Federal Register Vol. 81, No.238,

The Office of Personnel Management (OPM) maintains statutory responsibility under 5 U.S.C. 1103(c) to guide, enable, and assess agency strategic human capital management processes. On February 8, 2016, OPM published the Personnel Management in Agencies proposed rule in the Federal Register (81 FR 6469) that would amend 5 CFR part 250 subpart B, Strategic Human Capital Management, and 5 CFR part 250 subpart C, Employee Surveys. The purpose of this rule is to better assist agencies with developing strong human capital practices for achieving agency goals and objectives, and to further empower the human capital community to collectively identify and address cross-cutting human capital challenges. OPM issues a final rule to revise 5 CFR, part 250 subparts B and C.

The rule establishes the Human Capital Framework (HCF), which replaces the Human Capital Assessment and Accountability Framework (HCAAF). This rule also reduces and clarifies the reporting procedures agencies are required to follow; creates a data-driven review process (HRStat); and describes workforce planning methods that agencies are required to follow.

Lastly, the rule strengthens and modernizes the Employee Survey process by identifying questions that exhibit appropriate psychometric properties which better align to the topics cited in the National Defense Authorization Act for Fiscal Year 2004 (Pub. L. 108-136, sec. 1128, codified at 5 U.S.C. 7101).

The final rule sets forth a set of actions and practices that will better position human capital to demonstrate its contribution to agency mission through the alignment of Strategic Human Capital Management practices to the Government Performance and Results Act Modernization Act (GPRA-MA) of 2010 (Pub. L. 111-352). GPRA-MA requires performance assessments of Government programs for purposes of assessing agency performance and improvement.

Following promulgation of this rule, OPM will provide additional guidance for agencies about the planning and implementation requirements presented within this regulation.

The federal workforce plays a vital role in executing the important missions of federal agencies in service to the American people. As such, the Strategic Human Capital Management processes used to cultivate and manage the workforce must be integrated into agency planning and management processes, remain current with research and best practices, allow for proactive responses to anticipated environmental changes, and seek to continuously maximize the efficiency and effectiveness of Human Resource (HR) service delivery.

This rule supports the implementation of OPM's statutory responsibility under 5 U.S.C. 1103(c) to guide, enable, and assess agency strategic human capital management processes. Part 250 of Title 5, subpart B, implements the requirements of 5 U.S.C. 1103(c), and section 1103(c)(1) requires OPM to design a set of systems, including appropriate metrics, for assessing the management of human capital by federal agencies and to define those systems in regulation. Section 1103(c)(2) requires OPM to include standards addressing a series of specified topics. These requirements are further explained within this rule. Subpart B also provides an avenue for Chief Human Capital Officers (CHCOs) to carry out their required functions under 5 U.S.C. 1402(a).

Current regulations implement 5 U.S.C. 1103(c) by adopting the HCAAF system required by 5 U.S.C. 1103(c)(1) and providing the systems definitions and standards required by 5 U.S.C. 1103(c)(2). The HCAAF is a framework that integrates five human capital systems—Strategic Alignment, Leadership and Knowledge Management, Results-Oriented Performance Culture, Talent Management, and Accountability. These systems define practices for the effective and efficient management of human capital and support the steps involved in the planning and goal setting, implementation, and evaluation of human capital policies, programs, and initiatives in the Federal Government. This rule changes the current regulation, by replacing the HCAAF with the HCF.

As described throughout this section, in addition to replacing the HCAAF with the HCF, subpart B of this rule will:

1. Require agencies to develop a Human Capital Operating Plan (HCOP).

2. Require agencies to participate in Human Capital Reviews (HCRs) with OPM.

3. Institutionalize the requirement for agencies to conduct HRStat reviews.

4. Remove the requirement for agencies to develop and submit a Strategic Human Capital Plan.

5. Remove the requirement for agencies to develop and submit annual Human Capital Management Reports (HCMR).

6. Require OPM to issue the quadrennial Federal Workforce Priorities Report.

7. Communicate the workforce planning methods agencies are required to follow.

8. Ensure the consistent application of human capital practices by clearly defining key human capital management terms.

As discussed above, current regulations implement the requirements of 5 U.S.C 1103(c) by adopting the five systems of HCAAF. The HCF will replace the HCAAF and integrate four human capital systems—Strategic Planning and Alignment, Performance Culture, Talent Management, and Evaluation. OPM expects that the new systems and system definitions will result in improved outcomes for human capital programs that enable the accomplishment of agency mission objectives.

The HCF uses “Performance Culture” and “Talent Management” as the descriptors for the two systems under which the government's major people and organization activities and programs occur. It also prescribes “Strategic Planning and Alignment” and “Evaluation” as the two supporting management systems required for the development, measurement, and management of agency human capital agendas.

Standards are defined for each of the four systems and agencies will be expected to apply them as the bases for their work. Agencies will be required to implement each standard within their strategies, but will have autonomy to determine which focus areas (within each system) should be implemented to lead to the best outcomes.

The HCOP is a planning document (not a report) that provides details about how human capital strategies are being implemented in support of agency strategic. Additionally, the HCOP serves as a tool for agency leadership to set a clear path for achieving stated human capital strategies; identify and secure resources for supporting human capital policies, programs, and initiatives; and determine which timeframes and measures to use to assess progress, while demonstrating how the standards of each HCF system are being fulfilled within each strategy. The HCOP will correspond to the same timeframe covered by agency strategic plans and reviewed and updated annually.

These reviews are annual, in-person meetings for agency human capital leaders to discuss the implementation and achievement of human capital goals, including risks, barriers and successful practices. The reviews will serve as an opportunity for OPM to provide feedback to agencies, as well as identify and share practices and identify cross-cutting human capital challenges. This rule does not impose new requirements for agencies to submit written narratives. Previously, agencies were required to submit reports containing human capital information to OPM via a static written document. The revised rule affords agencies, in discussions with OPM, to collaboratively review agencies progress towards achieving their specific goals while providing a mechanism for OPM to identify cross-cutting and agency- specific human capital challenges that warrant further attention.

The quarterly review process is managed by agencies to identify and monitor human capital measures and targets that inform the progress agencies are making towards meeting their agency specific goals. The outcomes from the reviews should report the approach agencies take for corrective actions in areas for which they are not making substantial progress.

GPRA-MA requires agencies to indicate how human capital resources will support agency strategic goals within their strategic plans. Because human capital strategies supporting each mission-oriented goal and objective are identified in agency strategic plans, additional SHCPs are unnecessary. The increased alignment of human capital strategies to agency goals is intended to enhance human capital and organizational performance outcomes, by making data driven decisions.

OPM will monitor agency outcomes in human capital management through the Human Capital Evaluation Framework (HCEF), which consists of evaluating progress achieved through HRStat reviews, HCRs, and independent audits. As such, agencies are no longer required to develop and submit annual Human Capital Management Reports (HCMR). As mentioned above, the regulation does not impose new requirements for agencies to submit written narratives.

The report is developed through research and the analysis of environmental trends, agency experiences and needs. The report communicates key governmentwide human capital priorities and suggested strategies to strengthen the communication amongst and between agency leadership and human capital practitioners. Additionally, the report serves as an informative tool for the Chief Human Capital Officers Council (CHCOC) because it signals what human capital priorities are required for the establishment of enterprise-wide plans and the coordination of resources amongst the human capital community. We anticipate that the first report would be released in mid-2017.

The changes to the regulation focus on establishing requirements that maintain efficient and effective (integrated) human capital management practices now and into the future. This also provides Federal agencies with the flexibility to determine how to identify and implement human capital strategies that will achieve strong organizational outcomes for their specific mission and goals.

The public comment period for the proposed regulation ended on April 8, 2016. OPM received 35 comments on the proposed rule: 15 from Federal agencies, 18 from private individuals, and two (2) from organizations. OPM carefully considered the comments and as a result, made minor revisions to the final regulation. The final regulation will become effective 120 days after the publication date of this notice, in order to give agencies time to amend policies and communicate changes to their human resources staff. Below is a discussion of the comments that OPM received.

Four agencies were concerned as to whom the regulation applied.

Discussion

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 DHC-8-400 series airplanes. The NPRM published in the Federal Register on July 15, 2016 (81 FR 45995) (“the NPRM”). The NPRM was prompted by a determination by the manufacturer that shims might not have been installed between certain longerons and longeron joint fittings. The NPRM proposed to require repetitive inspections of the external surface of the fuselage skin panel for loose or working fasteners, and corrective action if necessary; a detailed visual inspection of the longeron joint fittings for the existence of shims and, if necessary, repetitive inspections of the longeron and the longeron joint fittings for any cracking, and corrective action if necessary. We are issuing this AD to detect and correct missing shims between the longerons and longeron joint fittings, which could result in a gapping condition and lead to stress corrosion cracking of the longeron joint fittings, and could adversely affect the structural integrity of the wing-to-fuselage attachment joints.

Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF-2015-22, dated August 3, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc. Model DHC-8-400 series airplanes. The MCAI states:

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.

Horizon Air requested that we incorporate Bombardier Service Bulletin 84-53-65, Revision A, dated February 22, 2016.

We agree with the commenter's request to incorporate the revised service information because Bombardier Service Bulletin 84-53-65, Revision A, dated February 22, 2016, is the latest revision. We have changed all service bulletin references in this final rule to Bombardier Service Bulletin 84-53-65, Revision A, dated February 22, 2016.

Horizon Air requested that we add a paragraph addressing credit for previous actions.

We agree. Since we have incorporated revised service information in this final rule, we agree to provide credit for required tasks performed before the effective date of this AD using Bombardier Service Bulletin 84-53-65, dated February 27, 2015. We have added a new paragraph (n) to this AD to provide credit for previous actions and redesignated subsequent paragraphs accordingly.

We have reformatted paragraph (l) in this AD to clarify the requirements.

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 Bombardier Service Bulletin 84-53-65, Revision A, dated February 22, 2016. The service information describes procedures for inspections of the external surface of the fuselage skin panel for loose or working fasteners; a detailed visual inspection of the longeron joint fittings for the existence of shims; high frequency eddy current inspections of the longeron and the longeron joint fittings for any cracking; and replacement of longeron fittings, shims, and fasteners. 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 76 airplanes of U.S. registry.

We also estimate that it will take about 2 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this AD on U.S. operators to be $12,920, or $170 per product.

In addition, we estimate that any necessary follow-on actions will take about 3 work-hours for the inspection for missing shims, 9 work-hours for the replacement of longeron fittings and shims, and 1 work-hour for a reporting requirement; and would require parts costing $3,222; for a cost of up to $4,327 per product. We have no way of determining the number of aircraft that might need these actions. We have received no definitive data that will enable us to provide cost estimates for repair of loose or working fasteners or structural damage specified in this AD.

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

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

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

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

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

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

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

3. Will not affect intrastate aviation in Alaska; and

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

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

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2012-22-02, Amendment 39-17238 (77 FR 69739, November 21, 2012) (“AD 2012-22-02”). AD 2012-22-02 applied to certain The Boeing Company Model 747-400, -400D, and -400F series airplanes. The NPRM published in the Federal Register on April 28, 2016 (81 FR 25357) (“the NPRM”). The NPRM was prompted by a determination that there were no inspection or repair procedures included in AD 2012-22-02 for airplanes with a STA 320 crown frame web thickness less than 0.078 inch, or greater than or equal to 0.084 inch and less than or equal to 0.135 inch. The NPRM proposed to continue to require certain actions required by AD 2012-22-02. The NPRM also proposed to require, for certain airplanes, replacement of the web, including related investigative and corrective actions if necessary. We are issuing this AD to prevent complete fracture of the crown frame assembly, and consequent damage to the skin. Such damage could result in in-flight decompression of the airplane.

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.

United Airlines stated that it concurs with the NPRM.

Boeing requested we change paragraph (i) of the proposed AD to remove redundant language. Boeing requested we remove the second half of the paragraph and subparagraphs (i)(1) and (i)(2) of the proposed AD because they include redundant requirements. Boeing also noted that the redundant requirements include an exception that does not apply to table 3 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 747-53A2784, Revision 2, dated August 20, 2015.

We agree to revise paragraph (i) of this AD for the reasons provided by Boeing. We have revised paragraph (i) of this AD accordingly.

We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this AD with the change 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 Alert Service Bulletin 747-53A2784, Revision 2, dated August 20, 2015. The service information describes procedures for various inspections for cracks and missing fasteners, web and fastener replacement, and related investigative and corrective actions, 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 29 airplanes.

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

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

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

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

(3) Will not affect intrastate aviation in Alaska, 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 all Fokker Services B.V. Model F28 Mark 0070 and 0100 airplanes. The NPRM published in the Federal Register on December 24, 2015 (80 FR 80299) (“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 2014-0271, dated December 12, 2014 (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:

Corrective actions include repair of cracking in the secondary structure of the wing at station 8700, rib part number (P/N) D15445-013/-014 (or lower dash number), in the trailing edge section.

You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-7530.

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 SBF100-57-048, dated October 27, 2014. This service information describes procedures for inspecting the trailing edge section at the rib of wing station 8700 for cracking. 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 also estimate that it will take about 1 work-hour per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. 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 $680, or $85 per product.

We have received no definitive data that will enable us to provide cost estimates for the on-condition actions specified in 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:

Section 500 of the Tariff Act of 1930, as amended (19 U.S.C. 1500), provides U.S. Customs and Border Protection (CBP) with the authority, under rules and regulations prescribed by the Secretary of the Treasury, to, among other things, give or transmit notice of liquidation pursuant to an electronic data interchange system. See 19 U.S.C. 1500(e). Similarly, CBP is authorized to give notice of extension of liquidation in such form and manner (which may include electronic transmittal) as prescribed by regulation and notice of suspension of liquidation in such manner as considered appropriate. See 19 U.S.C. 1504(b) and (c). Additionally, the National Customs Automation Program (NCAP) was established by Subtitle B of Title VI—Customs Modernization, in the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057, December 8, 1993), to provide for, among other things, the electronic status of liquidation. See 19 U.S.C. 1411.

Currently, notices of liquidation for formal entry, including notices of liquidation by operation of law, are physically posted in the customhouse or station at the port of entry on CBP Form 4333, and this physical posting is deemed the legal evidence of liquidation. When extension or suspension of liquidation occurs, official notices are mailed on an appropriately modified CBP Form 4333-A.

On October 14, 2016, CBP published a notice in the Federal Register (81 FR 71019) proposing to amend title 19 of the Code of Federal Regulations (“19 CFR”) to reflect that official notice of liquidation, suspension of liquidation, and extension of liquidation would be posted electronically on the CBP Web site rather than being physically posted at the customhouses or stations or mailed. CBP also proposed eliminating the mailed paper courtesy notices of liquidation but stated its intention to continue sending electronic courtesy notices of liquidation, extension, and suspension via a CBP-authorized electronic data interchange system to the electronic filer when entries liquidate or are extended or suspended. The proposed amendments were intended to modernize, centralize, and facilitate the method by which importers are provided official notice of liquidation, extension, and suspension. Additionally, CBP proposed certain technical corrections to sections 159.11(a), 159.12(f), and 173.4a of 19 CFR to update the regulatory language to reflect statutory changes to sections 504 and 520 of the Tariff Act of 1930, as amended (19 U.S.C. 1504 and 1520). The notice of proposed rulemaking requested public comments. The public comment period closed on November 14, 2016.

CBP received four comments regarding the proposed amendments to part 159 of 19 CFR regarding posting official notice of liquidation, suspension of liquidation, and extension of liquidation on the CBP Web site. No comments were received on the technical corrections to the regulations contained in sections 159.11(a), 159.12(f), and 173.4a of 19 CFR reflecting the statutory changes to 19 U.S.C. 1504 and 1520.

Four comments were received in response to the notice of proposed rulemaking. CBP has addressed the comments below:

Comment: Three commenters expressed support for the proposed changes to post liquidation information on CBP's Web site, www.cbp.gov.

CBP Response: CBP appreciates the support and the input from the commenters.

Comment: One commenter suggested that the regulations state that the link will be visible on the CBP home page so that it remains conspicuous regardless of future CBP Web site changes and the public will not have to search for the link.

CBP Response: CBP agrees that the link needs to be conspicuous although not necessarily on the homepage. The link will be labelled “Official Notices of Liquidation” and, pursuant to 19 CFR 159.9(b), it will be placed in a conspicuous place on CBP's Web site in such a manner that it can readily be located and consulted by all interested persons. CBP assures that the link will remain conspicuous regardless of any potential future CBP Web site changes.

Comment: One commenter stated that the regulations should include a definition of what constitutes the posting and its data elements.

CBP Response: CBP disagrees that adding a definition of what constitutes the posting and its data elements is necessary because CBP believes such a definition would not add value or clarity. As proposed, the regulations at 19 CFR 159.9 provide that the posting will occur on CBP's Web site, address the date of posting, state that the electronic posting will be deemed the legal evidence of liquidation, and address liquidations by operation of law.

Comment: One commenter stated that the regulations appear not to deal with reliquidations and proposed adding reliquidation to 19 CFR 159.9(b).

CBP Response: CBP disagrees with the commenter. CBP intends that the posting of reliquidations will also be done electronically. Section 173.3(b) regarding reliquidation (which is in the current regulations and was not proposed to be amended) provides that notice of reliquidation will be given in accordance with the requirements for giving notice of the original liquidation. Accordingly, CBP believes there is no need to add reliquidation to 19 CFR 159.9(b).

Comment: One commenter stated that the regulation should spell out in detail how the date of posting will appear.

CBP Response: CBP disagrees that the regulation needs to spell out in detail how the date of posting will appear as the posting will be in a format that is easy to understand. The date of posting will appear in standard MM/DD/YYYY format. For example, December 31, 2016, will appear as 12/31/2016.

Comment: One commenter asked if importers or brokers will be able to print the notice and asked if the printed notices would include the posting date.

CBP Response: A printed copy may be obtained using a web browser's print functionality which should include the information that is displayed on the screen, such as the posting date.

Comment: One commenter stated that the liquidation information posted on the CBP Web site should be searchable using data elements.

CBP Response: CBP agrees and has designed the liquidation information posted on the CBP Web site to be searchable using data elements.

Comment: One commenter stated that the large majority of liquidations take place on a Friday and asked if that practice will continue.

CBP Response: CBP has designed the functionality so that entries that are set for auto-liquidation, that is, liquidations that occur on the standard 314-day cycle without CBP intervention will continue to be made on Fridays. However, for manual liquidations where CBP action is required, liquidations will generally post to the Web site within 90 minutes after CBP processes the liquidation.

Comment: Two commenters suggested that the 15-month timeline for maintaining liquidation information on the CBP Web site should be stated in the regulations.

CBP Response: CBP agrees that adding this language to the regulations will be beneficial. Accordingly, CBP has added language to §§ 159.9(c)(1), 159.12(b), and 159.12(c) stating that notices of liquidation, extension, and suspension, respectively, will be maintained on the CBP Web site for a minimum of 15 months.

Comment: One commenter requested that CBP place in the regulations the process for requesting access to notices that are no longer available on the Web site beyond the 15-month timeline.

CBP Response: CBP disagrees that this process needs to be included in the regulations. Guidance will be provided in the Automated Commercial Environment (ACE) Business Rules Process Document, which can be updated in a quicker manner than the regulations should a more efficient process for obtaining historical information be developed. When the information is no longer available on the CBP Web site, a request may be made to CBP for historical information by contacting the filer's assigned client representative or by contacting the appropriate port or Center of Excellence and Expertise directly. Additionally, ACE account holders may run queries to obtain the historical information without having to contact CBP.

Comment: One commenter stated that CBP has the ability to post notices regarding liquidations by operation of law immediately when they occur in the electronic environment rather than “within a reasonable period” after each liquidation by operation of law. Another commenter asked that CBP post notice of liquidation by operation of law within 14 days of the liquidation.

CBP Response: CBP disagrees that it has the ability to post this information immediately upon occurrence because in many situations, CBP is unaware of the liquidation by operation of law for some time after it has occurred. However, the commenters validly pointed out that the electronic environment enables CBP to post notice without delay. Accordingly, based on these comments, CBP has amended the regulation at 19 CFR 159.9(c)(2)(i) to state that CBP will post this information when it has determined that an entry has liquidated by operation of law, and has removed the phrase regarding posting within a reasonable time period.

Comment: One commenter asked if the term “filer” was the filer code or the name of the importer of record and noted that both the filer code and the importer of record should be included with the information posted on the CBP Web site.

CBP Response: The term “filer” is not referencing the filer code or importer of record number but is instead referring to the party transmitting entry/entry summary data to CBP. The filer code is a searchable data element and will be displayed in the search results. However, as stated in the notice of proposed rulemaking, when the results of a search are viewed, the CBP Web site will not display the importer of record numbers.

Comment: One commenter asked if people in one location may search the notices for another location and used the example of being in Miami and searching notices from Long Beach.

CBP Response: Because information will be posted on the CBP Web site, all notices of liquidation throughout the country will be available to view and search regardless of the physical location of the searcher.

Comment: One commenter asked that the liquidation information remain on the CBP Web site indefinitely until historical information is available to sureties through the ACE portal, so that the surety can generate search results easily for its own list of entries. This commenter also requested that “Surety Code” be added to the list of data elements.

CBP Response: As stated elsewhere in the document, the liquidation information will be maintained on the CBP Web site for a minimum of 15 months. Regarding sureties, CBP has provided for surety code to be a searchable data element.

Comment: One commenter asked that the surety on an entry be included in 19 CFR 159.9(d) as a party to receive courtesy notices of liquidation.

CBP Response: A surety on an entry is able to receive courtesy notice if it is set up in ACE to receive courtesy notices of liquidation. However, based on this comment, CBP has amended the regulation at 19 CFR 159.9(d) to state that courtesy notices of the extension will be sent to the entry filer or its agent and the surety on an entry.

Comment: One commenter asked that the filer and the surety be included as a recipient of courtesy notices of extension of liquidation in 19 CFR 159.12(d)(2) in order to maintain consistency with 19 CFR 159.12(b) and (c) regarding whom the regulations identify as parties receiving courtesy notices.

CBP Response: CBP agrees that the regulations should each be consistent in this regard. Accordingly, based on this comment, CBP has amended the regulation at 19 CFR 159.12(b), (c), and (d)(2), to state that courtesy notices of the extension will be sent to the entry filer or its agent and the surety on an entry through a CBP-authorized electronic data interchange.

Accordingly, after review of the comments and further consideration, CBP has decided to adopt as final, with the changes discussed above, the proposed rule published in the Federal Register (81 FR 71019) on October 14, 2016. Specifically, the final rule contains the following changes based on the comments:

Executive Orders 13563 and 12866 direct agencies to assess the 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, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866. Accordingly, the Office of Management and Budget has not reviewed this regulation.

This section examines the impact of this rule on small entities per the requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996. The Regulatory Flexibility Act (5 U.S.C. 601 et seq.), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, requires agencies to assess the impact of regulations on small entities. A small entity may be a small business (defined as any independently owned and operated business not dominant in its field that qualifies as a small business per the Small Business Act); a small not-for-profit organization; or a small governmental jurisdiction (locality with fewer than 50,000 people).

Most goods imported into the United States are subject to duty assessments, which CBP conducts during a process known as liquidation. During this liquidation process, CBP performs a final computation of duties (not including vessel repair duties) on the entry covering the imported merchandise and then closes out the entry. In accordance with current regulations, CBP officially notifies importers,1 as well as the public, of a formal entry's liquidation by posting a weekly bulletin notice of liquidation in a readily-located and consulted place in the customhouse or station at each port of entry.2 These notices are generally available for importers and the public to peruse for a few weeks before they are placed in CBP storage. CBP provides the same official notice of liquidation for informal entries where a duty cannot be determined at the time of entry and for reliquidated dutiable entries.3 For other informal, mail, and baggage entries, CBP furnishes official notice of liquidation to an importer (and its surety when required) by a suitable printed statement appearing on the receipt issued for duties collected, by release of the merchandise under a free entry, or by acceptance of the free entry after release under a special permit for immediate delivery.4 Once CBP provides official notice of liquidation or reliquidation, importers generally have 180 days to file a protest challenging certain aspects of their entry's liquidation.5 In addition to these official notices, CBP endeavors to provide importers (and their sureties) informal, courtesy notices of liquidation and reliquidation for entries scheduled to be liquidated or deemed liquidated by operation of law. For the majority of importers filing entries, who actually file electronically, CBP generally sends these filers (and their sureties) courtesy notices of liquidation and reliquidation via a CBP-authorized electronic data interchange system before the official notice (and protest period's start date). For the small portion of importers who file entries by paper, CBP typically mails paper courtesy notices of liquidation and reliquidation using CBP Form 4333-A to these filers on or around the date of the official notice's posting. These courtesy notices are not direct, formal, and decisive notices of liquidation or reliquidation; however, based on anecdotal evidence, most importers rely on these courtesy notices to determine liquidations and reliquidations to avoid the time and resource costs incurred to view official bulletin notices at U.S. customhouses or stations.

Some liquidations may be extended or suspended. If liquidation is extended or suspended, CBP officially notifies the importer and its surety by mail using CBP Form 4333-A, as appropriately modified.6 CBP also provides importers who file entries electronically and their sureties with electronic courtesy notices of extension and suspension, which are generally sent in advance of mailed notifications. Although these courtesy notices are not direct, formal, and decisive notices of extension or suspension, CBP believes that most importers (and all sureties) rely on them to determine extensions and suspensions because importers receive them before the official notice and they contain the same information. Importers who file entries by paper do not receive electronic or paper courtesy notices of extension and suspension.

In an effort to modernize the liquidation, reliquidation, extension, and suspension notification processes, CBP, through this rulemaking, will discontinue physically posting official bulletin notices of liquidation and reliquidation at U.S. port of entry customhouses and stations. Instead, CBP will post these official notices in a readily-located, conspicuous place on the CBP Web site: www.cbp.gov. Additionally through this rule, CBP will begin posting electronically on www.cbp.gov official notices of extension and suspension that are currently mailed. CBP will tie all electronic notices directly to an already-developed, automated process by which entries are liquidated, reliquidated, extended, or suspended, ensuring that these actions and CBP's official notifications of these actions occur almost simultaneously. This rule will not change the method in which CBP provides electronic courtesy notices of liquidation, reliquidation, extension, or suspension, but it will discontinue the practice of mailing any paper notices. For other informal, mail, and baggage entries, CBP will continue to furnish official notices of liquidation and reliquidation to importers (and their sureties when required) by a suitable printed statement appearing on the receipt issued for duties collected, by release of the merchandise under a free entry, or by acceptance of the free entry after release under a special permit for immediate delivery. As described next, these regulatory changes will introduce benefits and costs to importers, including small entities.

For most importers (and their sureties), this rule will simply change the way in which they can access official notices of liquidation, reliquidation, extension, and suspension. Instead of posting weekly official bulletin notices of liquidation and reliquidation at each U.S. customhouse and station and mailing official notices of extension and suspension, CBP will publish these notices on the CBP Web site once this rule is in effect. CBP will also discontinue mailing all paper courtesy notices of liquidation and reliquidation with this rule. Because the vast majority of importers (and all their sureties) already rely on the electronic courtesy notices of liquidation, reliquidation, extension, and suspension that CBP provides, this rule's transition to electronic official notice publications will presumably only affect a small portion of importers. Specifically, this transition to electronic notice publications will only affect those importers who currently rely on official bulletin notices physically posted at U.S. customhouses and stations and those importers who receive and rely on paper courtesy notifications of liquidation and reliquidation and paper official notices of extension and suspension due to their paper entry filings.

Using historical data, CBP estimates that importers took an average of 2,500 trips to U.S. customhouses or stations each year for the single purpose of viewing official bulletin notices because the official bulletin notice's posting date was significant to a protest that importer planned to file.7 CBP also estimates that CBP mailed an average of 23,500 paper courtesy notices of liquidation and reliquidation and 3,100 paper notices of extension and suspension each year to importers who filed paper entries.8 Considering this historical data, CBP estimates that this rule could affect up to approximately 29,100 importers per year. To the extent that the same importer took more than one trip to the U.S. customhouse or station to view an official bulletin notice or received and relied on more than one paper notice, the number of importers affected by this rule will be lower. Nonetheless, because the majority of importers are small businesses, CBP believes this rule will affect a substantial number of small entities.

This rule's transition to fully electronic notices will require the estimated 29,100 importers who currently rely on official bulletin notices physically posted at U.S. customhouses and stations and those who rely on paper notices of liquidation, reliquidation, extension, and suspension to visit the CBP Web site to determine entry liquidations, reliquidations, extensions, and suspensions.9 To view this rule's official bulletin notices on the CBP Web site, CBP assumes that these importers will spend an added 4 minutes (0.0667 hours) 10 navigating the CBP Web site to find a liquidation, reliquidation, extension, or suspension notice, at a time cost of $2.01 based on the assumed hourly wage rate for importers.11 Most affected importers will presumably visit the CBP Web site once per year to view an entry's official notice of liquidation, reliquidation, extension, or suspension, for a total cost of $2.01 per year.12 However, some affected importers, such as those who receive extension and suspension notices that are in effect for an unknown amount of time, could visit the CBP Web site more than once per year for an entry, incurring the access cost of $2.01 each time they visit the CBP Web site. Even if an importer accesses the CBP Web site twice a month for an entry, or 24 times per year, it will incur only a $48.24 cost to do so. The average value per entry was $69,300 in FY 2015.13 The range of annual importer costs for this rule ($2.01 to $48.24) amounts to between 0.003 percent and 0.07 percent of this average entry value. Likewise, if an importer processes multiple entries per year, its total costs from this rule will be higher but the value of its entries will also be higher, meaning that the average cost to the importer will be between 0.003 percent and 0.07 percent of the entry value regardless of the number of entries the importer files per year. CBP does not consider this to be a significant economic impact.

Along with the minor Web site access cost imposed by this rule, this rule will provide benefits to importers who currently rely on official bulletin notices physically posted at U.S. customhouses and stations. This rule's electronic publication of official bulletin notices of liquidation and reliquidation will allow these importers to avoid visiting U.S. customhouses and stations for formal entry liquidation and reliquidation information, which typically occur 2,500 times a year. For each trip to a U.S. customhouse or station avoided, importers will save an estimated 45 minutes (0.75 hours), which will result in a time cost saving of $22.57 using the average hourly wage for importers of $30.09.14 Importers will also save $16.20 in travel costs per trip based on the estimated distance they sustain from traveling to and from a U.S. customhouse or station—30 miles—and the IRS's $0.54 standard mileage rate for business purposes.15 To the extent that some trips are taken for multiple purposes, not just for viewing an official bulletin notice of liquidation or reliquidation, fewer costs will be avoided and the benefits of this rule per trip will be lower.

The electronic bulletin notices introduced with this rule will also provide benefits of eased access, relatively quicker notification, and extended viewing to importers. In particular, this electronic transition will allow importers to easily view and query a complete, consolidated list of U.S. entry liquidations, reliquidations, extensions, and suspensions, thus facilitating the process by which these individuals obtain such entry information. For importers who typically rely on paper courtesy notices for liquidation and reliquidation information, which they receive by mail after the official notice's posting, this electronic posting will provide the added benefit of more timely notice and additional protest time. Importers who receive and rely on paper courtesy notices will also benefit from this rule's consolidated electronic notice posting. This change will allow importers and their agents to view liquidation, reliquidation, extension, and suspension notices simultaneously instead of individually as they currently do through paper notices. Furthermore, importers will have at least 14 more months to view official liquidation, reliquidation, extension, and suspension notices before having to request access to the notices through CBP.

Although CBP believes that this rule will affect a substantial number of small entities, specifically importers, CBP believes that the (negative) economic impact of this rule on small entities will not be significant. Accordingly, CBP certifies that this regulation will not have a significant economic impact on a substantial number of small entities. CBP received no public comments on the Electronic Notice of Liquidation Notice of Proposed Rulemaking challenging this certification.

As there is no collection of information proposed in this document, the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) are inapplicable.

This document is being issued in accordance with § 0.1(a)(1) of the CBP Regulations (19 CFR 0.1(a)(1)) pertaining to the authority of the Secretary of the Treasury (or his/her delegate) to approve regulations related to certain customs revenue functions.

For the reasons given above, parts 159 and 173 of title 19 of the Code of Federal Regulations (19 CFR parts 159 and 173) are amended as set forth below:

In the interim final rule FR Doc. 2016-28591, published on December 2, 2016, the following correction is made:

On page 86947, in the first column, correct the DATES section to read as follows:

Dates: Effective Date: January 3, 2017.

Comment Due Date: January 31, 2017.

The Route 82 Bridge, mile 16.8, across the Connecticut River, has a vertical clearance in the closed position of 22 feet at mean high water and 25 feet at mean low water. The existing bridge operating regulations are found at 33 CFR 117.205(c).

The waterway is transited by seasonal recreational traffic and some commercial barge traffic of various sizes.

The bridge owner, Connecticut Department of Transportation, requested a temporary deviation from the normal operating schedule to perform emergency repairs at the bridge.

Under this temporary deviation, the Route 82 Bridge shall open on signal on December 20, 2016 between 7 a.m. and 5 p.m. and on December 27, 2016 between 7 a.m. and 5 p.m. if at least 15 minutes advance notice is given by calling the number posted at the bridge.

Vessels able to pass under the bridge in the closed position may do so at anytime. The bridge will not be able to open for emergencies and there is no immediate alternate route for vessels to pass.

The Coast Guard will inform the users of the waterways through our Local Notice and Broadcast to Mariners of the change in operating schedule for the bridge so that vessel operations 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 USPTO issues this final rule to correct inadvertent errors in certain cross-references in §§ 2.124(f) and 2.126(c), to clarify the manner of testimony taken in a foreign country in § 2.123(a)(2), to clearly incorporate cross-examination in the process of depositions upon written questions in § 2.124(d)(1), and to reincorporate explicit timing requirements for cross-appeals and cross-actions in § 2.145(d)(1) and (3) of its October 7, 2016 final rule revising the Trademark Trial and Appeal Board Rules of Practice. (81 FR 69950) (published under RIN 0651-AC35).

The first sentence of § 2.123(a)(2) is clarified to separate motions to take depositions upon written questions by oral examination from testimony by affidavit or declaration. To implement this clarification, the phrase “A testimonial deposition” is replaced with “Testimony” and the clause “by affidavit or declaration, subject to the right of any adverse party to elect to take and bear the expense of cross-examination by written questions of that witness” is moved to clearly delineate it.

The first sentence of § 2.124(d)(1) should cross reference paragraphs (b)(1) and (2) rather than only (b). A paragraph was added to § 2.124(b) which operated to renumber that section, and the cross reference was not updated. In addition, in the first, third and sixth sentences, further clarification was needed to clearly incorporate the timing for cross-examination upon written questions of testimony by affidavit or declaration.

The second sentence of § 2.124(f) should cross reference § 2.125(c) rather than § 2.125(b). A paragraph was added to § 2.125, which operated to renumber that section, and the cross reference was not updated.

The first sentence of § 2.126(c) should cross reference § 2.125(f) rather than § 2.125(e). A paragraph was added to § 2.125, which operated to renumber that section, and the cross reference was not updated.

The October 7, 2016 final rule amended the timing requirements for appeals and civil actions, but inadvertently omitted the timing requirement for cross-actions from § 2.145(d)(3). Therefore, this correction revises the last sentence in § 2.145(d)(3) to reincorporate the timing requirement for cross-actions. Also, this correction revises § 2.145(d)(1) concerning cross-appeals to have consistency between § 2.145(d)(3) and (d)(1).

This correcting rule may be issued without prior notice and opportunity for comment as the corrections are nonsubstantive and being implemented to avoid inconsistencies and confusion with the rule issued on October 7, 2016. The USPTO corrects the errors as discussed below.

In FR Doc. 2016-23092, published on October 7, 2016 (81 FR 69950), make the following corrections:

Under 38 U.S.C. 1722A(a), VA must require veterans to pay at least a $2 copayment for each 30-day supply of medication furnished on an outpatient basis for the treatment of a non-service-connected disability or condition, unless the veteran is exempt from having to pay a copayment because the veteran has a service-connected disability rated 50 percent or more, is a former prisoner of war, or has an annual income at or below the maximum annual rate of VA pension that would be payable if the veteran were eligible for pension. VA has the authority under 38 U.S.C. 1722A(b) to increase that copayment amount and establish a maximum annual copayment amount (a “cap”) through regulation. We have implemented this statute in 38 CFR 17.110. Both the copayment amount for certain priority groups, as well as an annual cap on those copayments, are addressed in 38 CFR 17.110(b).

On January 5, 2016, we proposed a new medication copayment formula, in order to address longstanding concerns that the regulatory formula VA had been using was not competitive with non-VA retail copayment structures, lacked parity, may result in decreased medication adherence, and increased the likelihood of fragmented care due to price-shopping. 81 FR 196. The public comment period closed March 7, 2016, and we received nine comments, all of which were generally supportive. Several commenters expressed strong support for lowering the annual medication copayment amount. However, several commenters urged VA to make changes to different aspects of the proposed rule. The majority of the comments focused on the definition of multi-source medication. We address those comments, and make changes to the rulemaking as noted below.

The new regulatory formula established by this rule focuses on the type of medication being prescribed and would remove the automatic escalator provision, meaning that changes in copayments would only occur through subsequent rulemakings. Veterans exempt by law from copayments under 38 U.S.C. 1722A(a)(3) continue to be exempt. This VA rulemaking includes a definition of “medication” and “multi-source medication.” We also establish three classes of medications for copayment purposes: Tier 1 medications, Tier 2 medications, and Tier 3 medications. Tiers 1 and 2 includes multi-source medications, a term that is defined in § 17.110(b)(1)(iv). Tier 3 includes medications that retain patent protection and exclusivity and are not multi-source medications. Copayment amounts vary depending upon the Tier in which the medication is classified. A 30-day or less supply of Tier 1 medications has a copayment of $5. For Tier 2 medications, the copayment is $8, and for Tier 3 medications, the copayment is $11. The rule also changes the annual cap for medication copayments, lowering the cap to $700 for all veterans who are required to pay medication copayments.

On September 16, 2015, VA published a final rule maintaining, through December 31, 2016, medication copayment amounts at the 2014 rate for certain priority groups ($8 for veterans in priority groups 2-6 and $9 for veterans in priority groups 7 and 8). See 80 FR 55544. VA anticipated at that time that necessary information technology (IT) structure changes would be in place by December 31, 2016, allowing the current rulemaking to have an effective date of January 1, 2017. However, those changes will not be ready for a full roll-out until February 27, 2017. The effective date of this final rule is February 27, 2017. VA published a separate rulemaking that will extend the current copayment freeze until the effective date of the present rulemaking. The end result is that the higher annual copayment cap of $960 will be in effect through February 26, 2017, and the lower annual cap of $700 will apply the following day. We believe it is unlikely that a veteran will pay more than $700 in medication copayments during the short period of time before the lower annual cap goes into effect. However, in the event that any veteran exceeds the $700 cap in this final rule, before the rule takes effect, VA will refund the amount in excess of the $700 cap to the veteran.

In paragraph (a) of proposed section 17.110, we proposed that for the purposes of this section, the term “medication” would mean prescription and over-the-counter medications as determined by FDA. One commenter noted that the term “medication” is not a regulatory term of art used by FDA and FDA does not determine whether an item is medication. The commenter stated that the rule should instead refer to the regulatory approval authorities for drugs and biologics, section 505 of the Food Drug and Cosmetic Act (FDCA) for drugs, and section 351 of the Public Health Service Act (PHSA) for biologics. The commenter stated that citing these authorities would clarify that the term “medication” does not include medical supplies, nutritional items, and devices.

Section 505 of the FDCA is codified at 21 U.S.C. 355 (New drugs) and 355-1 (Risk evaluation and mitigation strategies). Citing the former would inappropriately limit the definition of “medication” to new drugs, and citing the latter would address only those instances where FDA determines that a risk evaluation and mitigation strategy is necessary to ensure that the benefits of a new drug outweigh the risks of the drug. While section 351 of the PHSA is applicable to the approval of all biologics, VA believes that it would be potentially confusing to the public if the rulemaking cited to statutory authority related to biologics but not for drugs. However, VA agrees with the commenter's concern that medical supplies and devices are not specifically excluded from the definition of “medication.” We have amended the definition accordingly to exclude medical supplies and devices. We also specifically excluded oral nutritional supplements from the definition of “medication” because they are exempt from copayments. Oral nutritional supplements are commercially prepared nutritionally enhanced products used to supplement the intake of individuals who cannot meet nutrient needs by diet alone.

One commenter stated that the definition of multi-source medication in § 17.110(b)(2)(A) is inappropriately broad, misaligned with the conventional use and understanding of the term, risks public confusion, and poses a potential risk to patient safety. The commenter stated that the term is typically used to describe only those drugs that FDA has determined to be therapeutically equivalent (i.e., pharmaceutically equivalent and bioequivalent), and that FDA's definition is also consistent with Centers for Medicare and Medicaid Services' regulatory use of the term “multiple source” for purposes of the Medicare and Medicaid programs.

Another commenter stated that the definition of “multi-source medication” “includes multiple categories of drugs defined separately under the Medicaid Drug Rebate Program in 42 U.S.C. 1396r-8(k)(7)(A) as `multiple source drug,' `innovator multiple source drug,' `non-innovator multiple source drug,' and `single source drug.'” The commenter asserts that VA's proposed definition of multi-source medication conflicts with these statutory definitions. Another commenter stated that the proposed definition of multi-source medication contributes to nonuniformity in federal regulations, noting that TRICARE regulations at 32 CFR 199.21(j) classify generic medications as multi-source products, and specifically define that term.

In response to these commenters, we note that our definition of multi-source medication is intentionally broad to differentiate medication that would fall under Tiers 1 and 2 from those in Tier 3 in the regulation. We determined that the use of a single term to describe medications that do not retain patent protection and exclusivity is appropriate because veterans receiving care from VA, not drug manufacturers, are primarily affected by this rulemaking. VA considered several options on how to address the types of medications we include in the definition of multi-source medications in § 17.110(b)(1)(iv)(A). Our primary considerations were to ensure, first, that the types of medications were adequately defined and, second, that the rulemaking clearly states to which copayment tier each of these types of medications is assigned. It became evident during the drafting process that treating the types of medications currently described in § 17.110(b)(1)(iv)(A) as separately-defined terms was problematic, because adding multiple definitions could lead to confusion. VA believes that using a single term to refer to types of medication with a shared major characteristic is less confusing than referring to multiple separate definitions. The characteristic shared by each type of medication in current § 17.110(b)(1)(iv)(A) is that it is available from multiple sources. VA believes that using the term “multi-source medication” has a lower risk of confusing the public than does the use of separate terms like those suggested by the commenter. The various Medicaid definitions referred to by the commenters are necessary for administration of medication payments or reimbursement by Medicaid to states, retail or hospital pharmacies, other health care providers, and drug manufacturers. That degree of differentiation in definitions is unnecessary for tiered copayment purposes, and would lead to confusion in our veteran population. Likewise, adopting definitions of similar terms used by Medicaid would not be helpful to veterans, as the Medicaid definitions of terms were drafted to serve another purpose and were targeted to their specific audience. As one commenter stated, TRICARE regulations do classify generic drugs as multi-source products. However, as noted above, several classes of medications can properly be described as being multi-source. As the definition of multi-source medication in this rulemaking relates solely to determining whether a particular medication should be in one of three tiers for purposes of VA medication copayments, we do not anticipate that nonuniformity of VA and other agencies' terms will be a problem. We make no changes based on these comments.

Two commenters stated that VA should clarify that the definition of “multi-source medication” applies only to VA's copayment structure in order to avoid confusion given the use of similar terminology in other federal regulations. We specify in § 17.110(b)(1)(iv) that the definition of “multi-source medication” is for purposes of that section only. We make no changes based on these comments.

In paragraph (b)(1)(iv)(A)(1)(ii) we proposed that the term “multi-source medication” would include a medication that has been and remains approved by FDA under section 351(k) of PHSA (42 U.S.C. 262), and has been granted an I or B rating in the current version of the FDA's Lists of Licensed Biological Products with Reference Product Exclusivity and Biosimilarity or Interchangeability Evaluations (the Purple Book). We received multiple, highly technical comments on this issue, which are summarized below. After the summary, we respond to the comments.

Several commenters stated that VA should clarify that it defers to FDA regarding both therapeutic equivalence for drugs and interchangeability for biological products. The commenters asserted that by defining multi-source medication to mean, in part, a medication that has been granted an I or B rating by FDA, VA would treat both biological products that FDA has determined to be interchangeable (I rated) and those deemed biosimilar (B rated) exactly the same. The commenters stated that the proposed rule erroneously conflates entirely the two very distinct approval standards for these two very distinct categories of biological products.

Several commenters stated that the proposed rulemaking failed to recognize the significant differences between generic drugs and biosimilar products. The commenters noted that biosimilar products are not necessarily interchangeable. Whereas drugs typically have small molecule structures that can be completely defined and entirely reproduced, biologics are large-protein molecules that are generally more complex, and reproductions are unlikely to be shown to be structurally identical to the innovator product. In recognition of this difference, the Biologics Price Competition and Innovation Act of 2009 (BPCIA) established separate approval standards for biosimilar and interchangeable biological products, distinct from standards for generic drugs. Generic drugs must be the same as a previously approved Reference Product, and are approved for the same indications. In contrast, to receive FDA approval, biosimilar products must be demonstrated to be “highly similar,” but not identical, to the innovator product. Approved B rated biosimilar products have not been determined by FDA to be safe for substitution with the Reference Product. Biologics must meet additional criteria established by the FDA to be interchangeable, or I rated. One commenter urged VA to exclude biosimilar products that FDA has not determined to be interchangeable from the definition of multi-source medication. In the alternative, the commenter stated that VA should clarify that a biological product licensed by FDA as a biosimilar is not interchangeable absent an FDA determination of such.

Commenters noted that the BPCIA sets forth criteria for a biologic being rated as a biosimilar product, and two additional requirements for interchangeability. Only those biosimilar products that have met these two additional criteria are deemed by FDA to be interchangeable. Two commenters stated that FDA sets a higher standard for interchangeability of biological products and other related biosimilar products than it does for biosimilarity or therapeutic equivalence for smaller molecule drugs. The commenters stated that, in the absence of the robust data that FDA requires to make a determination regarding biosimilarity or interchangeability, VA could potentially place patients at significant risk.

One commenter stated that the proposed rulemaking encourages the use of the lowest cost biosimilar regardless of interchangeability and whether the biosimilar has been tested for the indication for which it is prescribed.

One commenter noted that there are some smaller molecule drugs that have not been determined by FDA to be therapeutically equivalent. The commenter stated that VA should consider the unique safety questions surrounding substitution of biological products, including those that have been determined to be biosimilar, especially with regard to immunogenicity.

One commenter stated that VA should clarify that B rated biological products have not been approved as interchangeable with the reference Product. FDA approval as an interchangeable biological product (I rated) requires the successful demonstration of an entirely separate and more rigorous set of standards. The commenter states that VA should clarify that the inclusion of B rated biologics in the definition of multi-source medication does not imply that B rated biologics have been determined by FDA to be interchangeable.

We appreciate the complete analyses provided by the commenters on the topic of biosimilarity and interchangeability, and we have made changes to the regulation responsive to their concerns. Our reasoning follows.

The Purple Book lists biological products, including any biosimilar and interchangeable biological products licensed by FDA under the PHSA. The lists include the date a biological product was licensed under 351(a) of the PHSA and whether FDA evaluated the biological product for reference product exclusivity under section 351(k)(7) of the PHSA. The Purple Book enables a user to see whether a biological product licensed under section 351(k) of the PHSA has been determined by FDA to be biosimilar to or interchangeable with a reference biological product (an already-licensed FDA biological product). Biosimilar and interchangeable biological products licensed under section 351(k) of the PHSA are listed under the reference product to which biosimilarity or interchangeability was demonstrated.

The BPCIA was enacted as part of the Patient Protection and Affordable Care Act (Affordable Care Act) (Pub. L. 111-148) on March 23, 2010. The BPCIA amends the PHSA and other statutes to create an abbreviated licensure pathway for biological products shown to be biosimilar to or interchangeable with an FDA-licensed biological reference product (see sections 7001 through 7003 of the Affordable Care Act). Section 351(k) of the PHSA, added by the BPCIA, sets forth the requirements for an application for a proposed biosimilar product and an application or a supplement for a proposed interchangeable product. There are three relevant definitions in this statute.

Section 351(i) defines biosimilarity to mean that the biological product is highly similar to the reference product notwithstanding minor differences in clinically inactive components and that there are no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity, and potency of the product.

To meet the standard for interchangeability, an applicant must provide sufficient information to demonstrate that the biological product is biosimilar to the reference product and can be expected to produce the same clinical result as the reference product in any given patient. Additionally, if the biological product is administered more than once to an individual, the risk in terms of safety or diminished efficacy of alternating or switching between the use of the biological product and the reference product is not greater than the risk of using the reference product without such alternation or switch (see section 351(k)(4) of the PHSA). Interchangeable products may be substituted for the reference product by a pharmacist without the intervention of the prescribing health care provider (see section 351(i)(3) of the PHSA).

Reference product means the single biological product licensed under section 351(a) of the PHSA against which a biological product is evaluated in a 351(k) application (section 351(i)(4) of the PHSA).

The definition of multi-source medication in this rulemaking was crafted for only one purpose—to differentiate several classes of medication (including drugs and biologics) that can be termed either Tier 1 or 2 for medication copayment purposes. This definition does not equate an I rated product with one that is B rated by FDA. Nor does it conflict with or supersede a determination by FDA that a particular drug is the therapeutic equivalent of another, or that two biologics are biosimilar. The Purple Book lists biological products, including any biosimilar and interchangeable biological products licensed by FDA, and the definition of multi-source medication at paragraph (b)(1)(iv)(A)(1)(ii) recognizes that fact and categorizes those already-licensed products for VA's purposes. We have added clarifying language to indicate that VA defers to FDA regarding both therapeutic equivalence for drugs and interchangeability for biological products.

We do not agree with the commenter concerned that the rulemaking encourages the use of the lowest cost biosimilar regardless of interchangeability and whether it has been tested for the indication for which it is prescribed. A VA health care provider makes decisions on prescribing specific medications based on the clinical need of the individual patient being treated for a given illness or condition. Prescribing decisions are generally limited to those medications included in the VA National Formulary, which is discussed in greater detail below. If a particular medication is not available, sound clinical practice is for the health care provider to select an alternate medication that is interchangeable or otherwise approved by the FDA for treatment of the illness or medical condition. Cost is only one of several factors considered when VA determines which medications are on the National Formulary. In general, individual prescribing choices are influenced by medication copayment charges only when the issue is raised by the veteran, and only in those instances where a clinically justifiable alternative is available. We make no changes based on this comment.

In paragraph (b)(1)(iv)(A)(3) we proposed that the term “multi-source medication” would include a medication that has been and remains approved by the FDA pursuant to FDCA section 505(b)(1) or PHSA section 351(a); and has the same active ingredient or active ingredients, works in the same way and in a comparable amount of time, and is determined by VA to be substitutable for another medication that has been and remains approved by the FDA pursuant to FDCA section 505(b)(1) or PHSA section 351(a).

One commenter expressed concerns that the proposed rule gives VA total discretion to determine whether two approved drugs or biological products are “substitutable.” The commenter stated that VA should defer to FDA's determination of therapeutic equivalence and interchangeability when making decisions regarding substitutability of products.

The commenter also expressed concern that VA's determination that products are substitutable may be misconstrued by the public as indicating that the products have been determined by FDA to be interchangeable or therapeutically equivalent when they are not.

One commenter stated that the portion of the proposed rulemaking addressing substitutability is written in a manner to suggest that there may be more treatment options, and thus there are competitive forces at play, when certain drugs and biologics have the “same active ingredient or ingredients, work . . . in the same way, and in a comparable amount of time.” The commenter argued that it is outside VA's authority to determine when products are “substitutable” with one another. The commenter stated that it is FDA's scientific determinations about therapeutic equivalence (for small molecule drugs) and interchangeability (for biologic products) that impact substitutability determinations.

VA agrees that FDA determinations regarding therapeutic equivalence and interchangeability are important considerations. However, substitutability is not the same as therapeutic equivalence or interchangeability. Whether one medication can be substituted for another is a clinical decision made by a health care provider, based on sound clinical judgment, and the decision should be evidence-based. A health care provider may decide to substitute one medication for another to treat a given medical condition for several reasons including, but not limited to, a comparison of relative side effects, contraindications, and potential adverse reactions; patient tolerance of one medication over another; a request by the patient; or an effort to decrease costs for the patient while achieving the same or similar benefits. Therapeutic equivalence and interchangeability may play a part in the decision-making process, dependent upon the range of treatment options available to the health care provider. When therapeutic equivalence and interchangeability are considerations, FDA determinations on these issues are highly relevant. We make no changes based on this comment.

In paragraph (b)(1)(iv)(A)(4) we state that the term “multi-source medication” would also include a medication that is a listed drug, as defined in 21 CFR 314.3, that has been approved under FDCA section 505(c) and is marketed, sold, or distributed directly or indirectly to retail class of trade with either labeling, packaging (other than repackaging as the listed drug in blister packs, unit doses, or similar packaging for use in institutions), product code, labeler code, trade name, or trademark that differs from that of the listed drug. The definition in paragraph (b)(1)(iv)(A)(4) is substantively identical to the definition of “authorized generic drug” found in FDA regulations at 21 CFR 314.3.

One commenter stated that this definition unfairly precludes drugs approved as brand drugs and marketed as generics (authorized generics) from being included as a multiple-source medication at the Tier 1 or 2 copayment amount if there is no generic source rated in the Orange Book or if a drug approved as a brand drug is not lower in cost than other generic sources.

For clarification, the FDA publication “Approved Drug Products with Therapeutic Equivalence Evaluations” is commonly known as the Orange Book. The Orange Book identifies drug products approved on the basis of safety and effectiveness by the FDA under the FDCA. The publication does not include drugs on the market approved only on the basis of safety covered by the ongoing Drug Efficacy Study Implementation review or pre-1938 drugs. The main criterion for the inclusion of any product is that the product is the subject of an application with an effective approval that has not been withdrawn for safety or efficacy reasons. In addition, the Orange Book contains therapeutic equivalence evaluations for approved generic drugs. Finally, the Orange Book lists patents that are purported to protect each drug.

The commenter stated that it is unfair to charge veterans more for an authorized generic drug simply because there is no marketed generic drug approved under section 505(j), or when VA's cost for a drug approved as a brand drug is only slightly higher than another generic source.

Nothing in this rulemaking precludes an authorized generic drug from inclusion in either Tier 1 or 2. Authorized generics are prescription drugs produced by brand pharmaceutical companies and marketed under a private label, at generic prices. Authorized generics compete with generic products in that they are identical to their brand counterpart in both active and inactive ingredients, while generic drugs are required to contain only the same active ingredient as the brand name. Pharmaceutical manufacturers typically launch an authorized generic when patent protection and exclusivity have expired, and the authorized generic competes in the marketplace against any generic equivalents approved by FDA.

The three classes of medications defined for copayment purposes, Tier 1, Tier 2, and Tier 3, are found in paragraph (b)(1)(iv)(B)-(D). Multi-source medications generally fall under either Tier 1 or 2; placement in either tier being governed by whether the medication meets all the criteria found at paragraph (b)(2) for Tier 1 placement. The only medications that would fall under Tier 3 are those approved by the FDA under a New Drug Application (NDA) or a biological product approved by the FDA pursuant to a biologics license agreement (BLA) that retains its patent protection and exclusivity. The definition of multi-source medication specifically includes authorized generic drugs at paragraph (b)(1)(iv)(A)(4). There is nothing in the criteria for inclusion in Tier 1 or 2 that would disqualify an authorized generic because no other generic equivalent had yet been approved by FDA.

The comment does highlight two elements of the Tier 3 definition that may cause confusion: Patent protection and exclusivity. Tier 3 medication includes medications approved by FDA under a NDA that retains exclusivity. An authorized generic medication is manufactured by the original patent holder under a NDA, but is not marketed under the brand name. While an authorized generic medication may not retain exclusivity for patent purposes, the term “exclusivity” does come into play. Authorized generic medications are typically brought to the market during the 180-day exclusivity period during which a first filer of an Abbreviated New Drug Application (ANDA) under the Drug Price Competition and Patent Term Restoration Act (Pub. L. 98-417) can bring to market a generic version of the brand name drug. During this 180 day period no other manufacturer may market a generic version of the medication, other than the original patent holder who can market the authorized generic. To clarify the scope of Tier 3, we will amend the definition of Tier 3 to explicitly state that Tier 3 does not include authorized generic medications defined in paragraph (b)(1)(iv)(A)(4).

The commenter further stated that if the concern is that multiple source drug prices be competitive, the requirement should be that a drug approved as a brand drug be equivalent in cost to a generic version not lower in cost, particularly given generic drug pricing volatility. As noted above, the comment is based on an incorrect analysis of the definition of multi-source medication and what is included in each tier for copayment purposes. Authorized generic medications (which are generic versions of a medication that is marketed by the brand drug manufacturer) are not included in Tier 3. By definition, authorized generic medications are considered multi-source medication at paragraph (b)(1)(iv)(A)(4). A drug approved by the FDA as a brand drug is considered under this rule in one of two ways, dependent on whether the drug is marketed as both a brand drug and authorized generic medication, or solely as a brand drug. In the latter case, the brand drug would be considered a Tier 3 medication, while in the former case the authorized generic medication would be either a Tier 1 or 2, and the brand drug would be Tier 3. This differentiation between an authorized generic medication and a brand drug is consistent with how many non-VA health insurers categorize these products. The commenter correctly states that generic drug pricing can be volatile. However, VA has been successful at stabilizing generic drug acquisition prices through a variety of government contract vehicles and therefore has minimized generic price volatility. Generic price volatility is not the primary determining factor in whether an authorized generic medication is Tier 1 or 2. We do not agree with the commenter that VA should require brand drug to be equivalent to either the authorized generic version of that drug, or other generic versions of that drug. Finally, the description of authorized generic medication in paragraph (b)(1)(iv)(A)(4) does not include a requirement that the medication be lower in cost; that requirement is in (b)(1)(iv)(A)(2)(iii) and is not applicable to authorized generic medication. We make no change based on this comment.

One commenter stated that, while the proposed rule is intended to align medication copayments charged by VA with commercial practice, the three-tiered system deviates further from established commercial practice than the current two-tiered system. The commenter stated that the proposed three-tiered model will lead to confusion, and veterans may be less likely to fill needed prescriptions.

The primary purpose of this rulemaking is not to strictly align VA's medication copayment structure with commercial practice. Rather, it is to make medication copayments more affordable to the greatest number of affected veterans, while recognizing differences in costs of those medications to VA and the effect of that differential for veterans who may exercise a non-VA retail option. The previously utilized two-tiered system was inflexible and nonresponsive to changing conditions, and resulted in some veterans bearing a heavy financial burden to obtain necessary medication. We make no changes based on this comment.

One commenter was concerned that a single source drug or biologic for which there is no generic version is precluded from Tier 2, even where there is a therapeutic alternative that is also a single source drug or biologic. The commenter noted that single source drugs on the VA National Formulary may be clinically effective and cost effective compared to alternative treatments. The VA National Formulary is a listing of products (drugs and supplies) that must be available for prescription at all VA facilities. Only those products that actually have been approved by FDA under a NDA, ANDA, or biologics license, may be added to the National Formulary.

The commenter stated that many high use medications, such as oncology drugs and biologics, are for conditions for which no drug is available under another tier and which may not be on the VA formulary. The commenter asserted that the proposed tier structure will increase costs of these medications for veterans.

One commenter did not support the tiered copayment model, specifically Tier 3. The commenter argued that requiring higher copayments for Tier 3 medication penalizes veterans who benefit from newer medication, those who have no other option than using medication that retain patent protection and exclusivity to treat their medical condition. The commenter further stated that raising copayment amounts may force veterans to pick and choose which of several medications they will fill.

A medication is considered a therapeutic alternative if that medication differs chemically from the medication prescribed, but has the same therapeutic effect as the prescribed medication. An example is the various classes of calcium channel blockers that are prescribed to treat hypertension. One calcium channel blocking medication could be considered a therapeutic alternative to another, dependent upon case-specific factors. Placement of a medication into any of the three copayment tiers is not dependent on whether a therapeutic alternative exists. Rather, the issue is whether a particular medication is a multi-source or single source medication, and whether (in the case of a multi-source medication) the medication qualifies for Tier 1. The primary criteria for determining whether a medication is single source or multi-source is if it is a medication approved by the FDA under a New Drug Application (NDA) or a biological product approved by the FDA pursuant to a biologics license agreement (BLA) that retains its patent protection and exclusivity and is not a multi-source medication identified in paragraph (b)(1)(iv)(A)(3) or (4). Using “therapeutic alternative” as the touchstone to determine whether a medication is single source would not be consistent with the common usage of that term, and would be difficult to administer since medications may sometimes be prescribed to treat several different medical conditions. For one indication, medication X may be the therapeutic alternative to medication Y, and for another indication would be the therapeutic alternative to medication B.

Medication copayment amounts paid in non-VA pharmacies vary dependent upon whether the prescription is for a generic or brand name medication. The tiered copayment structure in this rulemaking follows the same pattern. What is commonly referred to as a brand name medication is equivalent to a medication that would fall under Tier 3. VA estimates that approximately 15 percent of billable prescriptions dispensed in a year will be in Tier 3, and that the total copayments for veterans prescribed Tier 3 medications will remain the same for many veterans and will decrease for a sizable portion. A reduction in the copayment cap provides a unique benefit to veterans who exclusively use Tier 3 medications. The total annual copayment costs for these veterans will not exceed $700, whereas under the prior regulations the costs would be $960, or more for those veterans in priority groups 7 or 8 that are not currently subject to a cap. So, while some veterans may still decide not to fill all of their prescriptions, we estimate that fewer will do so for financial reasons as a result of these changes.

We note that a veteran may request a waiver of medication copayment charges, as provided for in 38 CFR 17.105(c). That section states that the veterans must submit a form requesting a waiver, and that a hearing may be requested. We make no changes based on these comments.

Two commenters stated that this rule will still result in veterans being subject to copayments higher than they would have to pay in a non-VA pharmacy. One commenter argued that VA should offer the same copayment rates available in non-VA pharmacies.

In the impact analysis published concurrently with the proposed rule, VA considered the potential costs or savings to veterans as a result of this rulemaking. Based on a comparison of the current and proposed copayment amounts, we anticipate that most veterans would realize between a 10 and 50 percent reduction in their overall pharmacy copayment liability each year based on historic utilization patterns. By our estimates, 94 percent of copayment eligible veterans would experience no cost increase, and 80 percent would realize a savings of between $1 and $5 per 30-day equivalent of medications. While a small percentage of veterans may experience a small increase in medication copayments, a large majority will encounter no cost increase, or will realize savings, as a result of this rulemaking.

Medication copayment amounts vary widely between different non-VA pharmacies and under commercial health insurer policies, due to many factors. There is no standard non-VA medication copayment rate structure that can be used as a model for creating a copayment structure in VA. Uniformly adopting the lowest level of copayments found outside of VA would result in a copayment system that is not sustainable in the long term, and could possibly violate statutory requirements in 38 U.S.C. 1722A(a), which requires VA to charge a minimum copayment, with certain limited exceptions. VA believes that this rulemaking will result in copayment amounts that will benefit the greatest number of veterans. We make no changes based on these comments.

One commenter stated that manufacturers may be providing VA with competitive prices to increase market share of a single source drug within a therapeutic class, and the lower cost to VA should be passed along to veterans through a lower tier copayment amount. Given the number of pharmaceutical manufacturers and suppliers VA contracts with, and the varying terms and lengths of these contracts, determining copayments amounts on an individual contract basis would be difficult from an administrative standpoint and could lead to uncertainty as to the amount an individual veteran would pay for a medication copayment. In addition, this could result in different copayments for the same medication where more than one manufacturer or supplier provides that medication. Under this rulemaking, VA does include acquisition cost as an element considered in determining whether a medication will be included in Tier 1. See paragraph (b)(2). We make no changes based on this comment.

One commenter stated that if a large number of veterans are diagnosed with any one medical condition such as hypertension, medication to treat that condition should be considered service-connected and exempt from copayments. Another commenter stated that any veteran who has served in the military over 20 years, or served in a war or conflict, should be exempt from medication copayments. The commenter also stated that a pool of emergency funds should be set aside for use by veterans who are unable to afford medication copayments.

Exemptions from the medication copayment are controlled by statute. Under 38 U.S.C. 1722A(a)(3), the following veterans are exempt from the medication copayment: A veteran with a service-connected disability rated 50 percent or more; a veteran who is a former prisoner of war; and, a veteran whose annual income (as determined under 38 U.S.C. 1503) does not exceed the maximum annual rate of pension which would be payable to such veteran if such veteran were eligible for a VA pension. VA does not have the statutory authority to exempt other veterans from the medication copayment. While VA does not have the statutory authority to exempt other veterans from medication copayment charges, as noted above a veteran may request a waiver of such charges under 38 CFR 17.105(c). Service connection is not determined by whether a certain number of veterans have been diagnosed with a particular disease or condition. “Service-connected” means that the disability was incurred or aggravated in the line of duty while in active military, naval, or air service. 38 CFR 3.1(k). A finding that a disability is service connected means that the facts, shown by evidence, establish that a particular injury or disease resulting in disability was incurred coincident with service in the Armed Forces, or if preexisting such service, was aggravated therein. 38 CFR 3.303(a). Likewise, VA does not have the statutory authority to set aside appropriated funds for the use of individual veterans. We make no changes based on these comments.

One commenter stated that, unlike the Department of Defense, VA provides no opportunity for veterans, manufacturers, or the public to address the comparative clinical benefits, and cost benefits or effectiveness of a drug or biologic under consideration for addition to the National Formulary. The commenter stated that VA should make the formulary decision-making process more transparent. The process VA utilizes to consider changes to the National Formulary is beyond the scope of the rulemaking, and we make no changes based on this comment.

One commenter asked for a clarification on how this rulemaking will impact contracting decisions for the National Contract covering short acting and human insulins, along with future contracting processes. Although changes in the prices of certain medications may affect certain future contracting actions, VA will continue to follow all federal contracting requirements and will make purchases accordingly.

Finally, we make a technical edit to paragraph (b)(1). This paragraph establishes the medication copayment amounts for each tier of medication. As drafted, each clause in paragraph (b)(1)(i) through (iii) reads “[f]or a 30-day supply or less of . . . medication, the copayment amount is . . .” This language could be misinterpreted to mean that no medication copayment is charged for medication amounts greater than 30 days. This would be inconsistent with the statutory mandate at 38 U.S.C. 1722A(a), that VA must require certain veterans to pay at least a $2 copayment for each 30-day supply of medication furnished on an outpatient basis for the treatment of a non-service-connected disability or condition. In prior rulemakings we used the phrase “for each 30-day or less supply of medication” when establishing copayment amounts. Paragraph (b)(1) is edited to reflect that same language.

Based on the rationale set forth in the proposed rule and in this document, VA is adopting the provisions of the proposed rule as a final rule with changes as noted above.

Title 38 of the Code of Federal Regulations, as revised by this final rulemaking, represents VA's implementation of its legal authority on this subject. Other than future amendments to this regulation or governing statutes, no contrary guidance or procedures are authorized. All existing or subsequent VA guidance must be read to conform with this rulemaking if possible or, if not possible, such guidance is superseded by this rulemaking.

This final rule contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).

The Secretary hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act (5 U.S.C. 601-612). This final rule will generally be small business neutral. The rule will not affect pharmaceutical manufacturers, as it does not change the amount VA pays for medications to supply its pharmaceutical benefits program, only the amount VA collects from veterans as copayments. To the extent there are effects on pharmaceutical companies, we believe it will most likely have a positive affect if VA is purchasing more medications and supplies from them. Similarly, VA does not believe that this rule will have a significant economic impact on small pharmacies. It is possible that some veterans will choose to fill their prescriptions within VA rather than from a community pharmacist, but we anticipate such a shift will not result in a significant economic impact on a substantial number of such entities. Therefore, under 5 U.S.C. 605(b), this rulemaking is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 12866 (Regulatory Planning and Review) defines a “significant regulatory action,” requiring review by the Office of Management and Budget (OMB), unless OMB waives such review, as “any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.”

The economic, interagency, budgetary, legal, and policy implications of this final rule have been examined, and it has been determined to be a significant regulatory action under Executive Order 12866 because it is likely to result in a rule that may have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities. VA's impact analysis can be found as a supporting document at http://www.regulations.gov, usually within 48 hours after the rulemaking document is published. Additionally, a copy of the rulemaking and its impact analysis are available on VA's Web site at http://www.va.gov/orpm/, by following the link for “VA Regulations Published From FY 2004 Through Fiscal Year to Date.”

This final rule is subject to the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801, et seq.), which specifies that before a rule can take effect, the Federal agency promulgating the rule shall submit to each House of the Congress and to the Comptroller General a report containing a copy of the rule along with other specified information. The required report and this rule have been submitted to Congress and the Comptroller General for review.

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. This final rule will have no such effect on State, local, and tribal governments, or on the private sector.

The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this document are 64.007, Blind Rehabilitation Centers; 64.008, Veterans Domiciliary Care; 64.009, Veterans Medical Care Benefits; 64.010, Veterans Nursing Home Care; 64.011, Veterans Dental Care; 64.012, Veterans Prescription Service; 64.013, Veterans Prosthetic Appliances; 64.014, Veterans State Domiciliary Care; 64.015, Veterans State Nursing Home Care; 64.018, Sharing Specialized Medical Resources; 64.019, Veterans Rehabilitation Alcohol and Drug Dependence; 64.022, Veterans Home Based Primary Care; and 64.024, VA Homeless Providers Grant and Per Diem Program.

The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Gina S. Farrisee, Deputy Chief of Staff, Department of Veterans Affairs, approved this document on October 3, 2016, for publication.

Administrative practice and procedure, Alcohol abuse, Alcoholism, Claims, Day care, Dental health, Drug abuse, Government contracts, Grant programs—health, Grant programs—veterans, Health care, Health facilities, Health professions, Health records, Homeless, Medical and Dental schools, Medical devices, Medical research, Mental health programs, Nursing homes, Reporting and recordkeeping requirements, Travel and transportation expenses, Veterans.

For the reasons set out in the preamble, VA amends 38 CFR part 17 as follows:

I. Background and Overview

On December 14, 2012, EPA promulgated a revised primary annual PM2.5 NAAQS. The standard was strengthened from 15.0 micrograms per cubic meter (μg/m 3) to 12.0 μg/m 3. See 78 FR 3086 (January 15, 2013). Pursuant to section 110(a)(1) of the CAA, states are required to submit SIPs meeting the applicable requirements of section 110(a)(2) within three years after promulgation of a new or revised NAAQS or within such shorter period as EPA may prescribe. Section 110(a)(2) requires states to address basic SIP elements such as requirements for monitoring, basic program requirements and legal authority that are designed to assure attainment and maintenance of the NAAQS. States were required to submit such SIPs for the 2012 Annual PM2.5 NAAQS to EPA no later than December 14, 2015.

In a proposed rulemaking published on June 8, 2016 (81 FR 36848), EPA proposed to approve in part and disapprove in part Mississippi's December 11, 2015, SIP submission for the 2012 Annual PM2.5 NAAQS. In the June 8, 2016 proposed rulemaking, EPA proposed to disapprove the state board majority requirements respecting significant portion of income of 110(a)(2)(E)(ii). Also in the June 8, 2016 proposal, EPA did not propose any action regarding the preconstruction PSD permitting requirements for major sources of sections 110(a)(2)(C), prong 3 of (D)(i), and (J), and the interstate transport requirements of section 110(a)(2)(D)(i)(I) and (II) (prongs 1, 2, and 4). On March 18, 2015 (80 FR 14019), EPA approved Mississippi's December 11, 2015, infrastructure SIP submission regarding the PSD permitting requirements for major sources of sections 110(a)(2)(C), prong 3 of D(i), and (J) for the 2012 Annual PM2.5 NAAQS. Therefore, EPA is not taking any action today pertaining to sections 110(a)(2)(C), prong 3 of D(i), and (J). Additionally, on May 25, 2016, EPA finalized a rule related to prong 4 of 110(a)(2)(D)(i)(II) of Mississippi's December 11, 2015, SIP submission for the 2012 Annual PM2.5 NAAQS and will therefore not be acting upon this element today. See 81 FR 33139. With respect to the interstate transport requirements of section 110(a)(2)(D)(i)(I) (prongs 1 and 2), EPA will consider these requirements in relation to Mississippi's 2012 Annual PM2.5 NAAQS infrastructure submission in a separate rulemaking. The details of Mississippi's submission and the rationale for EPA's actions for this final rule are explained in the June 8, 2016, proposed rulemaking. Comments on the proposed rulemaking were due on or before July 8, 2016. EPA received no adverse comments on the proposed action.

With regard to the state board majority requirements respecting significant portion of income, EPA is finalizing a disapproval of Mississippi's December 11, 2015, infrastructure submission. Under section 179(a) of the CAA, final disapproval of a submittal that addresses a requirement of a CAA Part D Plan or is required in response to a finding of substantial inadequacy as described in CAA section 110(k)(5) (SIP call) starts a sanctions clock. The portion of section 110(a)(2)(E)(ii) provisions (the provisions being proposed for disapproval in this notice) were not submitted to meet requirements for Part D or a SIP call, and therefore, no sanctions will be triggered. However, this final action will trigger the requirement under section 110(c) that EPA promulgate a Federal Implementation Plan (FIP) no later than two years from the date of the disapproval unless the State corrects the deficiency, and EPA approves the plan or plan revision before EPA promulgates such FIP. With the exceptions noted above, EPA is taking final action to approve Mississippi's infrastructure SIP submission for the 2012 Annual PM2.5 NAAQS because the submission is consistent with section 110 of the CAA.

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

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

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

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

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

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

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

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

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

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

In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it impose substantial direct costs on tribal governments or preempt tribal law.

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by February 10, 2017. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. See section 307(b)(2).

40 CFR part 52 is amended as follows:

Background

This final rule makes changes to the HHS's adoption of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards published on December 19, 2014 (79 FR 75871) and the technical amendments published by HHS on January 20, 2016 (81 FR 3004). HHS codified the OMB language, with noted modifications, in 45 CFR part 75. Unlike all of the other modifications to the Uniform Administrative Requirements, these additional changes, although based on existing law or HHS policy, were not previously codified in regulation. This final rule implements these regulatory changes.

HHS received 24 relevant comments on the notice of proposed rulemaking, half of which were strongly supportive of the proposed rule. HHS addresses all of the comments below.

Comment: HHS received twelve comments on these provisions, all of which were strongly supportive of the codification of the nondiscrimination provisions in HHS awards and the recognition of same-sex marriages. Several of these supportive comments also provided additional areas for consideration specifically regarding the definition of discrimination on the basis of sex. Collectively, the comments indicated that HHS should define discrimination on the basis of sex explicitly to include discrimination on the basis of sex stereotyping, gender identity, sexual orientation, pregnancy, intersex traits, and the presence of atypical sex characteristics.

Response: HHS appreciates the comments received, and thanks commenters for their positive reactions and helpful suggestions. For the time being, HHS does not believe it is necessary to add additional categories to the list of non-merit based factors. We note that the determination whether a factor is merit-based for purposes of applying the prohibition will depend on the nature of the particular grant at issue. HHS has therefore decided not to amend the nondiscrimination language proposed in 45 CFR 75.300.

Comment: One comment urged HHS and its partner federal agencies to broadly construe age discrimination protections to support young people as well as older Americans. The comment noted that while many age discrimination laws are enacted with older adults in mind, it is important to recognize the stigmatization of young people and adolescents, particularly in the healthcare arena.

Response: HHS agrees that young people and adolescents should have access to health care and services free from discrimination. No alterations of the regulatory text are necessary to implement these protections. We note that, while employment laws enforced by the Equal Employment Opportunity Commission apply to applicants and employees forty or older, youth have additional rights under other federal, state, or local laws. The Age Discrimination Act of 1975 (Age Act), for instance, prohibits discrimination against young people and older Americans on the basis of age in federally funded programs and activities. In some cases, the Age Act permits age distinctions that reasonably take into account age as a factor necessary to the normal operation or the achievement of any statutory objective. State and local discrimination laws may offer broader protection.

Comment: One commenter indicated that HHS should specify that the nondiscrimination provisions included in § 75.300(c) flow down to subawards.

Response: HHS notes that the provisions of 45 CFR part 75 already address the flow down of requirements. 45 CFR 75.101(b)(1) stating that the terms and conditions of Federal awards flow down to subawards to subrecipients unless a particular section of this part or the terms and conditions of the Federal award specifically indicate otherwise.

Comment: Several commenters noted that the provisions of § 75.300(c) do not apply to funding under the Temporary Assistance for Needy Families Program (TANF) (title IV-A of the Social Security Act, 42, U.S.C. 601-619). These commenters suggested that HHS should provide additional guidance to TANF grantees on nondiscrimination.

Response: HHS appreciates the importance of continued education on the full scope of nondiscrimination obligations. The Administration for Children and Families shares this commitment.

Comment: HHS received three comments regarding the proposed eight percent cap on indirect cost rates for foreign organizations. Notably, HHS did not receive any comments that objected to the imposition of the same eight percent cost cap on indirect cost rates for training grants. The comments received suggested that the proposed provision was in conflict with § 75.414(f), and that HHS should instead adopt a ten percent cap on indirect cost rates for these organizations.

Response: A non-Federal entity that has never received an indirect cost rate that is a foreign organization or foreign public entity, or that would conduct a training grant, would be limited to the eight percent modified total direct cost rate as articulated in § 75.414(c)(3). Commenters indicated that this limitation conflicts with § 75.414(f), which would permit an entity that had never received an indirect cost rate to charge a de minimis rate of ten percent.

HHS agrees that this is inconsistent, and has added clarifying language to paragraph (f) to ensure that there is no conflict.

Comment: HHS received numerous comments, both through the regulations.gov portal and separately through the HHS Office of Intergovernmental and External Affairs, on the proposed language clarifying that applicability of certain provisions of the Uniform Administrative Requirements to contracts and compacts awarded pursuant to the Indian Self Determination and Education Assistance Act (ISDEAA). The comments received requested additional tribal consultation on these issues.

Response: The Department is in the process of conducting this tribal consultation, and will proceed as appropriate after that consultation has concluded. The regulatory language from the notice of proposed rulemaking is not included in this final rule.

HHS received no comments on the portions of the notice of proposed rulemaking suggesting changes to the proposed language regarding same-sex spouses, marriages, and households, payment provisions as applied to states, public access to records, or shared responsibility payments. Consequently, HHS is finalizing the regulatory language without modification. In addition, HHS is amending one provision to correct a typographical error that was inadvertently included in the most recent promulgation of the Uniform Administrative Requirements, so that the HHS promulgation matches the OMB guidance as intended.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Ch. 3506; 5 CFR 1320 Appendix A.1), HHS reviewed this final rule and determined that there are no new collections of information contained therein.

The Regulatory Flexibility Act requires that an agency provide a final regulatory flexibility analysis or to certify that the rule will not have a significant economic impact on a substantial number of small entities. This final rule aligns 45 CFR part 75 with various regulatory and statutory provisions, implements Supreme Court decisions, and codifies long-standing policies thus clarifying and enhancing the provisions in HHS's interim final guidance issued December 19, 2014, and amended on January 20, 2016. In order to ensure that the public receives the most value, it is essential that HHS grant programs function as effectively and efficiently as possible, and that there is a high level of accountability to prevent waste, fraud, and abuse. The additions provide enhanced direction for the public and will not have a significant economic impact beyond HHS's current regulations.

Pursuant to Executive Order 12866, HHS has designated this final rule to be economically non-significant. This rule is not being treated as a “significant regulatory action” under section 3(f) of Executive Order 12866. Accordingly, the rule has not been reviewed by the Office of Management and Budget.

Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded Mandates Act) (2 U.S.C. 1532) requires that covered agencies prepare a budgetary impact statement before promulgating a rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year. If a budgetary impact statement is required, section 205 of the Unfunded Mandates Act also requires covered agencies to identify and consider a reasonable number of regulatory alternatives before promulgating a rule. HHS has determined that this final rule will not result in expenditures by State, local, and tribal governments, or by the private sector, of $100 million or more in any one year. Accordingly, HHS has not prepared a budgetary impact statement or specifically addressed the regulatory alternatives considered.

HHS has determined that this final rule does not have any Federalism implications, as required by Executive Order 13132.

For the reasons set forth in the preamble, part 75 of title 45 of the Code of Federal Regulations is amended as follows:

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

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

Maryland and New York have requested the transfer of 50,000 lb (22,680 kg) of bluefish commercial quota from Maryland to New York. Both states have certified that the transfer meets all pertinent state requirements. This quota transfer was requested by New York to ensure that its 2016 quota would not be exceeded. The Regional Administrator has approved this quota transfer based on his determination that the criteria set forth in § 648.162(e)(1)(i) through (iii) have been met. The revised bluefish quotas for calendar year 2016 are: Maryland, 96,631 lb (43,831 kg); and New York, 927,289 lb (420,611 kg). These quota adjustments revise the quotas specified in the final rule implementing the 2016-2018 Atlantic Bluefish Specifications published on August 4, 2016 (81 FR 51370), and reflect all subsequent commercial bluefish quota transfers completed to date. For information of previous transfers for fishing year 2016 visit: http://go.usa.gov/xZT8H.

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