAR. Accordingly, the Board will create two subcategories for this metric. In the first subcategory, the Board will require reporting according to the 22 existing traffic categories currently reported to AAR. The second subcategory will include only fertilizer.

By requiring fertilizer reporting in this manner, the Board is not asking railroads to modify or extract traffic from the existing 22 categories, which should be reported in their current form; rather, the agency is adding a new, stand-alone category covering the STCCs identified above.

The SNPR proposes the creation of a third new metric not included in the NPR. Under this metric, railroads would be required to provide car order fulfillment percentage by 10 car types.

Railroad Interests. The railroads strongly oppose the addition of this metric. AAR states that the metric is ambiguous and unworkable. (AAR SNPR Comments 10.) It argues that “Class I railroad practices regarding car supply differ significantly,” (id.), explaining that “cars `due to be placed' and cars placed will not match up week to week.” The AAR also claims that, because cars that are constructively placed are eventually actually placed, the metric creates a potential double count. (Id.) AAR also states certain rail cars are supplied by pool arrangements that would distort individual railroad reporting. (Id.) UP states that the car order fulfillment percentage concept “applies only in situations where a customer orders and requests an empty car to be placed at a customer facility for loading.” (UP SNPR Comments 5.) UP alleges that there are numerous situations where customers do not place car orders, including intermodal cars, autoracks, covered hoppers, private cars, and pooled cars. (Id. at 5-8.) CSXT urges the Board not to adopt the proposed metric, stating that “in a considerable number of car supply scenarios, it is wholly unworkable.” (CSXT SNPR Comments 4.) BNSF and NSR also urge the Board not to adopt the metric, identifying a number of issues with the proposed metric. (BNSF SNPR Comments 6-7; NSR SNPR Comments 2-3.) BNSF questions the value of the data because the metric would cover several car types that customers do not order, and because there are significant differences between commodities and customers of similar commodities. (BNSF SNPR Comments 6-7.) NSR states that because it does not have a tariff governing car orders, the reporting will result in “significant double counting while reporting only actual placement will result in incomplete data.” (NSR SNPR Comments 3.)

Shipper Interests and Other Stakeholders. NITL and NGFA generally support the addition of this metric. (NITL SNPR Comments 4; NGFA SNPR Comments 13.) NITL stresses that it would provide additional visibility into industry operations that would be beneficial to a large number of shippers. (NITL SNPR Comments 4.) HRC urges the Board to take into consideration the fact that some railroads expire car orders at the end of each week, which will lead to an understatement of backlog orders. (HRC SNPR Comments 2.)

Final Rule. The Board will not adopt the proposed Request No. 12 from the SNPR in the final rules. As noted above, the railroad interests pointed out several practical and definitional challenges posed by this request, which make it incompatible in various ways with their operations and internal data tracking. Although shippers expressed support for this additional data, the Board believes that its potential utility would be significantly diminished due to the problems identified by the railroad industry. In a revised form, it would not apply to a significant amount of rail traffic. As such, the limited data would not materially enhance the Board's perspective on service performance.

The SNPR proposes requiring that the Class I railroads operating at the Chicago gateway jointly report the following performance data elements for the reporting week: (1) Average daily car volume in the following Chicago area yards: Barr, Bensenville, Blue Island, Calumet, Cicero, Clearing, Corwith, Gibson, Kirk, Markham, and Proviso; and (2) average daily number of trains held for delivery to Chicago sorted by receiving carrier. Moreover, the request would require Class I railroad members of the CTCO to provide certain information regarding the CTCO Alert Level status and protocols.

Railroad Interests. CP reiterates its suggestion that the Board require certain data from the Belt Railway of Chicago (BRC) and Indiana Harbor Belt (IHB), which it states are the heart of the Chicago terminal. (CP SNPR Comments 3.) CP suggests a number of metrics that the two carriers could report on a weekly basis: Number of cars arrived per day, number of cars humped or processed per day, number of cars re-humped or re-processed per day, number of cars pulled per day, number of trains departed each day by railroad, average terminal dwell, average departure yard dwell, and percentage of trains departed on-time each day by railroad. CP believes much of the data is already kept by the switching carriers. (Id. at 3 n.3.) CP asserts that, in contrast to the other commodity and geographic specific data the Board proposes to require, information from BRC and IHB “is likely to provide early warnings of rail service issues and more likely to be useful in averting a significant service disruption.” (Id. at 3.)

AAR reports that the railroads have agreed to provide CMAP and other Illinois entities with a weekly report related to the Chicago terminal. (AAR SNPR Comments 10.) AAR states that “the railroads have begun to provide the Chicago entities a report that include[s] cars en route to Chicago and cars processed, each broken out by cars terminated in Chicago and those transitioning through . . . . [and] a7-day average freight transit time through Chicago.” (Id.) AAR states that it would not object to making the report part of the weekly CTCO report to the Board. (Id.) Additionally, in its reply, AAR urges the Board to reject CMAP's request for additional data. (AAR SNPR Reply 6-7.)

Shipper Interests and Other Stakeholders. NITL states that additional information from BRC and IHB would be helpful to many stakeholders and recommends that the Board contact the Bureau of Transportation Statistics for guidance on designing not overly burdensome operating statistics for these two carriers. (NITL SNPR Comments 4.) NITL also states that “a cooperative joint effort between the Class I carriers that `feed' the Chicago region and the two belt lines to define a set of best measures would likely yield good results.” (Id.) NGFA reiterates its recommendation that the Board require three Chicago-specific metrics touching on idled cars in Chicago-area yards. (Id.) In its reply, NGFA urges the Board to evaluate whether AAR's proposed metrics would improve the Board's understanding of conditions in Chicago. (NGFA SNPR Reply 5.)

As noted above, CMAP also reports that it has reached an agreement with AAR to receive weekly information on “yard inventories, terminal dwell times for railcar yards, the number of railcars en route and processed, and the overall crosstown transit times” for the Chicago terminal, and that it agrees with AAR's suggestion to share this report with the Board. (CMAP SNPR Comments 1.) CMAP recommends that the Board also require additional performance metrics focusing on intermodal trains. (Id.) CMAP also reiterates its suggestion that the Board expand the number of yards included in its terminal dwell metric, and add metrics covering crosstown travel times; speed, volume, and train length for all key rail corridors in the Chicago terminal; and delay and intermodal lifts. (Id. at 2.)

Final Rule. The Board will adopt the SNPR proposal for Chicago gateway reporting as the final rule. The Board will also accept the AAR's voluntary offer to include the data it is reporting to CMAP in CTCO's report to the Board.

While the Board appreciates CP's recommendations for extending certain reporting requirements to IHB and BRC, the Board believes that the data reporting currently provided by the CTCO, through its Class I members, already provides focused visibility and heightened attention into this key gateway. The final rule, as augmented by the data that AAR has offered to submit voluntarily, will continue to maintain a robust view of operating conditions in the Chicago gateway. In the Chicago metrics, the Board will receive average daily car volumes at eleven key yards in the Chicago gateway, including yards operated by BRC and IHB, and data showing average daily number of trains held for delivery at Chicago, sorted by carrier. Also, under Request No. 2, the Board will receive weekly average terminal dwell time for several Chicago gateway yards. This data will allow the Board to sufficiently monitor operating conditions and spot congestion or fluidity issues in the Chicago gateway. Therefore, the Board will not require the reporting of additional granularity at this time.

The SNPR proposes requiring that each Class I railroad, annually on March 1 with an update on September 1, report a description of significant rail infrastructure projects (defined as anticipated expenditures of $75 million or more over the life of the project) that will commence during the current calendar year. The narrative report would require a brief description of each project, its purpose, location (state/counties), and projected date of completion. The SNPR modifies the NPR's proposal by changing the reporting period from a quarterly report to annual with one annual update, and by increasing the lower limit for projects required to be reported on from $25 million to $75 million.

Railroad Interests. The railroads are generally supportive of the changes to this metric in the SNPR. (UP SNPR Comments 2; AAR SNPR Comments.) In its reply, AAR urges the Board to reject some shippers' push for more extensive reporting, stating that the SNPR “strikes a balance of keeping the Board apprised on the progress of significant infrastructure improvements without unduly burdening railroads with its reporting requirements.” (AAR SNPR Reply 5.) AAR stresses that because none of the infrastructure reports can be automated, the requirement will draw on the time and effort of personnel to write the narrative. (Id.)

Shipper Interests and Other Stakeholders. Although some shippers support the modified infrastructure reporting requirements (NITL SNPR Comments 4), others urge the Board to adopt the NPR proposal (NGFA SNPR Comments 14; WCTL SNPR Comments 5). NGFA states that it sees one of the fundamental objectives of this proceeding as being the creation of “a one-stop-shop for more standardized information affecting rail service,” which should include information on the impacts of infrastructure investment that would have been required under the NPR. (NGFA SNPR Comments 14.) NGFA asserts that access to this type of information can vary widely between carriers. (Id.) NGFA stresses that having timely access to information on potential disruption to service is extremely important to shippers and, thus, asks the Board to require carriers to report the predicted time frames when freight traffic may be interrupted as a result of infrastructure projects. (Id.) WCTL states that infrastructure projects with a projected cost of $25-$75 million, which would not be reported under the SNPR proposal, can impact quality of service and together have an enormous impact on whether a railroad achieves and maintains fluidity. (WTCL SNPR Comments 6.) It also argues that curtailed reporting could undermine the Board's ability to carry out its responsibility to monitor the adequacy of service by rail carriers and their compliance with the common carrier obligation. (Id.)

Final Rule. The Board will adopt the SNPR proposal as the final rule. The Board believes that the request for an initial narrative response (due March 1) and a six-month update (due September 1) strikes an appropriate balance between the Board's need for current information about rail infrastructure projects and the burden of reporting on the railroads. Rather than specifying certain required elements, as in the initial proposal, the Board will allow railroads to exercise discretion and flexibility in preparing their narrative responses.

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

The final rules adopted here are limited to Class I railroads and, thus, will not have a significant economic impact upon a substantial number of small entities.12 Therefore, the Board certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities within the meaning of the RFA. A copy of this decision will be served upon the Chief Counsel for Advocacy, Office of Advocacy, U.S. Small Business Administration, Washington, DC 20416.

In a supplemental Federal Register notice, published at 81 FR 27,069 on May 5, 2016 (correction published at 81 FR 32268 on May 23, 2016), the Board sought comments pursuant to the Paperwork Reduction Act (PRA), 44 U.S.C. 3501-3521 and Office of Management and Budget (OMB) regulations at 5 CFR 1320.8(d), regarding: (1) Whether the collection of information in the proposed rule is necessary for the proper performance of the functions of the Board, including whether the collection has practical utility; (2) the accuracy of the Board's burden estimates; (3) ways to enhance the quality, utility, and clarity of the information collected; and (4) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology, when appropriate. Any comments relating to these issues are addressed in the decision above.

The proposed collection was submitted to OMB for review as required under the PRA, 44 U.S.C. 3507(d), and 5 CFR 1320.11. OMB withheld approval pending submission of the final rule. The Board has submitted the collection contained in this final rule to OMB for approval. Once approval is received, the Board will publish a notice in the Federal Register stating the control number and the expiration date for this collection. Under the PRA and 5 CFR 1320.11, 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 OMB control number.

It is ordered:

1. The final rule set forth below is adopted and will be effective on January 29, 2017. The initial reporting date will be February 8, 2017. Notice of the rule adopted here will be published in the Federal Register.

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

Having considered all written and oral comments on the SNPR, the following changes are reflected in the final rule for the new regulations to be codified at 49 CFR 1250.1-1250.2 to require Class I rail carriers, Class I carriers operating in the Chicago gateway, and the CTCO, through its Class I members, to submit to the Board reports on railroad performance. The regulations are below. The table below provides a brief description of the differences between the SNPR and this final rule, which were explained in detail above.

For the reasons set forth in the preamble, the Surface Transportation Board amends title 49, chapter X, subchapter C, of the Code of Federal Regulations by adding part 1250 to read as follows: