Federal Register Vol. 81, No.248,

On October 7, 2015, the Gold Star Fathers Act of 2015 (the “Act”) was enacted as Public Law 114-62. The Act provides an amendment to the eligibility criteria for veterans' preference purposes by amending subparagraphs (F) and (G) to 5 U.S.C. 2108(3). The amendment provides that fathers of certain permanently disabled or deceased veterans shall be included with mothers of such veterans as preference eligibles for treatment in the civil service. The Act also changes the requirements for parents of such veterans to qualify for this preference.

The Act replaces 5 U.S.C. 2108(3)(F) to state that the parent of an individual who lost his or her life under honorable conditions while serving in the armed forces during a war, in a campaign or expedition for which a campaign badge has been authorized, or during the period beginning April 28, 1952, and ending July 1, 1955, is eligible for preference if the spouse of that parent is totally and permanently disabled; or that parent, when preference is claimed, is unmarried or, if married, legally separated from his or her spouse.

The Act also replaces 5 U.S.C. 2108(3)(G) to state that the parent of a service-connected permanently and totally disabled veteran is eligible for preference if the spouse of that parent is totally and permanently disabled; or that parent, when preference is claimed, is unmarried or, if married, legally separated from his or her spouse.

OPM is amending 5 CFR 211.102(d) to state that a “preference eligible” is “a veteran, disabled veteran, sole survivor veteran, spouse, widow, widower, or parent who meets the definition of `preference eligible' in 5 U.S.C. 2108.” This amendment replaces the word “mother” with the word “parent” to conform to the statutory definition.

Pursuant to 5 U.S.C. 553(b)(B), I find that good cause exists for waiving the general notice of proposed rulemaking. Waiver of advance notice is necessary to ensure that the regulations become effective immediately, and that agencies understand their obligations under 5 U.S.C. 2108(3) and do not unwittingly deny veterans' preference based upon the outdated existing regulations. If OPM's regulations were permitted to remain as written while OPM solicited comments upon its proposed revisions, parents of certain deceased and disabled veterans may be inadvertently denied veterans' preference in Federal hiring based upon the current language in regulations. Accordingly, the notice otherwise required is impracticable because it would impede due and timely execution of agencies' functions. The revised language in this interim rule will ensure parents of certain deceased and disabled veterans receive their statutory entitlement to veterans' preference.

This rule has been reviewed by the Office of Management and Budget in accordance with Executive Order 12866.

I certify that this regulation would not have a significant economic impact on a substantial number of small entities because it affects only Federal employees.

Accordingly, OPM is amending part 211 of title 5, Code of Federal Regulations, as follows:

Table of Contents I. Authority and Background II. Synopsis of the Final Rule III. Response to Comments IV. Procedural Issues and Regulatory Review I. Authority and Background

Pursuant to the Atomic Energy Act of 1954 (AEA) (42 U.S.C. 2011 et seq.), DOE has issued regulations governing nuclear safety management (at 10 CFR part 830) and occupational radiation protection (at 10 CFR part 835). Section 234A of the AEA (42 U.S.C. 2282a) authorizes DOE to impose civil penalties for violations of these regulations. Specifically, section 234A authorizes civil penalties against contractors, subcontractors, and suppliers that are covered by an indemnification agreement under section 170.d. of the AEA (42 U.S.C. 2210(d)) (commonly known as the Price-Anderson Act) that violate DOE rules, regulations, or orders “related to nuclear safety.” DOE has issued Procedural Rules for DOE Nuclear Activities at 10 CFR part 820 (part 820), which establishes a process for imposing civil penalties under section 234A.

Separate from part 820, DOE has also issued regulations at 10 CFR part 708 (part 708) that prohibit DOE contractors or subcontractors from retaliating against employees for reporting violations of law, rule or regulation, fraud, gross mismanagement, waste, abuse; danger to employees or the public; participating in Congressional or administrative proceedings; or refusing to participate in an activity that may constitute a violation of federal health and safety law or cause a reasonable fear of serious injury (referred to as “whistleblowers”). Part 708 establishes an affirmative duty on the part of contractors not to retaliate against whistleblowers, and establishes a process for an employee alleging retaliation to file a claim for reinstatement, transfer-preference, back-pay, legal fees, and other relief.

On August 12, 2016, DOE published a Notice of Proposed rulemaking (NOPR) to amend part 820 to clarify the definition of “DOE Nuclear Safety Requirements” and to clarify that DOE may impose civil penalties against a contractor or subcontractor for violating the prohibition against whistleblower retaliation found in part 708, to the extent the violation concerns nuclear safety. 81 FR 53337.

This final rule revises the definition for “DOE Nuclear Safety Requirements” found in 10 CFR part 820 to identify the particular rules and regulations that DOE regards as DOE Nuclear Safety Requirements. Under the final rule, the following are enforceable DOE Nuclear Safety Requirements:

In the NOPR, DOE proposed that Compliance Orders issued pursuant to 10 CFR part 820, subpart C and each of the four listed rules and regulations are DOE Nuclear Safety Requirements “to the extent that subject activities concern nuclear safety.” In the final rule, DOE has moved this phrase so that it applies only to 10 CFR 708.43. Under section 234A of the AEA, DOE may impose civil penalties for violations of “any applicable rule, regulation, or order related to nuclear safety.” DOE believes that all of the activities subject to 10 CFR part 830, 10 CFR part 835, 10 CFR 820.11, and Compliance Orders issued pursuant to 10 CFR part 820, subpart C, have a direct connection to nuclear safety. Each of these rules is directed specifically at DOE activities that affect nuclear safety and therefore these rules “concern nuclear safety” in all their applications. By contrast, 10 CFR 708.43 is directed at all DOE activities, including those that have no connection to nuclear safety. Therefore, DOE is amending the definition of “DOE Nuclear Safety Requirements” to include 10 CFR part 830, 10 CFR part 835, 10 CFR 820.11, and Compliance Orders issued pursuant to 10 CFR part 820, subpart C, in all their applications and 10 CFR 708.43 to the extent that activities subject to 10 CFR 708.43 concern nuclear safety.

DOE is also establishing a new section, 10 CFR 820.14, to provide specific requirements that apply to imposing civil penalties for a violation of the prohibition against whistleblower retaliation found in 10 CFR 708.43. For example, the final rule provides that DOE will not initiate an investigation or take action with respect to an alleged act of retaliation by a DOE contractor until 180 days after an alleged violation occurs. The final rule further provides that DOE will suspend an investigation or other proceeding when an administrative or judicial proceeding commences based on the same alleged act of retaliation until 60 days after a final decision of an agency or court finds that a retaliation occurred, or otherwise makes a final disposition of the matter on procedural grounds without explicitly finding that retaliation did not occur. A final decision of an agency or court includes a final agency decision pursuant to 10 CFR part 708, a final decision or order of the Secretary of Labor pursuant to 29 CFR part 24, a decision by the Secretary of Energy upon a report by the Inspector General, or a decision by a federal or state court. The final rule makes clear that the commencement of an administrative or judicial proceeding shall not affect the Department's authority to take enforcement action for compliance with DOE Nuclear Safety Requirements other than 10 CFR 708.43.

DOE explained in its proposed rule that “it will not take any action under part 820 with respect to alleged retaliation until after the deadlines have passed for filing a claim under part 708 or 29 CFR part 24—i.e. 180 days after the alleged violation occurs” and that if “an administrative or judicial proceeding is filed after DOE has already initiated any action under part 820, DOE will immediately suspend its activities under part 820 until the issuance of a final decision in the proceeding—including the exhaustion of appeals.” The proposed rule stated that “DOE will not take any action under part 820 until sixty days after a final decision in an administrative or judicial proceeding finds that a retaliation occurred.” DOE's intent was to ensure that its investigation did not run concurrent with a judicial or administrative proceeding examining the same facts. A similar situation exists where an administrative or judicial proceeding is dismissed on procedural grounds without an explicit finding whether retaliation in fact occurred. Under this scenario, there would be no risk of conflict with any judicial or administrative proceedings, and DOE would be unable to pursue its interest in preventing whistleblower retaliation even though no judicial or administrative proceeding had fully addressed the question of whether retaliation in fact occurred. Therefore, consistent with DOE's intent, this final rule states that DOE will suspend an investigation or other proceeding when an administrative or judicial proceeding commences based on the same alleged act of retaliation until 60 days after a final decision of an agency or court finds that retaliation occurred, or otherwise makes a final disposition of the matter on procedural grounds without explicitly finding that retaliation did not occur.

Finally, DOE is revising its Whistleblower Enforcement Policy, found in appendix A to part 820. This appendix is a general statement of policy and is not binding on DOE or its contractors.

The Department received four comments in response to the proposed rule. After reviewing these comments, DOE has concluded that the rule should be finalized as proposed and without change. DOE's response to the comments is fully explained below.

One commenter stated that the proposed rulemaking would inappropriately narrow DOE's authority to issue civil penalties for retaliation by limiting that authority to retaliation for raising concerns involving only nuclear safety. DOE disagrees that this rule will limit its authority in this manner. This final rule clarifies that DOE may issue civil penalties under part 820 for violations of the prohibition against whistleblower retaliation that concern nuclear safety. DOE's authority to issue civil penalties against contractors that retaliate against employees for reporting non-nuclear safety concerns or refusing to participate in an activity that the employees reasonably believe may cause serious injury to themselves or other employees is covered under a different regulation that is not affected by today's rule. Namely, subpart C to 10 CFR part 851, Worker Safety and Health Program, requires DOE contractors to establish procedures for workers to report job-related hazards, and to permit workers to stop work or decline to perform an assigned task because of a reasonable belief that the task poses an imminent risk of serious physical harm to workers, without fear of reprisal. Subpart E to part 851 establishes the process for taking enforcement actions, including the issuance of civil penalties, against contractors that violate part 851 requirements.

One commenter identified a number of offenses for which DOE contractors should be subject to criminal penalties and questioned the independence of DOE personnel who oversee or may conduct investigations of DOE contractor activities. While these issues are outside the scope of this rulemaking, DOE notes that subpart F of part 820 already establishes provisions for the identification and disposition of potential criminal violations of the Atomic Energy Act or any applicable DOE Nuclear Safety Requirement. With respect to the independence of personnel handling enforcement functions, § 820.4 requires any DOE official with a financial or personal interest in a matter being addressed pursuant to the provisions of part 820 to withdraw from that action. This section also allows any interested person to request that DOE's General Counsel disqualify a DOE Official from a part 820 matter due to a conflict of interest.

Another commenter agreed with DOE's general approach of deferring any enforcement activity under part 820 with respect to an alleged retaliation until after a final decision has been issued concerning any other proceeding addressing the same alleged act of retaliation. The commenter stated that given that multiple avenues are available for whistleblowers to pursue retaliation complaints and obtain relief, the Department should presume that no retaliation has occurred, and thus enforcement action is not warranted, unless an employee has submitted a retaliation complaint using one of these mechanisms. DOE does not agree that there should be a presumption that no retaliation has taken place unless and until an employee has submitted a complaint. The existence of multiple avenues for aggrieved employees to raise complaints does not guarantee that a complaint will be filed after every instance of retaliation. There could be many reasons an individual employee may choose not to file a complaint through one of these mechanisms, and DOE does not believe it is appropriate to draw conclusions from the mere fact that no complaints have been filed. DOE intends to exercise its enforcement discretion consistent with the final decision of an agency or court on matters of retaliation that concern nuclear safety. However, DOE retains the authority to investigate whether a contractor has violated a DOE Nuclear Safety Requirement in retaliating against an employee for raising a nuclear safety concern under appropriate circumstances, even if no complaint of retaliation has been filed.

The commenter also suggested that DOE consider providing additional clarification regarding the escalation or mitigating factors the Department would consider in determining its enforcement penalties, particularly if this rulemaking is expected to result in an increase in enforcement activities. Based on historical trends in the number of cases of substantiated retaliation against DOE contractor and subcontractor employees who raise nuclear safety concerns, DOE does not expect any increase in enforcement activities. Further, DOE does not expect that this final rule will directly lead to an increase in enforcement activities. DOE believes that the factors that it considers when determining whether to escalate or mitigate any civil penalty are adequately described in section IX of appendix A to part 820 and in DOE's Enforcement Process Overview document that is available at http://energy.gov/ea/services/enforcement/enforcement-program-and-process-guidance-and-information. These same factors would be applied in any enforcement action for nuclear safety-related retaliation under part 820, in addition to those described in amended section XIII of appendix A of this rulemaking.

One commenter stated that DOE's authority to issue civil penalties for cases of nuclear safety-related retaliation is inconsistent with the Energy Reorganization Act and 29 CFR part 24, which provide jurisdiction to the Department of Labor to consider complaints of retaliation by DOE contractors against contractor employees. The commenter stated that imposing a civil penalty under part 820 for a retaliation that the Department of Labor has already considered and awarded a remedy to the employee for would constitute a duplicate penalty for the same violation. DOE disagrees that a civil penalty imposed under part 820 for a retaliation that the Department of Labor has substantiated under 29 CFR part 24 constitutes a duplicate penalty. DOE sees these processes as complementary in that each process has a different type of remedy that serves different purposes. The allowable remedies under 29 CFR part 24 are designed to “make the employee whole” by providing reinstatement, transfer-preference, back-pay, and legal fees sufficient to compensate the employee for the harm. By contrast, part 820 provides for civil penalties in order to hold a contractor accountable for violating a DOE Nuclear Safety Requirement and to deter future retaliation. This distinction is also true with respect to the DOE Contractor Employee Protection Program under part 708 and the Pilot Program for Enhancement of Employee Whistleblower Protection (41 U.S.C. 4712), neither of which provide for imposing a civil penalty on a contractor for violating a requirement that prohibits retaliation.

The commenter also stated that DOE has other sufficient mechanisms available, such as contract fee reductions, to address any “chilled workplace” or other leadership concerns. Under this final rule, DOE retains other mechanisms, including contract fee reductions, to respond to contractor violations of DOE Nuclear Safety Requirements. Although these mechanisms may be sufficient in a particular case to address “chilled workplace” concerns, DOE believes that there may be circumstances where civil penalties under part 820 are appropriate and necessary to ensure that future violations of the prohibition against whistleblower retaliation are deterred.

Finally, the commenter noted that the proposed rule does not address situations in which a DOE federal employee causes, demands or directs a contractor to retaliate against one of its employees for whistleblowing. DOE is not aware of any instance where a DOE employee was found to have caused or contributed to a retaliation by a contractor against a contractor employee. Nonetheless, DOE notes that section IX.8 of appendix A to part 820 already discusses DOE's approach to enforcement for cases wherein DOE may have contributed to a contractor's violation of a DOE Nuclear Safety Requirement. This final rule does not amend or alter this provision.

This final rule has been determined not to be a significant regulatory action under Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (Oct. 4, 1993). Accordingly, this notice of proposed rulemaking was not subject to review by the Office of Information and Regulatory Affairs of the Office of Management and Budget.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires preparation of an initial regulatory flexibility analysis for any rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. As required by Executive Order 13272, “Proper Consideration of Small Entities in Agency Rulemaking,” 67 FR 53461 (Aug. 16, 2002), DOE published procedures and policies on February 19, 2003, to ensure that the potential impacts of its rules on small entities are properly considered during the rulemaking process. 68 FR 7990. DOE has made its procedures and policies available on the Office of the General Counsel's Web site (http://energy.gov/gc/office-general-counsel).

DOE has reviewed this rule under the provisions of the Regulatory Flexibility Act and the procedures and policies published on February 19, 2003. The final rule amends DOE's Procedural Rules for DOE Nuclear Activities to clarify the definition of “DOE Nuclear Safety Requirements” and to clarify that DOE may assess civil penalties against certain contractors and subcontractors for violations of the prohibition against retaliating against whistleblowers. While the amended part 820 would expose small entities that are contractors and subcontractors to potential liability for civil penalties, DOE does not expect that a substantial number of these entities will violate a DOE Nuclear Safety Requirement resulting in the imposition of a civil penalty. On this basis, DOE certifies that this final rule would not have a significant economic impact on a substantial number of small entities. Accordingly, DOE has not prepared a regulatory flexibility analysis for this rulemaking. DOE's certification and supporting statement of factual basis will be provided to the Chief Counsel for Advocacy of the Small Business Administration pursuant to 5 U.S.C. 605(b).

This rule does not impose new information or record keeping requirements. Accordingly, OMB clearance is not required under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

DOE has determined that this rule is covered under the Categorical Exclusion in DOE's National Environmental Policy Act regulations at paragraph A.5 of appendix A to subpart D, 10 CFR part 1021, which applies to rulemaking that interprets or amends an existing rule or regulation without changing the environmental effect of the rule or regulation that is being amended. The final rule amends DOE's regulations on civil penalties with respect to certain DOE contractors and subcontractors in order to clarify that civil penalties are available for violations of the prohibition against whistleblower retaliation found in § 708.43 that concern nuclear safety. These amendments are procedural and do not change the environmental effect of part 820. Accordingly, neither an environmental assessment nor an environmental impact statement is required.

Title II of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531 et seq., requires each Federal agency, to the extent permitted by law, to prepare a detailed assessment of the effects of any Federal mandate in an agency rule that may result in costs to State, local, or tribal governments, or to the private sector, of $100 million or more (adjusted annually for inflation) in any one year. 2 U.S.C. 1532. While the final rule may expose DOE contractors and subcontractors to potential liability for civil penalties for retaliating against a whistleblower in connection with a protected activity relating to nuclear safety, DOE does not expect that these civil penalties will approach $100 million in any single year. Therefore, the requirements of Title II of the Unfunded Mandates Reform Act of 1995 do not apply.

Section 654 of the Treasury and General Government Appropriations Act, 1999, 5 U.S.C. 601 note, requires Federal agencies to issue a Family Policymaking Assessment for any proposed rule that may affect family wellbeing. While this final rule would apply to individuals who may be members of a family, the rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.

Executive Order 13132, “Federalism,” 64 FR 43255 (Aug. 4, 1999), imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. Agencies are required to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and carefully assess the necessity for such actions. DOE has examined this final rule and has determined that it does not preempt State law and does 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. No further action is required by Executive Order 13132.

With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (Feb. 7, 1996), imposes on Executive agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard for affected conduct rather than a general standard and promote simplification and burden reduction. With regard to the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, this final rule meets the relevant standards of Executive Order 12988.

The Treasury and General Government Appropriations Act, 2001, 44 U.S.C. 3516 note, provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE has reviewed this final rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.

Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to the Office of Information and Regulatory Affairs (OIRA) a Statement of Energy Effects for any proposed significant energy action. A “significant energy action” is defined as any action by an agency that promulgates or is expected to lead to promulgation of a final rule, and that: (1) Is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy, or (3) is designated by the Administrator of OIRA as a significant energy action. For any proposed significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use. This regulatory action has been determined to not be a significant regulatory action, and it would not have an adverse effect on the supply, distribution, or use of energy. Thus, this action is not a significant energy action. Accordingly, DOE has not prepared a Statement of Energy Effects.

As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of this rule prior to its effective date. The report will state that it has been determined that the rule is not a “major rule” as defined by 5 U.S.C. 804(2).

The Secretary of Energy has approved the publication of this final rule.

For the reasons stated in the preamble, DOE hereby amends part 820 of chapter III of title 10 of the Code of Federal Regulations as set forth below:

10 CFR part 1004 contains DOE's regulations that implement the FOIA, 5 U.S.C. 552. The regulations provide information concerning the procedures by which the public may request records from DOE offices, and the policies and procedures by which DOE provides such records to members of the public. DOE previously amended its regulations in 1988 (53 FR 15660, May 3, 1988) and 2014 (79 FR 22855, Apr. 25, 2014). DOE is now updating its regulations to implement the requirements of the FOIA Improvement Act of 2016, Public Law 114-185 (June 30, 2016) (Act). The Act requires that Federal agencies review and update their FOIA regulations in accordance with its provisions. The Act addresses a range of procedural issues, including a requirement that agencies make available for public inspection in an electronic format records that have become or are likely to become the subject of subsequent requests for substantially the same records, or records that have been requested three or more times. The Act also requires that agencies provide a minimum of 90 days for requesters to file an administrative appeal following an adverse determination, and that they provide dispute resolution services at various times throughout the FOIA process. The Act also codifies the U.S. Department of Justice's “foreseeable harm” standard, specifying that an agency shall withhold information only if the agency reasonably foresees that disclosure would harm an interest protected by an exemption described in 5 U.S.C. 552(b) or if disclosure is prohibited by law. This provision also requires that agencies consider whether partial disclosure is possible if full disclosure is not possible, and that agencies take reasonable steps to segregate and release nonexempt information. The Act also amends Exemption 5 to specify that the deliberative process privilege does not apply to records created 25 years or more before the date of the request; creates a new “FOIA Council” charged with, among other things, developing recommendations for increased agency compliance and efficiency; and adds two new elements to agency Annual FOIA Reports (i.e., the number of times an agency has denied a request for records under 5 U.S.C. 552(c) and the number of records made available for public inspection under 5 U.S.C. 552(a)(2)).

DOE also makes additional revisions to update, clarify, and streamline the language in several procedural provisions, as described in Section I.

In the paragraphs that follow, DOE describes the changes to each section of 10 CFR part 1004 that it is promulgating in this final rule.

In § 1004.1, DOE adds a citation to the FOIA Improvement Act of 2016, which was enacted on June 30, 2016. The citation is to Public Law 114-185, 130 Stat. 538.

In § 1004.2(b), DOE clarifies the definition of “Authorizing or Denying Official”; clarifies that term in reference to DOE's National Nuclear Security Administration (NNSA); and corrects several typographical errors.

In § 1004.2(h)(1), DOE updates the address of the Bonneville Power Administration.

In § 1004.2(h)(5), DOE updates the address of the Golden Field Office.

In § 1004.2(h)(6), DOE updates its Headquarters address.

In § 1004.2(h)(8), DOE updates the address of the National Nuclear Security Administration.

In § 1004.2(h)(9), DOE updates the address of the National Energy Technology Laboratory.

In § 1004.2(h)(13), DOE updates the address of the Office of Scientific and Technical Information.

In § 1004.2(i), DOE revises the reference to the DOE Organization Act, Public Law 95-91, and clarifies the definition of “General Counsel” in reference to the NNSA General Counsel, as defined by the National Nuclear Security Administration Act, Public Law 106-65.

In § 1004.2(m), DOE updates the definition of “Representative of the news media” to mirror the term as defined in the FOIA, 5 U.S.C. 552(a)(4)(A)(ii)(III).

In § 1004.2(n), DOE corrects a typographical error.

In § 1004.2(p), DOE corrects typographical errors.

In § 1004.3, DOE revises the language to conform to the requirements of the FOIA Improvement Act of 2016, which amended 5 U.S.C. 552(a)(2) to require that agencies maintain, for public inspection in an electronic format, the materials required by FOIA to be made available for public inspection and copying. The Act also requires that agencies make available for public inspection in an electronic format records that have become or are likely to become the subject of frequent requests for substantially the same records or that have been requested three or more times. DOE will implement this section consistent with FOIA, as amended by the Act.

DOE deletes paragraphs (b) through (d) of § 1004.3 and renumbers § 1004.3(e) as § 1004.3(b). Paragraphs (b) and (c) pertained to reading rooms at DOE field offices, and paragraph (d) was reserved.

In renumbered § 1004.3(b), DOE revises the reference to 5 U.S.C. 552(b)(2) by deleting “(2)” to make this section consistent with the Supreme Court decision in Milner v. Dep't of the Navy, 131 S. Ct. 1259 (2011), wherein the Court clarified that FOIA Exemption 2, 5 U.S.C. 552(b)(2), prevents disclosure only of material that relates solely to the internal personnel rules and practices of an agency. DOE's revision is also consistent with the intent of FOIA, which promotes a policy of disclosure unless disclosure is prohibited by law or by any of the enumerated exemptions in 5 U.S.C. 552(b), not solely the exemption found at § 552(b)(2).

In renumbered § 1004.3(b)(2), DOE revises references to paragraphs § 1004.3(e)(1) and (e)(4) to refer to renumbered paragraphs § 1004.3(b)(1) and (b)(4), respectively.

In renumbered § 1004.3(b)(4), DOE revises the reference to paragraph § 1004.3(e)(2) to refer to renumbered paragraph § 1004.3(b)(2).

In § 1004.4(a), DOE revises the language to conform to the requirements of the FOIA Improvement Act of 2016, which requires that agencies maintain, for public inspection in an electronic format, the materials required by FOIA to be made available for public inspection and copying. 5 U.S.C. 552(a)(2). DOE further revises § 1004.4(a) by clarifying that requests can be submitted via facsimile or electronically on an appropriate agency Web site. DOE also corrects a typographical error.

In § 1004.4(c)(2), DOE corrects a typographical error.

In § 1004.5(b), DOE revises the procedure for processing requests for records to conform to the requirements of the FOIA Improvement Act of 2016, which requires that a written response to the requester shall notify the requester of the right to seek dispute resolution services from the DOE FOIA Public Liaison or the Office of Government Information Services. 5 U.S.C. 552(a)(6)(A)(i).

In § 1004.5(c), DOE corrects grammatical errors in the procedure for processing requests for records in the custody of one or more Authorizing Officials. No change to current practice is intended.

In § 1004.5(d), DOE clarifies the definition of “days” with respect to the time limit for processing requests, to eliminate any confusion with existing § 1004.12 on computation of time. No change in the time limit is intended. DOE also amends the reference to when a request is “received” for purposes of the time limits prescribed in § 1004.4(a).

In § 1004.5(d)(iii), DOE clarifies the extension of time that can be granted before a decision on a request can be reached, consistent with existing § 1004.12. No change in the length of an extension is intended. DOE also revises this section to conform to the requirements of the FOIA Improvement Act of 2016, which provides that in unusual circumstances, the agency shall notify the requester of the right to seek dispute resolution services from the DOE FOIA Public Liaison or the Office of Government Information Services. 5 U.S.C. 552(a)(6)(B)(i).

In § 1004.5(d)(4), DOE corrects a typographical error.

In § 1004.5(d)(7), DOE extends the time period during which a requester can appeal a denial of expedited processing to 90 days, as required by the FOIA Improvement Act of 2016, which prescribes the time period in which adverse determinations may be appealed. 5 U.S.C. 552(a)(6)(A)(i)(III)(aa). DOE also corrects a typographical error.

In § 1004.7(b), DOE corrects a typographical error.

In § 1004.7(b)(4), DOE extends the period during which requesters may challenge the adequacy of search to 90 days, as required by the FOIA Improvement Act of 2016. 5 U.S.C. 552(a)(6)(A)(i)(III)(aa).

In § 1004.7(b)(5), DOE extends the period during which requesters may appeal a determination to deny records to 90 days, as required by the FOIA Improvement Act of 2016. 5 U.S.C. 552(a)(6)(A)(i)(III)(aa).

In § 1004.8(a), DOE revises the time limit for an appeal of an initial denial of a request for records to 90 days, as required by the FOIA Improvement Act of 2016. 5 U.S.C. 552(a)(6)(A)(i)(III)(aa). DOE also corrects typographical errors in this section.

In § 1004.8(b), DOE revises the methods by which an appeal may be delivered to the Office of Hearings and Appeals and corrects typographical errors.

In § 1004.8(c), DOE corrects typographical errors.

In § 1004.8(d), DOE clarifies the definition of “days” with respect to the Appeal Authority's time limit for acting upon an appeal, consistent with existing § 1004.12. No change in the time limit is intended.

In § 1004.8(d)(2), DOE clarifies the means by which DOE notifies requesters of an extension of the time to make an appeal decision.

In § 1004.9(a), DOE updates the reference to the Government Printing Office to the Government Publishing Office. DOE also corrects a grammatical error.

In § 1004.9(a)(2), DOE revises the language regarding computer searches for records and removes the reference to the central processing unit (CPU), consistent with current practice.

In § 1004.9(a)(6)(i), DOE clarifies the definition of “search time” and clarifies how fees for search time are calculated, consistent with current practices.

DOE adds paragraphs (a)(6)(iii) through (iv)(cc) in § 1004.9 consistent with the FOIA Improvement Act of 2016. 5 U.S.C. 552(a)(4)(A)(vii). The amendments in the Act enumerate exceptions to DOE's ability to assess search fees for certain categories of requesters when DOE has not complied with the time limits described in § 1004.5(d). The Act also specifies that DOE may assess search fees when it has determined that unusual circumstances apply; more than 5,000 pages are necessary to respond to the request; DOE has provided the requester with a timely written notice; and DOE has made no fewer than three good-faith attempts to contact the requester to discuss how the requester could effectively limit the scope of the request in accordance with 5 U.S.C. 552(a)(6)(B)(ii).

In § 1004.9(a)(8)(i), DOE corrects typographical errors.

In § 1004.9(a)(8)(ii), DOE corrects typographical errors.

In § 1004.9(b), DOE corrects a typographical error.

In § 1004.9(b)(1), DOE corrects a typographical error.

In § 1004.9(b)(5), DOE clarifies when it will begin assessing interest charges on the amount billed to requesters who fail to pay fees. This change is consistent with existing § 1004.12, and no change in the administrative time limits is intended.

In § 1004.9(b)(6), DOE clarifies that it is not required to assess charges for search time even if the search fails to identify responsive records or if the records located are exempt from disclosure.

In § 1004.9(b)(8)(ii), DOE clarifies the definition of “days” for purposes of determining when a requester has failed to pay a fee in a timely fashion for purposes of exemption from making an advance payment, by deleting the word “working” as superfluous. This section also clarifies the definition of “days” for purposes of administrative time limits for certain actions when DOE receives advance fee payments. This change is consistent with existing § 1004.12, and no change in the administrative time limits is intended.

In § 1004.10(b)(5), DOE revises the definition of exemption (b)(5) to conform to the requirements of the FOIA Improvement Act of 2016, which states that the deliberative process privilege shall not apply to records created 25 years or more before the date on which the records were requested. 5 U.S.C. 552(b)(5).

In § 1004.10(c), DOE revises its obligations to reasonably segregate nonexempt portions of records as required by the FOIA Improvement Act of 2016, which states that an agency shall withhold information under 5 U.S.C. 552 only if the agency reasonably foresees that disclosure would harm an interest protected by an exemption described in subsection (b) of 5 U.S.C. 552, or disclosure is prohibited by law. 5 U.S.C. 552(a)(8)(A)-(B). The section is also revised to reflect the requirement in the Act that agencies consider whether partial disclosure of information is possible whenever the agency determines that a full disclosure of a requested record is not possible and take reasonable steps necessary to segregate and release nonexempt information.

In § 1004.11(g), DOE clarifies the definition of “days” for purposes of the time limit for informing submitters of DOE's intended discretionary release prior to public disclosure of the information to a requester. This change is consistent with the existing § 1004.11(c), (d), and (e), and no change in the administrative time limits is intended.

DOE has determined that notice and comment is not required pursuant to 5 U.S.C. 553(b)(B), which requires notice and an opportunity for comment unless an agency finds good cause that notice and public procedures are impracticable, unnecessary or contrary to the public interest. In this rulemaking, DOE is implementing changes required by the FOIA Improvement Act of 2016, Public Law 114-185 (June 30, 2016). DOE is exercising no discretion in implementing these statutory changes. DOE is also correcting minor typographical errors and making other minor changes to, for example, reflect the current DOE organizational structure. As a result, seeking public comment on these changes is unnecessary. For these same reasons DOE finds good cause to waive the 30-day delay in effective date provided for in 5 U.S.C. 553(d).

This rule has been determined to be not significant for purposes of Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (Oct. 4, 1993). As a result, the Office of Information and Regulatory Affairs within the Office of Management and Budget did not review this rule.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires preparation of a final regulatory flexibility analysis (FRFA) for any final rule where the agency was first required by law to publish a proposed rule for public comment. As required by Executive Order 13272, “Proper Consideration of Small Entities in Agency Rulemaking,” 67 FR 53461 (Aug. 16, 2002), DOE published procedures and policies on February 19, 2003, to ensure that the potential impacts of its rules on small entities are properly considered during the rulemaking process. 68 FR 7990. DOE has made its procedures and policies available on the Office of the General Counsel's Web site (http://energy.gov/gc/office-general-counsel). Because there was no requirement to first publish this regulation for comment, as discussed in section II.A., no analysis is required for purposes of the Regulatory Flexibility Act.

This rule does not contain a collection-of-information requirement subject to review and approval by OMB under the Paperwork Reduction Act (PRA).

Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number.

DOE has reviewed this final rule under 10 CFR part 1021, DOE's National Environmental Policy Act Implementing Procedures. DOE has determined that the final rule fits within categorical exclusion A.5 listed in Appendix A to 10 CFR part 1021, subpart D: Rulemaking that interprets or amends an existing rule or regulation and that does not change the environmental effect of the rule or regulation being amended. Accordingly, neither an environmental assessment nor an environmental impact statement is required. DOE's CX determination for this rule is available at http://energy.gov/nepa/categorical-exclusion-cx-determinations-cx.

Executive Order 13132, “Federalism.” 64 FR 43255 (Aug. 10, 1999) imposes certain requirements on Federal agencies formulating and implementing policies or regulations that preempt State law or that have Federalism implications. The Executive Order requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. The Executive Order also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have Federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations. 65 FR 13735. DOE has examined this rule, which would update DOE's FOIA regulations for consistency with the FOIA Improvement Act of 2016, and has determined that it would 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. Therefore, no further action is required by Executive Order 13132.

With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” imposes on Federal agencies the general duty to adhere to the following requirements: (1) eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; (3) provide a clear legal standard for affected conduct rather than a general standard; and (4) promote simplification and burden reduction. 61 FR 4729 (Feb. 7, 1996). Regarding the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, this final rule meets the relevant standards of Executive Order 12988.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). For a regulatory action likely to result in a rule that may cause 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 (adjusted annually for inflation), section 202 of UMRA requires a Federal agency to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and Tribal governments on a “significant intergovernmental mandate,” and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect them. On March 18, 1997, DOE published a statement of policy on its process for intergovernmental consultation under UMRA. 62 FR 12820. DOE's policy statement is also available at http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.

DOE has concluded that this final rule will not result in the expenditure by States, tribal, or local governments, in the aggregate, or by the private sector, of $100 million in any one year. As a result, no assessment or analysis is required under the Unfunded Mandates Reform Act of 1995.

Section 654 of the Treasury and General Government Appropriations Act, 1999 (Public Law 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that may affect family well-being. This rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.

Pursuant to Executive Order 12630, “Governmental Actions and Interference with Constitutionally Protected Property Rights” 53 FR 8859 (March 18, 1988), DOE has determined that this rule would not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution.

Section 515 of the Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to review most disseminations of information to the public under information quality guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE has reviewed this final rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.

Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to OIRA at OMB, a Statement of Energy Effects for any significant energy action. A “significant energy action” is defined as any action by an agency that promulgates or is expected to lead to promulgation of a final rule, and that: (1) is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy, or (3) is designated by the Administrator of OIRA as a significant energy action. For any significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use.

DOE has concluded that this regulatory action, which sets forth amended procedures by which the public may request records from DOE offices under the FOIA, and the policies and procedures by which DOE will provide such records to members of the public, is not a significant energy action because the final rule is not a significant regulatory action under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy, nor has it been designated as such by the Administrator at OIRA. Accordingly, DOE has not prepared a Statement of Energy Effects on this final rule.

As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of this rule prior to its effective date. The report will state that it has been determined that the rule is not a “major rule” as defined by 5 U.S.C. 804(2).

For the reasons set forth in the preamble, amend part 1004 of Title 10 of the Code of Federal Regulations as set forth below:

On December 1, 2015, the Board of Governors of the Federal Reserve System (Board) invited comment on a proposed rule (proposed rule) to implement public disclosure requirements for certain companies subject to the Board's liquidity coverage ratio (LCR) rule: (1) All bank holding companies and certain savings and loan holding companies that, in each case, have $50 billion or more in total consolidated assets or $10 billion or more in total consolidated on-balance sheet foreign exposure; and (2) nonbank financial companies designated by the Financial Stability Oversight Council for Board supervision to which the Board has applied the LCR rule by separate rule or order (covered companies).1 The LCR rule 2 requires a company subject to the rule to maintain an amount of high-quality liquid assets (HQLA) (the numerator of the ratio) 3 that is no less than its total net cash outflow amount over a forward-looking 30 calendar-day period of significant stress (the denominator of the ratio).4 A modified LCR requirement (modified LCR requirement) applies to certain smaller, less complex banking organizations (modified LCR holding companies). Community banking organizations are not subject to the Board's LCR rule.5

The purpose of the proposed rule was to promote market discipline by providing the public with comparable liquidity information about covered companies.6 The Board has long supported meaningful public disclosure by banking organizations with the objective of improving market discipline and encouraging sound risk-management practices.7 Market discipline can mitigate the risk to financial stability by causing a firm to internalize the cost of its liquidity profile and encouraging safe and sound banking practices. For instance, a firm that consistently and predictably discloses a resilient liquidity profile to its investors and counterparties may have access to a lower cost of funding. Companies with less-resilient liquidity profiles would be incentivized to improve their liquidity positions in order to reduce their cost of funding and companies with more resilient liquidity profiles would be encouraged to maintain their sound risk management practices.

To the extent that disclosure can increase investor confidence and bolster transparency between counterparties, it increases liquidity in the market as a whole, thereby limiting the risk that a liquidity event will lead to asset fire sales and contagion effects in the financial sector. A funds provider that is uncertain about the liquidity conditions of its counterparties may be more likely to withhold funding during a liquidity event.

The Board receives and analyzes liquidity information from covered companies through supervisory reporting; market participants bring additional perspectives through their assessments of these firms, which will in turn help inform the Board's supervision of covered companies. In this fashion, market discipline complements the Board's supervisory practices and policies.

The proposed rule would have required a covered company to disclose publicly information about (1) certain components of its LCR calculation in a standardized tabular format (LCR disclosure template), and (2) factors that have a significant effect on its LCR, to facilitate an understanding of the company's calculations and results.8

Under the proposed rule, a covered company would have been required to provide timely public disclosures, including a completed LCR disclosure template, each calendar quarter in a direct and prominent manner on its public internet site or in a public financial or other public regulatory report. A covered company would have been required to keep this information available publicly for at least five years from the time of initial disclosure, on a rolling basis. For example, the proposed rule would have required information that was initially disclosed on February 1, 2018, to remain available until at least February 1, 2023.

The Board received five comments from trade organizations, a public interest group, and other interested parties on the proposed rule. Although some commenters generally supported requiring covered companies to disclose publicly information about their LCR calculations, commenters objected to the frequency of the required disclosures under the proposed rule and the granularity of the information required to be disclosed on the proposed LCR disclosure template. Two commenters supported the proposed scope of application of the proposed rule, which included depository institution holding companies and nonbank financial companies but not depository institutions. Commenters raised concerns about the requirements for qualitative disclosure under the proposed rule. In particular, commenters argued that the disclosure requirements should include a materiality standard that is consistent with disclosure requirements applicable under other public disclosure regimes and a clarification that covered companies would not be required to disclose confidential or proprietary information. Finally, some commenters sought additional time before covered companies would have to comply with the proposed disclosure requirements.9

The final rule includes the same general requirements as the proposed rule with some modifications in response to comments as described below.

The proposed rule would have required a covered company to provide timely public disclosures after each calendar quarter. One commenter argued that the frequency of the required disclosure should be increased to daily because market participants need more timely information so they can adequately adjust their risk management and business activities based on the liquidity risk of covered companies. The commenter also argued that quarterly LCR disclosures could increase market instability, relative to more frequent disclosures, because large changes in a covered company's LCR between quarters would be more disruptive to the market compared to more frequent disclosures that revealed smaller incremental changes to a firm's LCR. Another commenter supported a monthly or weekly disclosure requirement, which could be made more frequent in the event of a market or idiosyncratic stress.

The final rule maintains the requirement that disclosures be made quarterly. Liquidity, by its nature, is subject to rapid changes. As a result, it is expected that the LCR of a covered company will exhibit some volatility in the short term, which may not be indicative of liquidity problems at the firm. Indeed, there are many potential causes for short-term fluctuations in a firm's liquidity, such as seasonal deposit flows and periodic tax payments. Public disclosure of these types of short-term swings in a covered company's LCR could potentially negatively affect the firm and may not be indicative of a company's medium-term liquidity position, which in most cases is a better indication of the overall strengths and weaknesses of a company's liquidity position. Disclosure on a quarterly basis should help market participants assess the liquidity risk profiles of covered companies consistent with other quarterly disclosures of financial information. For supervisory purposes, the Board will continue to monitor on a more frequent basis any changes to a covered company's liquidity profile through the information submitted on the FR 2052a Complex Institution Liquidity Monitoring Report (FR 2052a report).10

As noted, under the proposed rule, a covered company would have been required to provide timely public disclosures, including a completed LCR disclosure template, each calendar quarter in a direct and prominent manner on its public internet site or in a public financial or other public regulatory report. One commenter asserted that the “direct and prominent” disclosure standard is unnecessary because the requirement for a covered company to make the required disclosures in its financial statements or on its Web site will cause that information to be accessible to the public. The final rule retains the direct and prominent standard to ensure that the required disclosures are easily accessible to interested market participants. Such disclosures must remain available to the public for at least five years from the time of initial disclosure.

As discussed in the Supplementary Information section of the proposed rule, the timing of disclosures under the federal banking laws may not always coincide with the timing of disclosures required under other federal law, including disclosures required under the federal securities laws and their implementing regulations by the Securities and Exchange Commission (SEC). For calendar quarters that do not correspond to a covered company's fiscal year-end, the Board would consider disclosures that are made within 45 days of the end of the calendar quarter (or within 60 days for the limited purpose of the covered company's first calendar quarter in which it is subject to the final rule's disclosure requirements) as timely. In general, where a covered company's fiscal year-end coincides with the end of a calendar quarter, the Board considers disclosures to be timely if they are made no later than the applicable SEC disclosure deadline for the corresponding Form 10-K annual report. In cases where a covered company's fiscal year-end does not coincide with the end of a calendar quarter, the Board would consider the timeliness of disclosures on a case-by-case basis.

This approach to timely disclosures is consistent with the approach to public disclosures that the Board has taken in the context of other regulatory reporting and disclosure requirements. For example, the Board has used the same indicia of timeliness with respect to the public disclosures required under its risk-based capital rules.11

The proposed rule would have required a covered company to disclose publicly its LCR and certain components of its LCR calculation in a standardized tabular format. The standardized format was designed to help market participants compare the LCRs of covered companies across the U.S. banking industry and international jurisdictions. In this regard, the proposed format was similar to a common disclosure template developed by the Basel Committee on Banking Supervision (BCBS). However, the proposed rule was tailored to reflect differences between the LCR rule and the BCBS LCR standard.

Under the proposed rule, a covered company, other than a modified LCR holding company, would have been required to calculate all disclosed amounts as simple averages of the components used to calculate its daily LCR over the past quarter. A modified LCR holding company would have been required to calculate all disclosed amounts as simple averages of the components used to calculate its monthly LCR over the past quarter. The proposed rule would have required a covered company to disclose both average unweighted amounts and average weighted amounts, as set forth in section 249.91(b)(2) and (3) of the proposed rule, for the covered company's HQLA, cash outflow amounts, and cash inflow amounts.

One commenter asserted that the detailed disclosures required by the proposed rule would create new vulnerabilities that could exacerbate market stresses. The commenter argued that the public disclosure of the granular information required by the proposed LCR disclosure template could precipitate or accelerate a significant liquidity event rather than promote market discipline as intended. The commenter also asserted that detailed disclosure of a covered company's liquid assets could constrain the covered company's ability to execute its risk management and business strategies in a stressed environment. For instance, the commenter argued that a covered company may find it difficult to adjust the composition of its HQLA because of a potential negative reaction from market participants in response to its LCR public disclosures or because other market participants could use the information in public disclosures to “front run” the covered company's planned liquidity management actions.

The commenter suggested the Board's policy objectives would be better achieved by requiring only disclosure of a firms' HQLA amount, aggregate outflows, and aggregate inflows, which the commenter argued would provide the market with sufficient information on a covered company's liquidity profile without resulting in the negative effects of overly detailed disclosures. The commenter also recommended that, in order to mitigate the impact of short-term fluctuations in a covered company's LCR, a covered company should calculate disclosed amounts as simple averages of the components used to calculate its daily or monthly LCR over a rolling six-month rolling period, rather than over a quarter.

The final rule retains the requirement that a covered company make its disclosures using quarterly averages, rather than using six-month rolling average calculations. Extending the averaging period from three to six months would cause the public disclosures to be inconsistent with a covered company's other public regulatory disclosures, such as its quarterly reporting on the FR Y-9C Consolidated Financial Statements for Holding Companies and its quarterly disclosures under federal securities laws.

The final rule requires a covered company to make public disclosures with the same the level of granularity that would have been required under the proposal. In determining the appropriate amount of detail of the disclosure requirements, the Board weighed the benefits that detailed disclosures provide, such as promoting market discipline of firms and overall liquidity in the funding market, against the costs of such requirements, including the risk that the disclosures could potentially contribute to a liquidity event during stress.

The disclosure requirements are designed to provide market participants with information on covered companies' liquidity positions in order to enable them to distinguish among covered companies' liquidity risk profiles. The disclosure of only a firm's HQLA amount, aggregate outflows, and aggregate inflows may be insufficient to enable market participants to assess fully the nature of a covered company's liquidity risk profile. On the other hand, more granular disclosure would provide market participants a more accurate view of the covered company's liquidity risk profile and enhance covered companies' incentives to maintain a robust liquidity risk profile. For example, more detailed disclosure about a covered company that has a high LCR, but also exhibits high dependence on a particular funding class or counterparty type, would allow market participants to better assess potential liquidity vulnerabilities. For a covered company with strong liquidity risk management, more granular disclosures would also reduce the likelihood that market participants would react overly negatively towards the covered company in the event of the public release of negative information about the covered company or the banking sector more generally. Without such granular disclosure, there is a greater likelihood that uncertainty over a covered company's liquidity position would cause counterparties to cease funding the covered company following the release of negative information. The granular disclosure requirements under the proposed and final rules would encourage covered companies to engage in safe and sound banking practices and strengthen financial stability, without causing firms to bear undue costs.

Although the final rule requires disclosure of relatively detailed liquidity data to enhance market participants' understanding of firm's liquidity risk management, several considerations should mitigate the potential for the disclosures to negatively impact a covered company or precipitate or accelerate a significant liquidity event during times of idiosyncratic or market stress. As noted, the disclosures are based on quarterly averages. Importantly, the due dates for the disclosures are several weeks after the end of the quarter. This means that the liquidity disclosures will include a lag that provides market participants with a broad understanding of a firm's medium-term liquidity position without causing the release of current liquidity data that could potentially negatively affect the firm. The final rule also does not require firms to disclose specific asset- or transaction-level details, which will limit the risk that the public disclosures will constrain a covered company's ability to execute its risk management and business strategies.

The proposed rule would have required a covered company to disclose its average HQLA amount, average total net cash outflow amount, and average LCR. A covered company's HQLA amount and total net cash outflow amount are the numerator and the denominator of the LCR, respectively, and thus, are important to help market participants and other parties understand the liquidity risk profile of a covered company and compare risk profiles across companies.

At a more granular level, to describe the quality and composition of a covered company's HQLA amount, the proposed rule would have required a covered company to disclose its average amount of eligible HQLA,12 as well as the average amounts of eligible level 1, level 2A, and level 2B liquid assets to identify the quality and composition of a company's HQLA amount.13 The proposed rule would have required the disclosure of both average unweighted amounts and average weighted amounts of eligible HQLA and eligible level 1, level 2A, and level 2B liquid assets. The proposed rule also would have required a covered company to disclose both the average unweighted amounts and average weighted amounts of its cash outflows and inflows. This information helps identify the short-term liquidity risks facing a firm and, in particular, potential sources of liquidity strains during a period of market stress.

In the Supplementary Information section of the proposed rule, the Board clarified three points regarding a covered company's required quantitative disclosures. First, the Board noted that the average values disclosed for the HQLA amount, total net cash outflow amount, and the LCR (rows 29, 32, and 33 of the LCR disclosure template) may not equal the calculation of those values using component values reported in rows 1 through 28 of the LCR disclosure template. This lack of equivalence is due to technical factors such as the application of the level 2 liquid asset caps, the total inflow cap and, for modified LCR holding companies, the application of the 0.7 factor to total net cash outflows. The application of the asset and inflow caps and modified LCR requirement's 0.7 factor may affect a covered company's LCR calculation in varying degrees across the calculation dates used to determine the average values that are required to be disclosed in rows 29, 32, and 33 of the LCR disclosure template and, thus, would affect the averages for the covered company's HQLA amount, total net cash outflow amount, and the LCR. The LCR disclosure template includes a footnote that highlights this difference.

Second, because a modified LCR holding company is not required to calculate a maturity mismatch add-on calculation amount under the modified LCR requirement,14 it would not have been required to disclose amounts in row 30 or 31 of the LCR disclosure template, which each relate to the maturity mismatch add-on amount calculation.

Third, while the proposed rule would have required a modified LCR holding company to disclose its average total net cash outflow amount after applying a factor of 0.7 (which reflects the fact that modified LCR holding companies are required to apply a factor of 0.7 to its average total net cash outflow amount under section 249.63 of the LCR rule), the proposed rule would have required a modified LCR holding company to disclose its average cash outflows and cash inflows without applying the factor of 0.7.

The Board did not receive comments, other than those described above, on these aspects of the proposal, and the final rule adopts these aspects without modification.

Under the proposed rule, a covered company would have been required to provide a “sufficient” qualitative discussion of its LCR. This discussion was intended to complement the quantitative disclosure requirements. In this regard, the proposed rule included a list of potentially relevant items for the covered company to address in its qualitative disclosures: (1) The main drivers of the LCR; (2) changes in the LCR over time; (3) the composition of eligible HQLA; (4) concentration of funding sources; (5) derivative exposures and potential collateral calls; (6) currency mismatch in the LCR; (7) the covered company's centralized liquidity management function and its interaction with other functional areas of the covered company; and (8) other inflows and outflows in the LCR that are not specifically identified by the required quantitative disclosures, but that the covered company considers to be relevant to facilitate an understanding of its liquidity risk profile. The proposed rule also would have required that a covered company provide a brief discussion of any significant changes that have occurred since the end of the quarter (i.e., during the period following the quarter for which a covered company has prepared its LCR disclosures) such that current or previous quantitative disclosures were no longer reflective of a covered company's current liquidity risk profile.

Two commenters argued that the qualitative disclosure requirement should be better aligned with public disclosures required by other regulations. The commenters requested that a covered company only be required to provide a qualitative discussion of items that are “material” to the firm's LCR, rather than items that are “significant” or “relevant” to a firm's LCR, as would have been required under the proposed rule. The commenters argued that adopting a materiality standard that is consistent with disclosure requirements applicable under other public disclosure regimes, notably federal securities laws, would be less confusing and ensure that covered companies approach the required disclosures in a consistent manner. In addition, one commenter argued that qualitative public disclosures should include an exemption, similar to that in the Board's risk-based capital rules, for disclosure of certain confidential or proprietary financial information.

In response to the commenters' concerns, the final rule clarifies that a covered company is not required to include in its qualitative disclosures any information that is proprietary or confidential. Rather, the covered company would only be required to disclose general information about those subjects and provide a reason why the specific information has not been disclosed.

The final rule continues to use the term “significant” to describe items affecting a covered company's LCR about which a covered company should provide a qualitative discussion. However, in response to concerns raised by commenters, the Board agrees with commenters that a covered company may assess the relevant qualitative disclosures based on their materiality. Information is regarded as material for purposes of the disclosure requirements in the final rule if the omission or misstatement of the information could change or influence the assessment or decision of a user relying on that information for the purpose of making investment decisions. This approach is consistent with the standards in the Board's risk-based capital rules, which also use a concept of materiality to inform the qualitative disclosure requirements required under those rules.15

The proposed rule's requirement that a covered company provide a qualitative discussion of the main drivers of its LCR and any changes in its LCR over time, to the extent such changes were significant, was intended to include a discussion of the causes of any such changes. However, in order to avoid any confusion, the final rule has been revised to state explicitly that, in addition to discussing any changes in its LCR over time, a covered company should also include a discussion of the causes of such changes. Changes in risk management strategies or macroeconomic conditions are examples of the type of causes that could potentially cause a change to a covered company's LCR and that, if significant, would have to be discussed in the firm's qualitative disclosures.

In addition, the final rule eliminates the requirement that a covered company provide a brief discussion of any significant changes that have occurred since the end of the quarter that would cause its quarter-end quantitative disclosures to no longer reflect its liquidity profile. Although it was not the intended result, this requirement could have been interpreted to require a covered company to disclose information about specific and recent developments in its liquidity risk profile, which could include short-term volatility of a firm's LCR. The disclosure of this information could have potentially adverse effects on a covered company, or precipitate or accelerate a significant liquidity event during times of idiosyncratic or market stress. Moreover, such a requirement would have been at odds with the final rule's requirement that all disclosed amounts be calculated as quarterly averages and that due dates for the disclosures be several weeks after the end of the quarter. For these reasons, the final rule does not include this requirement.

As noted above, the proposed rule would have required a covered company to provide a qualitative discussion of its LCR and would have included an illustrative list of potentially relevant items that a firm could discuss, to the extent relevant to its LCR. Among the illustrative list of potentially relevant items was “other inflows and outflows in the LCR that are not specifically identified by the required quantitative disclosures, but that the covered company considers to be relevant to facilitate an understanding of its liquidity risk profile.” The Board has determined that this item is redundant of the proposed rule's general requirement that a firm must provide a qualitative discussion of its LCR. For this reason, the final rule eliminates this example.

The proposed compliance dates for the public disclosure requirements would have differed based on the size, complexity, and potential systemic impact of the covered companies that currently are subject to the LCR rule. The proposed rule would have required covered companies that have $700 billion or more in total consolidated assets or $10 trillion or more in assets under custody to comply with the proposed public disclosure requirements beginning on July 1, 2016. Other covered companies, not including modified LCR holding companies, would have been required to comply with the proposed public disclosure requirements beginning on July 1, 2017. These proposed compliance dates would have required covered companies that are currently subject to the LCR rule to comply with the proposed public disclosure requirements one year after the date that they were required to calculate their LCR on a daily basis.16 The proposed rule would have required modified LCR holding companies to comply with the public disclosure requirements beginning on January 1, 2018.

One commenter argued that covered companies need additional time to comply with the public disclosure requirements in order to align their existing liquidity data reporting processes under the FR 2052a report with the LCR public disclosure requirements. The commenter also asserted that a longer transition period was necessary so that covered companies would have sufficient time to clarify certain aspects of their LCR calculations with the agencies to ensure that the disclosed LCR data is calculated consistently across covered companies.

In response to the comments, the final rule extends the implementation timeline nine months such that a covered company currently subject to the LCR rule would be required to make LCR public disclosures approximately five calendar quarters after the covered company's liquidity information has been required to be submitted on the FR 2052a report.17 The effect of this extension will be to require covered companies that have $700 billion or more in total consolidated assets or $10 trillion or more in assets under custody to comply with the public disclosure requirements beginning on April 1, 2017. Other covered companies, other than modified LCR holding companies, will be required to comply with the public disclosure requirements beginning on April 1, 2018. Modified LCR holding companies that are currently subject to the modified LCR rule will be required to comply with the public disclosure requirements beginning on October 1, 2018.

A covered company that becomes subject to the LCR rule in the future will be required to make its first public disclosures for the calendar quarter that starts on its LCR rule compliance date (i.e., three months after the company becomes subject to the LCR rule). During the time such company is required to calculate the LCR monthly pursuant to 12 CFR 249.1(b)(2)(ii),18 the company would be required to calculate all disclosed amounts as simple averages of the components used to calculate its monthly LCR over the quarter. A modified LCR holding company that becomes subject to the modified LCR requirement in the future will be required to make its first public disclosures for the calendar quarter that begins eighteen months after the date it becomes subject to the modified LCR requirement. For example, if a modified LCR holding company becomes subject to the modified LCR requirement beginning in January 2018, the final rule would require that company to comply with public disclosure requirements beginning July 1, 2019.

A company that becomes subject to the modified LCR requirement is currently required to comply with the requirement on the first day of the first quarter after which the company's total consolidated assets equal $50 billion or more. As noted in the Supplemental Information section in the proposed rule, this compliance date may not provide sufficient time for these companies to build the systems required to calculate the LCR. In light of this operational challenge, the proposed rule would have amended the modified LCR requirement to provide these companies with a full year to come into compliance with the LCR requirement after becoming subject to the rule. The Board is clarifying that a covered company subject to the full LCR requirement that subsequently becomes subject to the modified requirement (e.g., following a decrease in the covered company's consolidated assets or on-balance sheet foreign exposure below the thresholds specified in section 249.1(b) of the LCR rule at the most recent year-end) would be required to comply with the modified LCR requirement (including the disclosure requirement) immediately upon becoming subject to the requirement. In this case, the covered company would already have the systems in place to calculate the LCR and would not need additional time to come into compliance with the modified LCR requirement.

The Board received no comments on this aspect of the proposed rule. The final rule includes this amendment to the modified LCR requirement without modification.

Section 722 of the Gramm-Leach Bliley Act 19 requires the Board to use plain language in all proposed and final rules published after January 1, 2000. The Board sought to present the proposed rule in a simple and straightforward manner and did not receive any comments on the use of plain language.

The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (RFA), generally requires that an agency prepare and make available for public comment an initial RFA analysis in connection with a notice of proposed rulemaking.20 The Board solicited public comment on this rule in a notice of proposed rulemaking and has since considered the potential impact of this final rule on small entities in accordance with section 604 of the RFA. The Board received no public comments related to the initial RFA analysis in the proposed rule from the Chief Council for Advocacy of the Small Business Administration or from the general public. Based on the Board's analysis, and for the reasons stated below, the Board believes that the final rule will not have a significant economic impact on a substantial number of small entities.

Under regulations issued by the Small Business Administration, a “small entity” includes a depository institution, bank holding company, or savings and loan holding company with total assets of $550 million or less (a small banking organization). As of June 30, 2016, there were approximately 594 small state member banks, 3,203 small bank holding companies, and 162 small savings and loan holding companies.

As discussed above, the final rule requires certain companies that are subject to the LCR rule to disclose publicly information about components of their LCR. The final rule does not apply to “small entities” and applies only to the following Board-regulated institutions: (1) All bank holding companies and certain savings and loan holding companies that, in each case, have $50 billion or more in total consolidated assets or $10 billion or more in total consolidated on-balance sheet foreign exposure; and (2) nonbank financial companies designated by the Financial Stability Oversight Council for Board supervision to which the Board has applied the LCR Rule by separate rule or order. Companies that are subject to the final rule therefore substantially exceed the $550 million asset threshold at which a banking entity is considered a “small entity” under SBA regulations.

No small bank holding company, savings and loan holding company, or state member bank would be subject to the rule, so there would be no additional projected compliance requirements imposed on small bank holding companies, small savings and loan holding companies, or small state member banks.

The Board believes that the final rule will not have a significant impact on small banking organizations supervised by the Board and therefore believes that there are no significant alternatives to the rule that would reduce the economic impact on small banking organizations supervised by the Board.

Certain provisions of the final rule contain “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3521 (PRA). In accordance with the requirements of the PRA, the Board may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The Board's OMB control number is 7100-0367 and will be extended, with revision. The Board reviewed the final rule under the authority delegated to the Board by OMB. The final rule contains requirements subject to the PRA. The disclosure requirements are found in sections 249.64, 249.90, and 249.91. The Board did not receive any public comments on the PRA analysis.

The Board has a continuing interest in the public's opinions of collections of information. At any time, commenters may submit comments regarding the burden estimate, or any other aspect of this collection of information, including suggestions for reducing the burden, to the addresses listed in the ADDRESSES section. A copy of the comments may also be submitted to the OMB desk officer (1) by mail to U.S. Office of Management and Budget, New Executive Office Building, Room 10235, 725 17th Street NW., Washington, DC 20503; (2) by fax to 202-395-6974; or (3) by email to: [email protected].

Title of Information Collection: Reporting, Recordkeeping, and Disclosure Requirements associated with the Liquidity Risk Measurement Standards (Regulation WW).

Frequency of Response: Event generated, monthly, quarterly, annually.

Affected Public: Insured state member banks, bank holding companies, savings and loan holding companies, and nonbank financial companies supervised by the Board, and any subsidiary thereof.

Current Actions: The final rule requires a depository institution holding company and nonbank financial company subject to the LCR (covered company) to disclose publicly information about certain components of its LCR calculation in a standardized tabular format and include a discussion of factors that have a significant effect on its LCR. Public disclosure of information about covered company LCR calculations will help market participants and other parties consistently assess the liquidity risk profile of covered companies. Under the final rule, a covered company is required to provide timely public disclosures each calendar quarter. A covered company is required to include the completed disclosure template on its public internet site or in a public financial or other public regulatory report and make its disclosures available to the public for at least five years from the time of the initial disclosure.

A covered company must disclose publicly the information required under subpart J beginning on April 1, 2017, if the covered company is subject to the transition period under section 249.50(a) or April 1, 2018, if the covered company is subject to the transition period under section 249.50(b). For modified LCR holding companies, the final rule would require them to comply with the public disclosure requirements beginning on October 1, 2018.

Under the final rule, quantitative disclosures will convey information about a covered company's high-quality liquid assets (HQLA) and short-term cash flows, thereby providing insight into a covered company's liquidity risk profile. Consistent with the BCBS common template, the final rule requires a covered company to disclose both average unweighted amounts and average weighted amounts for the covered company's HQLA, cash outflow amounts, and cash inflow amounts. A covered company is also required to calculate all disclosed amounts as simple averages of the components used to calculate its daily LCR over a calendar quarter, except that modified LCR holding companies are required to calculate all disclosed amounts as simple averages of the components used to calculate their monthly LCR. A covered company is required to calculate all disclosed amounts on a consolidated basis and express the results in millions of U.S. dollars or as a percentage, as applicable.

In addition, the final rule requires a covered company to provide a discussion of certain features of its LCR. A covered company's qualitative discussion may include, but does not have to be limited to, the following items: (1) The main drivers of the LCR; (2) changes in the LCR over time and causes of such changes; (3) the composition of eligible HQLA; (4) concentration of funding sources; (5) derivative exposures and potential collateral calls; (6) currency mismatch in the LCR; and (7) the covered company's centralized liquidity management function and its interaction with other functional areas of the covered company.

Estimated Burden per Response: Reporting—0.25 hours; recordkeeping—10 hours and 100 hours; disclosure—24 hours.

Frequency: Reporting—monthly, quarterly, and annually; recordkeeping—annually; disclosure—quarterly.

Estimated Number of Respondents: 39 (only 35 respondents are affected by the new disclosure requirements).

Current Total Estimated Annual Burden: Reporting—13 hours; recordkeeping—1,080 hours.

Proposed Total Estimated Annual Burden: Reporting—13 hours; recordkeeping—1,080 hours; disclosure—3,360 hours.

Section 302 of the Riegle Community Development and Regulatory Improvement Act of 1994 (RCDRIA) requires a Federal banking agency, in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions, to consider any administrative burdens that such regulations would place on depository institutions, and the benefits of such regulations, consistent with the principles of safety and soundness and the public interest. In addition, new regulations that impose additional reporting disclosures or other new requirements on insured depository institutions generally must take effect on the first day of a calendar quarter which begins on or after the date on which the regulations are published in final form.21 Section 302 of the RCDRIA does not apply to this final rule because the final rule does not prescribe additional reporting, disclosures, or other new requirements on insured depository institutions. As discussed above in the Supplementary Information section, the final rule only applies to (1) all bank holding companies and certain savings and loan holding companies that, in each case, have $50 billion or more in total consolidated assets or $10 billion or more in total consolidated on-balance sheet foreign exposure; and (2) nonbank financial companies designated by the Financial Stability Oversight Council for Board supervision to which the Board has applied the LCR rule by separate rule or order. Nevertheless, the final rule becomes effective on April 1, 2017, the first day of a calendar quarter.

For the reasons stated in the preamble, the Board amends part 249 of chapter II of title 12 of the Code of Federal Regulations as follows:

I. Background

This interim rule reflects changes to the Board's Rules Regarding Availability of Information (“Board's Rules”) required by the FOIA Improvement Act of 2016 (the “Improvement Act”).1 The Improvement Act addresses a range of procedural issues, including requirements that agencies establish a minimum of 90 days for requesters to file an administrative appeal and that they provide dispute resolution services at various times throughout the FOIA process. Accordingly, the Board is adopting this interim final rule to comply with the statutory requirements of the Improvement Act.

This interim final rule makes conforming amendments throughout part 261 of the Board's Rules to adopt the statutory exemptions and exceptions required by the Improvement Act. It also explains general policies and procedures for requesters seeking access to records and for processing requests by the Board's Freedom of Information Office.

Section 261.10—Published information. The Improvement Act requires agencies to make certain records available in an electronic format. Thus, we are amending this section to include language that the Index to Board Actions will be maintained in an electronic format. In addition, we are removing the reference to the pedestrian entrance for Publications Services because it is no longer accurate.

Section 261.11—Records available for public inspection. We are amending this section, including its heading, to clarify when and how the Board's records will be available for public inspection. Specifically, we are removing references to “copying” and adding in the text of the rule that records will be available “in an electronic format” to reflect the Improvement Act's change.2 We are also removing outdated information about records created after 1996 and incorrect information about procedures for obtaining certain reporting forms from the National Technical Information Service. As required by the Improvement Act, this section will now also provide that the Board will make available for public inspection records that have been released under section 261.12 and have been requested three or more times.

Section 261.12—Records available to public upon request. We are amending this section to remove one of the Board's FOI Office's incorrect facsimile number and adding the Board's Web site address for individuals to submit FOIA requests to the Board online.

Section 261.13—Processing requests. We are amending this section to describe the process for the Board to extend its time for response in unusual circumstances. We are also adding language reflecting that all responses to FOIA requests will advise the requester of his or her right to seek assistance from the Board's FOIA Public Liaison. In keeping with the language of FOIA, the new language refers to “adverse determinations” rather than “denials.” The new language describes adverse determinations that may be appealed, and extends the time for appeal from 10 days to 90 days in accordance with the Improvement Act. The revised language also provides that when making an adverse determination, the Board will advise the requester of the right to seek dispute resolution services from the Board's FOIA Public Liaison or from the Office of Government Information Services. We are also adding an email address for requesters to submit an appeal to the Board.

Section 261.14—Exemptions from disclosure. We are adding language to state that the Board will not withhold records based on the deliberative process privilege if the records were created 25 years or more before the date on which the records were requested, and that the Board will withhold records only when it reasonably foresees that disclosure would harm an interest protected by an exemption described in the section, as required by the Improvement Act.

Section 261.17—Fee schedules; waiver of fees. We are amending this section to provide restrictions on the Board's ability to charge fees as required by the Improvement Act.

The Board notes that the Improvement Act provides federal agencies with no discretion in the implementation of the rule, and requires that conforming amendments to agency-specific rules become effective within 180 days of the Act's enactment. Accordingly, this interim rule is final and effective on December 27, 2016. The Board is providing an opportunity for comment and will address any comments received in a subsequent rulemaking.

This rule is not subject to the provisions of the Administrative Procedure Act (“APA”), 5 U.S.C. 553, requiring notice, public participation, and deferred effective date. The FOIA Improvement Act of 2016 provides federal agencies with no discretion in the implementation of the substantive amendments made in this rule, and it also requires that conforming amendments to agency-specific rules become effective as of December 27, 2016. For these reasons, the Board finds good cause to determine that public notice and comment for these amendments is unnecessary, impracticable, or contrary to the public interest, pursuant to the APA, 5 U.S.C. 553(b)(B), and that good cause exists to dispense with a deferred effective date pursuant to 5 U.S.C. 553(d)(3). The Board is providing, however, an opportunity for comment and will address any comments received in the final rule that adopts the interim rule as final.

The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., applies only to rules for which an agency publishes a general notice of proposed rulemaking. Because the Board has determined for good cause that a notice of proposed rulemaking for this rule is unnecessary, the Regulatory Flexibility Act does not apply to this final rule.

There is no collection of information required by this interim final rule that would be subject to the Paperwork Reduction Act of 1995, 44 U.S.C. 3501 et seq.

Section 722 of the Gramm-Leach-Bliley Act requires each federal banking agency to use plain language in all rules published after January 1, 2000. In light of this requirement, the Board believes this interim rule is presented in a simple and straightforward manner and is consistent with this “plain language” directive.

For the reasons set forth in the SUPPLEMENTARY INFORMATION, the Board of Governors of the Federal Reserve System amends 12 CFR chapter II as follows:

I. Background

On June 30, 2016, the Freedom of Information Act 1 (FOIA) was amended by the FOIA Improvement Act of 2016 2 (FOIA Improvement Act). Among other things, section 3 of the FOIA Improvement Act requires each federal agency to revise its disclosure regulations and procedures for processing FOIA requests in order to conform to the substantive amendments made by section 2 of the FOIA Improvement Act by December 27, 2016. As it pertains to the Committee's Rules Regarding Availability of Information (Rules), the Committee is required to make a number of changes to comply with the FOIA Improvement Act's amendments. In addition, the Committee is making certain technical changes to the Rules to make the FOIA process easier for the public to navigate, to make certain provisions clearer (removing obsolete language), and inform the public of additional electronic methods for submitting FOIA requests and administrative appeals. In drafting the amendments to the Rules, the Committee consulted the “Guidance for Agency FOIA Regulations” issued by the U.S. Department of Justice's Office for Information Policy. The following is a section-by-section discussion of the changes.

This interim final rule amends the Committee's Rules, as described below.

The Committee has made a technical change to section 271.3(c) of its Rules to delete certain outdated information about publishing Committee information in the Federal Reserve Bulletin and to clarify that members of the public no longer need to contact the Publications Services section of the Federal Reserve Board (Board) to obtain certain information, because such information is already made publicly available on the Web sites of the Board or Federal Reserve Banks.

As required by the FOIA Improvement Act, the Committee is revising this section to clarify that the Committee's records, which are available for public inspection pursuant to 5 U.S.C. 552(a)(2), specifically include records requested three or more times, and that such records will be made available in electronic format. Thus, the Committee is revising section 271.4(a) and (b) of its Rules to specifically reference the availability of records described in 5 U.S.C. 552(a)(2) for public inspection in electronic format. The Committee also is adding language to paragraph (b)(1) of section 271.4 to direct members of the public to the Web site of the Committee's electronic reading room. Additionally, in paragraph (b)(1) of section 271.4, the Committee updated information on how to obtain access to the Committee's reading room at the Board's Freedom of Information Office to reflect updated security procedures and because the Board's Freedom of Information Office has moved from the location at 20th Street and Constitution Avenue NW. Lastly, because all the records described in 5 U.S.C. 552(a)(2) are now required to be made available in electronic format, which necessarily would also include records created on or after 1996, the Committee removed and reserved paragraph (c) of section 271.4.

The Committee is adding language to section 271.5 of its Rules to inform members of the public that they have the option to electronically submit FOIA requests using the Committee's online FOIA request form.

The Committee is making a technical correction to paragraph (c)(2) of section 271.6 of its Rules, to remove the reference to paragraph (i) and replace it with paragraph (h).

The FOIA, as revised by the FOIA Improvement Act, requires that, whenever an agency extends the 20-day time limit to respond to a FOIA request by more than ten working days due to “unusual circumstances,” then the agency must provide the requester with an opportunity to limit the request's scope and must notify the requester of the availability of dispute resolution services from the FOIA Public Liaison and the Office of Government Information Services (OGIS). Accordingly, the revisions to paragraph (d) of section 271.6 reflect these statutory requirements.

The Committee's amendments to paragraph (e) of section 271.6 conform to the amendments of the FOIA Improvement Act, which require that all determination letters advise requesters of the right to seek assistance from the Committee's FOIA Public Liaison and, in the case of an adverse determination, that requesters be informed of the right to seek dispute resolution services from the Committee's FOIA Public Liaison or OGIS.

In order to mirror the more expansive language of the FOIA and to reflect the Committee's current practice, the Committee also has made technical edits to paragraphs (e) and (h) of section 271.6 to clarify that a requester has the right to administratively appeal any “adverse determination” by the Secretary of the Committee (not just to appeal denials or partial denials of requests for records). The new language in paragraph (e) provides examples of the adverse determinations that may be appealed. In paragraph (h) of section 271.6, the Committee is adding language to inform members of the public that they also have the option to submit administrative appeals via email to the Secretary of the Committee and providing the email address to use for such administrative appeals.

Lastly, in paragraph (g) of section 271.6, the Committee has added language providing that a requester also may be sent copies of requested records in electronic format to the requester's email address. This technical change clarifies that requesters are not limited to receiving records by U.S. postal mail.

The FOIA Improvement Act restricts an agency's ability to charge search or duplication fees in certain circumstances. The Committee has added paragraph (i) to section 271.9 to reflect the statutory restrictions on charging fees.

The Committee invites comment on all aspects of the interim final rule.

Pursuant to the Administrative Procedure Act, 5 U.S.C. 553(b)(3)(B), notice and comment are not required prior to the issuance of a final rule if an agency, for good cause, finds that “notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.” As discussed above, this interim final rule implements the substantive amendments made by the FOIA Improvement Act. Congress provided federal agencies with no discretion in amending their disclosure rules to comply with the statutory amendments made to the FOIA, and required that such conforming amendments become effective by December 27, 2016. Given that the substantive amendments to the Committee's Rules are mandated by the FOIA Improvement Act, and that the other amendments made to the Committee's Rules are technical in nature, the Committee for good cause finds that prior notice and comment on this rulemaking is impracticable, unnecessary, or contrary to the public interest pursuant to 5 U.S.C. 553(b)(3)(B). For these same reasons, the Committee finds good cause to dispense with the delayed effective date otherwise required by 5 U.S.C. 553(d)(3). While the interim final rule is effective immediately upon publication, the Committee is inviting public comment on the interim final rule during a 60-day period and will consider all comments in developing a final rule.

The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., applies only to rules for which an agency publishes a general notice of proposed rulemaking. Because the Committee has determined for good cause that a notice of proposed rulemaking for this rule is unnecessary, the Regulatory Flexibility Act does not apply to this final rule. 5 U.S.C. 601(2).

For the reasons set forth in the SUPPLEMENTARY INFORMATION, the Federal Open Market Committee amends part 271 to 12 CFR chapter II to read as follows:

The members of the FFIEC are the Board of Governors of the Federal Reserve System (FRB), the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the State Liaison Committee (SLC) (Agencies).

The Council is publishing an interim final rule revising its regulations implementing the FOIA as necessitated by the passage of the FOIA Improvement Act of 2016 Public Law 114-185, 130 Stat. 538. This interim file rule serves to achieve the mandated changes required by December 31, 2016. The Council expects to conduct a review and further updating of its regulations in the next year based on recent guidance issued by the United States Department of Justice's Office of Information Policy on agency FOIA regulations.

The Council modifies its existing regulations to reflect a number of substantive and procedural amendments to the FOIA contained in the FOIA Improvement Act of 2016, Public Law 114-185, 130 Stat. 538.

In 12 CFR 1101.4(a), the Council revises the paragraph by providing public inspection in electronic format along with an index of records referred to in this section.

In 12 CFR 1101.4(b)(1), the Council adds language to the paragraph on exempt from disclosure to reference 5 U.S.C. 552(b) and where disclosure is prohibited by law except as provided in subparagraph (2) of this paragraph (b).

In 12 CFR 1101.4(b)(1)(v), the Council adds language to explain that the Council will not withhold records based on the deliberative process privilege if the records were created 25 years or more before the date of the records request.

In 12 CFR 1101.4(b)(2), the Council adds language that the Council will only withhold records requested under this paragraph (b) if disclosure has a foreseeable harm to the interests protected by an exemption listed in 5 U.S.C. 552(b), and that the Council will consider partial disclosures were possible by segregating and releasing the nonexempt portion of the record.

In 12 CFR 1101.4(b)(3)(v)(A) the Council adds language for defining when the Council can extend the time for response by 10 days in unusual circumstances as defined in 5 U.S.C. 552(a)(6)(B) and provide notice in writing to the requestor including the reasons for the delay and the expected date for determination. In addition the Council adds language explaining when the requestor would be provided the opportunity to modify the scope of their request and offering both the FFIEC FOIA Public Liaison and the Office of Government Information Services contact information for dispute resolution.

The Council adds a new 12 CFR 1101.4(b)(3)(v)(B)(3) with language that the requestor has the right to seek assistance from the FFIEC FOIA Public Liaison.

The Council reassigns the text from the previous 12 CFR 1101.4(b)(3)(v)(B)(3) to the new 12 CFR 1101.4(b)(3)(v)(B)(4) and details the procedures in the event that an adverse determination is made.

In 12 CFR 1101.4(b)(3)(v)(B)(4)(iv) the Council replaces the words “the denial” with the words “any adverse determination” and replaces the reference of “10 working days” with the new requirement of “90 days.”

The Council adds 12 CFR 1101.4(b)(3)(v)(B)(4) (v) to offer the requester the right to seek dispute resolution services from both the FFIEC FOIA Public Liaison and the Office of Government Information Services.

In 12 CFR 1101.4(b)(3)(vi) the Council replaces the phrase “If a request is denied in whole or in part, the requester may appeal” with the phrase “A requestor may appeal any adverse determination.” The Council also and replaces the reference of “10 working days” with the new requirement of “90 days” and replaces the word “denial” with the word “adverse.” The Council adds the option to file an appeal by email.

In 12 CFR 1101.4(b)(4)(i) the Council adds the words “in an electronic format” for defining how the Council will provide access to the requester for inspection when records requests are granted in whole or in part.

In 12 CFR 1101.4(b)(5)(ii) the Council revises the language to include that charging of fees for search and/or duplication is subject to the restrictions of paragraph (b)(5)(ii)(G) of this section.

In 12 CFR 1101.4(b)(5)(ii)(E) the Council replaces the words “Council personnel” with “the Council's FOIA Public Liaison.”

In 12 CFR 1101.4(b)(5)(ii)(G) the Council adds sections (1), (2)(i), (2)(ii), (2)(iii), and (2)(iv) to update and define the procedures for restrictions on assessing fees if the Council fails to comply with time limits specified, if the Council determines that unusual circumstances apply, and where a court determines that exceptional circumstances exist.

The Council deletes the duplicate entry for section 12 CFR 1101.4(b)(5)(iii) “Categories of requestors.”

In 12 CFR 1101.4(b)(5)(iii)(A) the Council replaces the words “which recover the” with the words “sufficient to recover the” and makes a typographical correction to replace “the” with “and.”

The Council deletes the duplicate entry for section 12 CFR 1101.4(b)(5)(iv) which was inadvertently left in the 2010 regulation update along with its replacement section. Therefore the second appearance of 12 CFR 1101.4(b)(5)(iv) is fully deleted.

The Council adds 12 CFR 1101.4(b)(5)(v) which was inadvertently removed from the 2010 regulation update in error. Therefore the full text from the previous regulation is reinstated as follows: “Fees for unsuccessful search and review. The Council may assess fees for time spent searching and reviewing, even if it fails to locate the records or if records located are determined to be exempt from disclosure.”

Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601, et seq.) (RFA), the Council certifies that the interim final rule will not have a significant economic impact on a substantial number of small entities. The interim final rule addresses only the procedures to be followed to request records of the Council. Small entities, like any other individual or entity, may request information from the Council pursuant to the FOIA that has not been generally made available to the public. Under the FOIA, agencies may recover only the direct costs of searching for, reviewing, and duplicating the records processed for certain categories of requesters. The Council's fee structure is in accordance with Department of Justice and Office of Management and Budget (OMB) guidelines, and is based upon the category of requester. Thus, fees assessed by the Council are nominal and will not have a significant economic impact on a substantial number of small entities within the meaning of the RFA.

The Council has determined that the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., does not apply because these rules do not contain any information collection requirements that require the approval of the OMB.

The Council has determined that the interim final rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, enacted as part of the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat. 2681).

OMB has determined that the rule is not a “major rule” within the meaning of the relevant sections of the Small Business Regulatory Enforcement Act of 1996 (SBREFA) (5 U.S.C. 801 et seq.). As required by SBREFA, the Council will file the appropriate reports with Congress and the General Accounting Office so that the rule may be reviewed.

Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The Council has sought to present the interim final rule in a simple, comprehensible, and straightforward manner.

For the reasons set forth in the preamble, the Council amends 12 CFR part 1101 as follows:

The final rule published on July 25, 2016, at 81 FR 48557, contained errors that must be corrected in order ensure consistency within the regulations and to avoid public uncertainty or confusion.

On October 19, 2016, SBA issued a correction pertaining to 8(a) joint venture profits. 81 FR 71981. As SBA explained, due to the change made to § 121.103(h), which eliminated the ability of a joint venture to be populated with individuals intended to perform contracts awarded to the joint venture, a conforming correction was needed to § 124.513(c), which references populated joint ventures. Specifically, § 124.513(c)(4) provided that in the case of a populated separate legal entity joint venture, 8(a) Participant(s) must receive profits from the joint venture commensurate with their ownership interests in the joint venture. Because SBA eliminated populated joint ventures, that provision was superfluous and was deleted. SBA's 8(a) joint venture rule now states that the 8(a) Participant(s) in a joint venture must receive profits from the joint venture commensurate with the work performed by the 8(a) Participant(s). 13 CFR 124.513(c)(4). This change was necessary because under the mentor protégé program, a protégé may perform as little as 40% of the total work performed by the joint venture in aggregate. It would not make sense to require a firm to receive 51% of the profits for doing only 40% of the work.

The same language that SBA corrected in the 8(a) regulations is currently in place for joint ventures under all small mentor protégé, Service-Disabled Veteran-Owned, Women-Owned and HUBZone small business programs. SBA's intent was for profits to be commensurate with the work performed by each member of the joint venture. These rules currently state that in the case of a separate legal entity, the firm must receive profits commensurate with their ownership interests in the joint venture, which is contrary to SBA's intent. Consequently, SBA is correcting §§ 125.8(b)(2)(iv), 125.18(b)(2)(iv), 126.616(c)(4) and 127.506(c)(4) to the make the rules consistent with 124.513(c)(4) and across all programs.

Accordingly, 13 CFR parts 125, 126, and 127 are corrected by making the following correcting amendments:

On April 12, 2016, at 81 FR 21493, the Federal Register published our notice of proposed rulemaking (NPRM), which proposed to amend 14 CFR part 39 by adding an AD that would apply to Airbus Helicopters Model AS355NP helicopters with an Arrius 1A1 fire extinguishing system installed. The NPRM proposed to require removing and correctly installing the fire extinguishing system pipes in accordance with Airbus Helicopters' service information and removing any placards on the instrument panel if installed. The proposed requirements were intended to correct the connections and to prevent the fire extinguishing system from discharging to the wrong engine compartment, failure of the fire extinguishing system to control a fire, and subsequent loss of control of the helicopter.

The NPRM was prompted by AD No. 2011-0192-E, dated October 4, 2011, issued by EASA, which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition for Eurocopter (now Airbus Helicopters) Model AS355NP helicopters with an Arrius 1A1 fire extinguishing system installed through production modification (mod) OP-3931.

EASA advises that during an inspection of the engine fire extinguishing system on an AS355NP helicopter, the left-hand (LH) fire extinguisher discharge system was found connected to the right-hand (RH) engine compartment and the RH discharge system was connected to the LH engine compartment. An investigation showed that this erroneous installation was inherent in Eurocopter production modification (mod) OP-3931. According to EASA, this condition, if not detected and corrected, could lead to the discharge of the fire extinguisher in the wrong engine compartment in the event of a fire. Pending the development of a modified extinguishing system, EASA Emergency AD No. 2011-0192-E required installing a placard warning the flight crew of the erroneous installation until the squibs on each fire extinguisher are exchanged.

After EASA issued Emergency AD No. 2011-0192-E, Airbus Helicopters developed a permanent modification of the discharge system to reconfigure the position of the squibs on each fire extinguisher to line up with the control buttons. EASA subsequently issued superseding EASA AD No. 2015-0181, dated August 31, 2015, to retain the requirements of its previous Emergency AD and require the modification of the engine fire extinguishing discharge system within 12 months.

After our NPRM (81 FR 21493, April 12, 2016) was published, we received two comments from Airbus Helicopters.

Airbus Helicopters requested that the proposed AD have mod 073990 as a terminating action and exempt Model AS355NP aircraft that are “post mod 073990” from the AD's requirements.

We agree with the comment but disagree that a change to the AD is necessary. The AD requires compliance with the service information that Airbus Helicopters has identified as mod 073990. A Model AS355NP helicopter in a “post mod 073990” configuration has complied with the service information, and therefore has also previously complied with the required actions of the AD under paragraph (d). We have added a note to the required actions to specify that the service information is the equivalent of Mod 073990.

Airbus Helicopters also requested that we clarify that the AD requires removing and installing certain pipes and not removing and installing the entire fire extinguishing system.

We agree and revised the Required Actions paragraph to clarify that compliance means removing and installing the pipes.

These helicopters have been approved by the aviation authority of France and are approved for operation in the United States. Pursuant to our bilateral agreement with France, EASA, its technical representative, has notified us of the unsafe condition described in the EASA AD. We are issuing this AD because we evaluated all information provided by EASA, reviewed the relevant information, considered the comments received, and determined the unsafe condition exists and is likely to exist or develop on other helicopters of these same type designs and that air safety and the public interest require adopting the AD requirements as proposed with the changes described previously. These changes are consistent with the intent of the proposals in the NPRM (81 FR 21493, April 12, 2016) and will not increase the economic burden on any operator nor increase the scope of this AD.

The EASA AD requires installing a placard on the instrument panel to warn the flight crew of the erroneous installation until the squibs on each fire extinguisher are exchanged, and then, within 12 months, removing and re-installing certain pipes in the fire extinguishing system to position the squibs in line with the control buttons. This AD does not require installation of the placards or the temporary exchange of the squibs. Also, this AD requires removing and re-installing the fire extinguisher system pipes within 600 hours time-in-service or at the next annual inspection, whichever occurs first.

We reviewed Airbus Helicopters Alert Service Bulletin No. AS355-26.00.10, Revision 0, dated July 2, 2015 (ASB AS355-26.00.10). ASB AS355-26.00.10 provides procedures for removing the fire extinguishing system's pipes and re-installing them in a configuration where the squibs match the positioning of the fire extinguisher discharge heads. ASB AS355-26.00.10 also specifies removing any previously-affixed placard on the instrument panel and installing new discharge system pipes. Helicopters with mod 073990 installed have already complied with ASB AS355-26.00.10.

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 also reviewed Eurocopter Emergency Alert Service Bulletin No. 26.00.09, Revision 0, dated September 15, 2011 (EASB 26.00.09), issued prior to the permanent modification developed by Airbus Helicopters. EASB 26.00.09 provided procedures for interchanging the squibs on each fire extinguisher. Until this was accomplished, EASB 26.00.09 specified affixing a label on the instrument panel to make the flight crew aware of the crossed connection.

We estimate that this AD affects 2 helicopters of U.S. Registry and that labor costs average $85 per work hour. We expect that removing and installing the fire extinguishing system requires 24 work hours and required parts cost $6,367. Based on these estimates, we expect a total cost of $8,407 per helicopter and $16,814 for the U.S. fleet.

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 helicopters identified in this rulemaking action.

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

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

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

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

(3) Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; 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.

We prepared an economic evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

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

Discussion

On March 25, 2016, at 81 FR 16100, the Federal Register published our notice of proposed rulemaking (NPRM), which proposed to amend 14 CFR part 39 by adding an AD that would apply to Airbus Helicopters Model BO-105LS A-3 helicopters with a TT strap part number (P/N) 2604067 or P/N 117-14110 installed. The NPRM proposed to require inspecting the helicopter records to determine if there is a life limit for the TT straps installed in the helicopter lifting system, establishing a life limit if none exists, and replacing each TT strap that has met or exceeded its life limit. The proposed requirements were intended to prevent failure of a TT strap and subsequent loss of control of a helicopter.

The NPRM was prompted by AD No. 2015-0042, dated March 9, 2015, issued by EASA, which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition for the Airbus Helicopters Model BO105 LS A-3 helicopters. EASA advises that life limits have been introduced for TT strap P/N 2604067 and P/N 117-14110 installed on the helicopter lifting system. During a revision of the Airworthiness Limitations section of the Model BO105LS A-3 maintenance manual, the life limit for the TT strap was inadvertently deleted. Accordingly, EASA issued AD No. 2015-0042 to correct this error. EASA AD No. 2015-0042 requires replacing TT straps upon reaching their life limit and entering the life limit into the aircraft maintenance manual. EASA states that failure to comply with the life limit could result in an unsafe condition.

After our NPRM (81 FR 16100, March 25, 2016) was published, we received comments from one commenter.

The commenter supported the NPRM but asked why the FAA proposed a drastically shorter compliance time of 20 hours time-in-service (TIS) instead of the two-month compliance time that EASA requires. We disagree that the compliance time in this AD is drastically shorter. We determined that, because of the average utilization of this model helicopter, 20 hours TIS is roughly equivalent to EASA's two-month compliance time.

These helicopters have been approved by the aviation authority of Germany and are approved for operation in the United States. Pursuant to our bilateral agreement with Germany, EASA, its technical representative, has notified us of the unsafe condition described in the EASA AD. We are issuing this AD because we evaluated all information provided by EASA, reviewed the relevant information, considered the comment received, and determined the unsafe condition exists and is likely to exist or develop on other helicopters of these same type designs and that air safety and the public interest require adopting the AD requirements as proposed.

This AD requires compliance within 20 hours TIS. The EASA AD allows two months to calculate the flight cycles or calendar time of each TT strap.

Airbus Helicopters issued Alert Service Bulletin ASB BO105LS-10A-013, Revision 0, dated March 9, 2015 (ASB). The ASB specifies adding a life limit for the TT strap P/N 2604067 or 117-14110 of 25,000 flights or 10 years, whichever occurs first, in the list of life-limited parts and corresponding log cards. The ASB also states TT straps that have exceeded the retirement time must be replaced and that only TT straps that have not exceeded the retirement time may be installed.

We estimate that this AD affects 8 helicopters of U.S. Registry. Labor costs are estimated at $85 per work hour. We estimate that it takes 2 work hours to inspect and revise the Airworthiness Limitations section and to calculate and record a life limit for the TT strap for a total cost of $170 per helicopter and $1,360 for the fleet. If a TT strap is replaced, we estimate it takes 8 work hours and $16,617 for required parts for a total cost of $17,297 per helicopter per TT strap.

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 helicopters identified in this rulemaking action.

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

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

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

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

(3) Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; 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.

We prepared an economic evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

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

On March 11, 2016, at 81 FR 12838, the Federal Register published our notice of proposed rulemaking (NPRM), which proposed to amend 14 CFR part 39 by adding an AD that would apply to certain serial-numbered Agusta Model AB139 and AW139 helicopters. The NPRM proposed to require, within 50 hours time-in-service (TIS), performing operational tests of the Number 1 and Number 2 hydraulic systems power control modules (PCMs), the tail shut-off valve, the PCM1 and PCM2 flight control shut-off valves, and the emergency landing gear shut-off valve for correct functionality. Depending on the results of the operational checks, the NPRM proposed to require replacing a PCM, the tail shut-off valve, a flight control shut-off valve, the number 2 hydraulic control panel, the number 1 hydraulic module, the number 1 or number 2 PCM pressure switch, or repairing the electrical wiring. The proposed requirements were intended to prevent loss of hydraulic power to the flight controls and subsequent loss of control of the helicopter.

The NPRM was prompted by AD No. 2011-0207, dated October 20, 2011 (AD No. 2011-0207), issued by EASA, which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition for certain serial-numbered Agusta Model AB139 and AW139 helicopters. EASA advises that an accident involving a Model AW139 helicopter caused the tail rotor (T/R), the T/R gearbox, and part of the fin to detach from the aircraft, rupturing the hydraulic lines and draining all of the hydraulic fluid. According to EASA, an assessment of the helicopter's hydraulic systems following the accident revealed that an operational check of the hydraulic systems is necessary to ensure its functionality. EASA advises that this condition, if not corrected, could lead, in the case of multiple failures, to loss of hydraulic power and subsequent loss of control of the helicopter. To address this, EASA AD No. 2011-0207 requires, within 50 flight hours or 2 months, operational checks of the power control modules and shutoff valves and reporting the results to the manufacturer.

After our NPRM (81 FR 12838, March 11, 2016) was published, we received comments from one commenter.

The commenter requested we not adopt the proposed AD, as it is unnecessary. The commenter stated that following the release of EASA AD No. 2011-0207 and Agusta Bollettino Tecnico No. 139-269, dated September 30, 2011 (BT 139-269), they already have a 600 hour/12 month inspection and operational check of the hydraulic systems as part of their maintenance program that covers all of the proposed actions in the NPRM. Finally, the commenter stated that the proposed AD would not change any of their maintenance procedures, but it would add an additional burden of required paper work for the same results.

We disagree. EASA AD No. 2011-0207 is not mandatory for U.S. operators. Additionally, while an operator may incorporate the procedures described in BT 139-269 into its maintenance program, not all operators are required to do so. In order for the corrective actions in BT 139-269 to become mandatory, and to correct the unsafe condition identified in the NPRM, the FAA must issue an AD.

These helicopters have been approved by the aviation authority of Italy and are approved for operation in the United States. Pursuant to our bilateral agreement with Italy, EASA, its technical representative, has notified us of the unsafe condition described in the EASA AD. We are issuing this AD because we evaluated all information provided by EASA, reviewed the relevant information, considered the comment received, and determined the unsafe condition exists and is likely to exist or develop on other helicopters of these same type designs and that air safety and the public interest require adopting the AD requirements as proposed.

The EASA AD requires reporting the results of the operational checks to Agusta, while this AD does not. The EASA AD also requires compliance within 50 flight-hours or 2 months, while this AD requires compliance within 50 hours TIS.

We reviewed BT 139-269 for Model AB139 and AW139 helicopters. BT 139-269 contains procedures for conducting operational checks of both hydraulic systems to confirm correct functionality.

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 this AD will affect 102 helicopters of U.S. Registry.

Based on an average labor rate of $85 per hour, we estimate that operators may incur the following costs in order to comply with this AD. Performing the operational checks of the hydraulic systems requires about 2 work-hours for a total cost per helicopter of $170 and a total cost to U.S. operators of $17,340.

If required, replacing a PCM will require about 3 work-hours and required parts will cost about $87,136, for a cost per helicopter of $87,391.

If required, replacing a tail or flight control shut-off valve will require about 2 work-hours, and required parts will cost about $7,512, for a cost per helicopter of $7,682. If required, replacing the number 2 hydraulic control panel will require about 2 work-hours, and required parts will cost about $8,165, for a cost per helicopter of $8,335.

If required, replacing the number 1 hydraulic module will require about 4 work-hours, and required parts will cost about $87,137, for a cost per helicopter of $87,477.

If required, replacing a PCM pressure switch will require about 2 work-hours, and required parts will cost about $6,974, for a cost per helicopter of $7,144.

If required, repairing the electrical wiring will require about 2 work-hours, and required parts will cost about $45, for a cost per helicopter of $215.

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 helicopters identified in this rulemaking action.

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

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

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

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

(3) Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; 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.

We prepared an economic evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

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

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain The Boeing Company Model 747-400, 747-400D, and 747-400F series airplanes; Model 757 airplanes; and Model 767-200, -300, -300F, and -400ER series airplanes. The NPRM published in the Federal Register on December 23, 2015 (80 FR 79735) (“the NPRM”). The NPRM was prompted by reports of uncommanded autopilot engagement events resulting in incorrect stabilizer trim adjustment during takeoff. The NPRM proposed to require, depending on the model/configuration for Model 747 airplanes, installing an on-ground stabilizer autotrim inhibit system, doing routine functional testing of the system, and doing corrective actions if necessary; for Model 757 airplanes and Model 767 airplanes, installing relays and related wiring to open and close the FCC analog output that controls the stabilizer trim adjustment, doing routine functional testing of the on-ground auto stabilizer trim inhibit system, and doing corrective actions if necessary; and for Model 767-300, and -300F series airplanes, installing new OPS into the FCCs. We are issuing this AD to prevent stabilizer mistrim, which could result in a high-speed rejected takeoff and runway overrun, or reduced controllability of the airplane after takeoff due to insufficient pitch control.

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

The Airline Pilots Association, International stated that it fully supports the intent of the NPRM.

United Parcel Service (UPS) requested that the NPRM be withdrawn until the actual root cause of the unsafe condition can be determined and a validated and confirmed solution is developed.

FedEx Express (FedEx) requested that we withdraw the NPRM. FedEx stated that the burden of the actions proposed in the NPRM is not justified based on data presented in Boeing Fleet Team Digest 757-FTD-22-12001 or its operational experience. FedEx believes this is an extremely isolated and unlikely anomaly on the Model 757 fleet. FedEx stated that it operates over 100 Model 757 aircraft and has completed over 210,000 flight cycles with no reports of uncommanded autopilot engagement.

We disagree with the commenters' request to withdraw the NPRM. The quantitative and qualitative risks analyzed for this identified unsafe condition present an unacceptable risk that must be addressed on both passenger and freighter models. The manufacturer also considers the condition a safety issue and has developed an on-ground stabilizer autotrim inhibit system that addresses the unsafe condition. We have determined that it is necessary to proceed with issuance of this AD.

Boeing requested that we revise the Discussion section of the NPRM. Boeing acknowledged that the root cause is unknown, but requested that we revise the speculation that “the erroneous autopilot engage request is believed to have come from the mode control panel (MCP) and to have been caused by contamination within the MCP.” Boeing requested that we instead indicate that possible failures in the autopilot flight director system can cause an uncommanded engagement of the autopilot. Boeing stated that the revised statement would be less speculative.

We partially agree with the commenter's request. We agree that the revised statement would be less speculative. However, since the pertinent part of the Discussion section is not repeated in this final rule, no change is necessary to this final rule.

One commenter, Geoffrey Barrance, requested that we take immediate action to require examination for contamination of all MCPs on all affected airplanes. Mr. Barrance stated that the exposure to the problem will persist until all (or some critical part) of the actions specified by the NPRM are completed.

We do not agree with the commenter's request. As stated above, the manufacturer and the FAA agree that pointing to MCP contamination as the root cause is speculative. We concur with the manufacturer's conclusion that the on-ground stabilizer autotrim inhibit system of this AD mitigates possible failures in the autopilot flight director system. The compliance times specified in this AD are established to ensure an acceptable level of risk. We have not changed this final rule in this regard.

Boeing requested that we revise the SUMMARY of the NPRM to describe the specific Model 767 airplanes identified in the applicability of this AD, rather than using the term “Model 767 airplanes.” Boeing stated that this will clarify that the applicability will not apply to future Model 767 series airplanes, such as the Model 767-2C, which will be designed to inhibit autopilot engagement on the ground with the flaps down, preventing the unsafe condition addressed by the NPRM.

We agree with the commenter's request. In the SUMMARY of this final rule we refer to “certain” airplanes, and we identify the subgroup of Model 767 airplanes by referring to the effectivity of the service information in paragraph (c) of this AD. We are not including future production airplanes in the applicability of this AD.

United Airlines (UAL) requested that we revise the NPRM to specify using Boeing Special Attention Service Bulletin 747-22-2256, Revision 1, dated January 6, 2016 (“SASB 747-22-2256 R1”), and that we give credit for Boeing Special Attention Service Bulletin 747-22-2256, dated March 6, 2015.

We agree with UAL's request. We have revised paragraphs (c)(1) and (g) of this AD to specify using SASB 747-22-2256 R1, as an appropriate source of service information for accomplishing the required actions in these paragraphs. SASB 747-22-2256 R1 specifies doing functional testing of the automatic stabilizer trim inhibit system. Since paragraph (g) of the proposed AD specified doing the functional testing of the automatic stabilizer trim inhibit, there is no increase in the economic burden on any operator or increase of the scope of this AD. We added credit for using Boeing Special Attention Service Bulletin 747-22-2256, dated March 6, 2015, to paragraph (k) of this AD.

EVA Airways (EVA) requested that we consider the complexity of Boeing Special Attention Service Bulletin 747-22-2256, dated March 6, 2015, and noted that Boeing Information Notice 747-22-2256 IN 02, dated June 10, 2015, has been issued to revise Boeing Special Attention Service Bulletin 747-22-2256, dated March 6, 2015.

We agree with the commenter's request. As previously stated, we have revised this AD to specify SASB 747-22-2256 R1 as an appropriate source of service information. This service information has incorporated the information in Boeing Information Notice 747-22-2256 IN 02, dated June 10, 2015. No further change is necessary in this regard in this final rule.

Boeing requested that we delete the “Differences Between this Proposed AD and the Service Information” section in the NPRM, which stated that, for Model 747 airplanes, the proposed AD would require doing post-modification routine functional testing of the on-ground stabilizer auto trim inhibit system, and corrective actions if necessary, at intervals not to exceed 1,500 flight hours. Boeing stated that SASB 747-22-2256 R1 now includes the functional testing of the on-ground stabilizer auto trim inhibit system.

We agree with Boeing that SASB 747-22-2256 R1 specifies doing the functional testing of the on-ground auto stabilizer trim inhibit system specified in “Differences Between this Proposed AD and the Service Information” in the NPRM, and in paragraph (i) of this AD. However, the “Differences Between this Proposed AD and the Service Information” section is not repeated in this final rule. We have not changed this final rule in this regard.

Aviation Partners Boeing (APB) stated that the installation of winglets per Supplemental Type Certificate (STC) ST01518SE does not affect the accomplishment of the manufacturer's service instructions.

We agree with APB that STC ST01518SE does not affect the accomplishment of the manufacturer's service instructions for Model 757 airplanes. Therefore, the installation of STC ST01518SE does not affect the ability to accomplish the actions required by this AD for Model 757 airplanes. Therefore, we have not changed this AD in this regard.

All Nippon Airways (ANA), American Airlines (AA), APB, Boeing, Thompson Airways, UAL, and UPS requested that we revise the NPRM to address the Model 767 airplanes equipped with winglets installed under APB STC ST01920SE. The commenters explained that the Model 767 equipped with APB winglets have a different compliance time and modification specified in APB Service Bulletin AP767-22-005, Revision 1, dated June 16, 2015 (“SB AP767-22-005 R1”), than those that have not been modified by the APB STC.

We agree with the commenters' requests to revise this AD to address Model 767 airplanes equipped with APB winglets. The Model 767-300 and -300F series airplanes identified in Boeing Special Attention Service Bulletin 767-22-0143, Revision 1, dated July 6, 2015 (“SASB 767-22-0143 R1”), that have been modified with the installation of APB winglets are identified in SB AP767-22-005 R1.

We have revised applicability paragraph (c)(3) of this AD to exclude Model 767-300 and -300F series airplanes that are identified in SB AP767-22-005 R1. We have added a new paragraph (c)(5) to this AD to include Model 767-300 and -300F series airplanes with winglets installed per STC ST01920SE having part number (P/N) 2276-COL-AF2-03 installed, as identified in APB Service Bulletin AP767-22-005, dated May 8, 2015; or SB AP767-22-005 R1.

We have redesignated paragraph (j) of the proposed AD as paragraph (j)(1) of this AD and added paragraph (j)(2) to this AD to require the actions specified in SB AP767-22-005 R1, for Model 767 airplanes that are identified in paragraph (c)(5) of this AD. These actions were previously proposed in the NPRM; therefore, there is no increase in scope of the requirements of this AD and no supplemental comment period is necessary. We have also added paragraph (j)(3) to this AD which states that, for airplanes identified in paragraph (c)(5) of this AD, no additional action is required by this AD.

AIRDO Company, ANA, Boeing, British Airways, Thomson Airways, and UAL requested that we revise the NPRM to specify using Boeing Special Attention Service Bulletin 757-22-0096, Revision 1, dated February 8, 2016 (“SASB 757-22-0096 R1”); Boeing Special Attention Service Bulletin 767-22-0143, Revision 2, dated May 25, 2016 (“SASB 767-22-0143 R2”); certain Boeing Information Notices that provide revisions to the service information; and to provide credit for actions using the previous issues of service information.

We agree with the commenters' requests to reference the revised service information, which incorporates the revisions in the Boeing Information Notices, and to provide credit. This service information incorporates small editorial changes and requires no additional work on airplanes that have had prior revisions of this service information accomplished on them. We have revised paragraphs (c)(2) and (h) of this AD to reference SASB 757-22-0096 R1. We have revised paragraphs (c)(3) and (i) of this AD to reference SASB 767-22-0143 R2. In paragraph (k) of this AD, we have added credit for previous actions using Boeing Special Attention Service Bulletin 757-22-0096, dated March 23, 2015; and Boeing Special Attention Service Bulletin 767-22-0143, Revision 1, dated July 6, 2015.

AAL requested that we approve SB AP767-22-005 R1, or later FAA-approved revisions, as an AMOC to the NPRM requirements. AAL also requested that we approve later FAA-approved revisions to the service information in the NPRM.

We do not agree with the commenter's requests. As stated previously, we have included SB AP767-22-005 R1 as a source of service information in this AD. AMOCs provide an alternative method of compliance to the methods required to be used in the associated AD. An AMOC is issued only after an AD has been issued and only after data are provided to show that the proposed alternative adequately addresses the unsafe condition.

Referring to specific service information in an AD and using the phrase “or later FAA-approved revisions” violates Office of the Federal Register regulations for approving materials that are incorporated by reference. However, operators may request approval to use a later revision of the referenced service information as an AMOC, under the provisions of paragraph (l) of this AD. We have not changed this AD in this regard.

AAL, AIRDO Company, FedEx, British Airways, EVA Airways, Thomson Airways, and UAL requested that we revise the NPRM compliance times. The revision requests for the Model 747 airplanes 24-month compliance time range from 48 months to 60 months to the next scheduled heavy airplane check. The revision requests for the Model 757 airplanes 24-month compliance time range from 36 months to 48 months. The revision requests for the Model 767 airplanes 24-month compliance time is 36 months. UAL requested that operators installing the APB winglets in the near future, have 24 months instead of 16 months after the effective date of the AD to comply with the AD requirements. The commenters requested the compliance time changes to accommodate maintenance schedules, parts availability, and airplane down times.

We do not agree with the commenters' compliance time requests. In developing appropriate compliance times, we considered the safety implications, normal maintenance schedules for timely accomplishment of the modification, and parts availability. In light of these items, we have determined that the compliance times, as proposed, represent the maximum interval of time allowable for the affected airplanes to continue to safely operate before the modification is done. In addition, since maintenance schedules vary among operators, there would be no assurance that the airplane would be modified during that maximum interval. The manufacturer has concurred with the compliance times as proposed. We have not changed this final rule in this regard. However, under the provisions of paragraph (l) of this AD, we will consider requests for approval of an extension of the compliance time if sufficient data are submitted to substantiate that the new compliance time would provide an acceptable level of safety. We have not changed this final rule in this regard.

Mr. Geoffrey Barrance requested that we do a risk assessment and probability safety analysis in setting the compliance time. Mr. Barrance stated that steps must be immediately taken to assess whether the specified compliance time is adequate to keep the fleet risk within proper limits.

We agree with the commenter. We have done an assessment of the risk posed by the identified unsafe condition. The compliance times following the effective date of this AD were determined to be appropriate. The manufacturer has concurred with the compliance times as proposed. No change to this final rule is needed in this regard.

Mr. Geoffrey Barrance requested that, until the modification of any specific airframe has been accomplished, we include an additional step in the pre-flight checklist to check that the stabilizer is in the correct position.

We agree that this step is necessary. However, the existing pre-flight checklist already requires checking the stabilizer position prior to departure. Therefore, no change is needed to this AD in this regard.

UAL requested that we revise the cost estimate to reflect the additional financial burden imposed on the operator in order to comply with the NPRM. UAL stated that the compliance times do not coincide with UAL's maintenance intervals for heavy aircraft checks. UAL explained that, as a result, it will need to take a number of airplanes out of service for several days.

We do not agree with the commenter's request. In establishing the requirements of all ADs, we consider the cost impact to operators for parts and labor costs. We attempt to set compliance times that generally coincide with operators' maintenance schedules where possible in consideration of the safety risk. However, because operators' schedules vary substantially, we cannot accommodate every operator's optimal scheduling in each AD. Each AD has an allowable provision for individual operators to obtain approval for extensions of compliance times, based on a showing that the extension provides an acceptable level of safety. We have not changed this AD regarding this issue.

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 the following service information. These documents are distinct since they apply to different airplane models in different configurations.

• SB AP767-22-005 R1. This service information describes procedures for modifying relays and wiring to open and close the FCC analog output that controls the stabilizer trim adjustment, and doing functional testing.

• SASB 747-22-2256 R1. This service information describes procedures for installing an on-ground stabilizer autotrim inhibit system, and doing functional testing.

• SASB 757-22-0096 R1. This service information describes procedures for modifying relays and wiring to open and close the FCC analog output that controls the stabilizer trim adjustment, and doing functional testing.

• SASB 767-22-0143 R2. This service information describes procedures for modifying relays and wiring to open and close the FCC analog output that controls the stabilizer trim adjustment, and doing functional testing.

• Boeing Special Attention Service Bulletin 767-22-0146, Revision 1, dated June 25, 2015. This service information describes procedures for installing new OPS into the FCCs.

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 1,220 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

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

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.

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.

On April 11, 2016, at 81 FR 21284, the Federal Register published our notice of proposed rulemaking (NPRM), which proposed to amend 14 CFR part 39 by adding an AD that would apply to Airbus Helicopters Model EC130B4, EC130T2, AS350B, AS350B1, AS350B2, AS350B3, AS350BA, AS350C, AS350D, AS350D1, AS355E, AS355F, AS355F1, AS355F2, AS355N, and AS355NP helicopters with a cross-bar part number (P/N) 350A38-1040-20 or P/N 350A38-1040-00 installed. The NPRM proposed to require repetitively inspecting each cross-bar for a crack and replacing any cracked cross-bar before further flight. The proposed requirements were intended to detect cracks in a cross-bar and prevent failure of the cross-bar and subsequent loss of control of the helicopter.

The NPRM was prompted by AD No. 2015-0094, dated May 29, 2015, issued by EASA, which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition for Airbus Helicopters Model AS350B, AS350BA, AS350BB, AS350B1, AS350B2, AS350B3, AS350D, AS355E, AS355F, AS355F1, AS355F2, AS355N, AS355NP, EC130B4, and EC130T2 helicopters. EASA advises that two cases of cracks in a cross-bar were reported on AS350B3 helicopters. The cracks were found at the transmission deck attachment fitting holes in helicopters equipped with a cargo hook that had completed missions with a significant number of torque cycles. Because of common design features, cracks may also occur on other Model AS350-series, AS355-series, and EC130-series helicopters. EASA advises that crack growth may lead to failure of one of the four yokes and significantly increase stress loads on the remaining yokes. This condition, if not detected or corrected, could lead to cracks on the remaining yokes and increased load on the cross-bar, possibly resulting in cross-bar failure and consequently loss of the helicopter. To correct this condition, EASA AD No. 2015-0094 requires repetitive cross-bar inspections and, depending on the findings, replacing the cross-bar.

One commenter submitted comments supporting the NPRM (81 FR 21284, April 11, 2016).

These helicopters have been approved by the aviation authority of France and are approved for operation in the United States. Pursuant to our bilateral agreement with France, EASA, its technical representative, has notified us of the unsafe condition described in the EASA AD. We are issuing this AD because we evaluated all information provided by EASA and determined the unsafe condition exists and is likely to exist or develop on other helicopters of these same type designs and that air safety and the public interest require adopting the AD requirements as proposed.

The EASA AD applies to Airbus Helicopters Model AS350BB helicopters. This AD does not apply to the Model AS350BB because it does not have an FAA type certificate. However, this AD applies to Model AS350C and AS350D1 helicopters, while the EASA AD does not. The EASA AD requires a florescent dye-penetrant inspection if the visual inspection of the bi-directional suspension cross-bar causes doubts. This AD does not require a florescent dye-penetrant inspection. The EASA AD requires returning the damaged bi-directional suspension cross-bar to Airbus Helicopters, and this AD does not.

Airbus Helicopters has issued Alert Service Bulletin (ASB) No. EC130-05A021 for Model EC130B4 helicopters; ASB No. EC130-05A022 for Model EC130T2 helicopters; ASB No. AS350-05.00.84 for Model AS350B, AS350B1, AS350B2, AS350B3, AS350BA, AS350BB, AS350D, and military Model AS350L1 helicopters; and ASB No. 355-05.00.73 for Model AS355E, AS355F, AS355F1, AS355F2, AS355N, and AS355 NP helicopters (ASBs). All of the ASBs are Revision 0 and dated May 21, 2015. The ASBs specify visually inspecting the cross-bar. If there is any doubt after the visual inspection, the ASBs call for a dye-penetrant inspection to make sure there are no cracks. If a crack is detected, the ASBs call for replacing the cross-bar before further flight and sending the damaged cross-bar to Airbus Helicopters.

We estimate that this AD affects 1,132 helicopters of U.S. Registry and that labor costs average $85 a work-hour. Based on these estimates, we expect the following costs:

• Visually inspecting the cross-bar requires 16.5 work-hours for a labor cost of about $1,403. No parts are needed so that the cost for the U.S. fleet totals $1,588,196 per inspection cycle.

• Replacing the cross-bar costs $1,630 for parts. No additional labor costs are needed.

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 helicopters identified in this rulemaking action.

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

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

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

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

(3) Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; 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.

We prepared an economic evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

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

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain The Boeing Company Model 767-200 and -300 series airplanes. The NPRM published in the Federal Register on August 30, 2016 (81 FR 59549) (“the NPRM”). The NPRM was prompted by a report of a fire in the bilge area of the cargo compartment that burned through the insulation blankets that were intended to prevent smoke from migrating behind the cargo compartment sidewall liners and upward into the main cabin. The NPRM proposed to require replacing the cargo compartment insulation blankets on the left and right sides with new insulation blankets that incorporate fire stops. We are issuing this AD to prevent a fire in the bilge area of the cargo compartment burning through the insulation blankets and consequently allowing smoke to migrate behind the cargo compartment sidewall liners and upward into the main cabin.

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.

Boeing and United Airlines expressed support for the NPRM.

Aviation Partners Boeing stated that the installation of winglets per Supplemental Type Certificate (STC) ST01920SE does not affect the accomplishment of the manufacturer's service instructions.

We agree with the commenter that STC ST01920SE does not affect the accomplishment of the manufacturer's service instructions. Therefore, the installation of STC ST01920SE does not affect the ability to accomplish the actions required by this AD. We have not changed this AD in this regard.

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

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

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

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

We reviewed Boeing Special Attention Service Bulletin 767-25-0550, dated January 30, 2015. The service information describes procedures for replacing the cargo compartment insulation blankets on the left and right sides between stringers 29 and 33 with new insulation blankets that incorporate fire stops. 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 26 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

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

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

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

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

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

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

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

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

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

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

I. Executive Summary

This action continues the prohibition against certain flight operations in the Damascus (OSTT) Flight Information Region (FIR) by all U.S. air carriers; U.S. commercial operators; persons exercising the privileges of a U.S. airman certificate, except when such persons are operating a U.S.-registered aircraft for a foreign air carrier; and operators of U.S.-registered civil aircraft, except when such operators are foreign air carriers. The FAA finds this action necessary to address a continuing hazard to persons and aircraft engaged in such flight operations. This rule extends SFAR No. 114, § 91.1609, (SFAR 114) from December 30, 2016, to December 30, 2018.

The FAA is responsible for the safety of flight in the United States and for the safety of U.S. civil operators, U.S.-registered civil aircraft, and U.S.-certificated airmen throughout the world. The FAA's authority to issue rules on aviation safety is found in title 49 of the U.S. Code. Subtitle I, section 106(f), describes the authority of the FAA Administrator. Subtitle VII of title 49, Aviation Programs, describes in more detail the scope of the agency's authority. Section 40101(d)(1) provides that the Administrator shall consider in the public interest, among other matters, assigning, maintaining, and enhancing safety and security as the highest priorities in air commerce. Section 40105(b)(1)(A) requires the Administrator to exercise his authority consistently with the obligations of the U.S. Government under international agreements.

This SFAR is promulgated under the authority described in Title 49, Subtitle VII, Part A, Subpart III, section 44701, General requirements. Under that section, the FAA is charged broadly with promoting safe flight of civil aircraft in air commerce by prescribing, among other things, regulations and minimum standards for practices, methods, and procedures that the Administrator finds necessary for safety in air commerce and national security. This regulation is within the scope of that authority because it continues the prohibition against certain flight operations in the OSTT FIR due to the hazard to persons and aircraft engaged in such flight operations that is described in the Background section of this final rule.

Section 553(b)(3)(B) of title 5, U.S. Code, authorizes agencies to dispense with notice and comment procedures for rules when the agency for “good cause” finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” In this instance, the FAA finds that notice and public comment to this final rule, as well as any delay in the effective date of this rule, are contrary to the public interest due to the immediate need to address the continuing hazard to civil aviation that exists in the Damascus (OSTT) FIR, as described in the Background section of this final rule.

The significant threat identified when the FAA first published SFAR 114 to civil aviation operating in the Damascus (OSTT) FIR continues due to the presence of anti-aircraft weapons controlled by non-state actors, threats made by the extremist groups, de-confliction concerns, and ongoing military fighting. Flight safety risks associated with a lack of de-confliction between various military forces conducting operations in Syria and civil aviation, as identified in the original prohibition, also continue unabated.

Due to the presence of foreign national military forces and non-state actors operating in Syria, the FAA has determined that safety of flight continues to be a serious safety concern for U.S. civil aviation flight operations in the Damascus (OSTT) FIR. There are multiple extremist groups, known to be equipped with a variety of anti-aircraft weapons including radar-guided surface-to-air missiles (SAMs) and man-portable air defense systems (MANPADs), which have the capability to threaten civil aircraft. Syrian and Russian military aircraft have been shot down during the course of the current conflict and these groups have previously warned civilian air carriers against operating within (or providing service to) Syria.

In 2015 and in support of the Asad regime, Russia began conducting military operations using fighter and bomber aircraft and employed advanced cruise missiles. These operations further increase the risk to civilian flight operations within the Damascus (OSTT) FIR.

The FAA continues to assess the situation in the Damascus (OSTT) FIR and believes there is a significant threat to civil aviation operating in the Damascus (OSTT) FIR at all altitudes due to the presence of anti-aircraft weapons controlled by non-state actors, threats made by the extremist groups, de-confliction concerns, and ongoing military fighting.

Due to the continuation of the previously described hazards to U.S. civil aviation operations, the FAA is extending the expiration date of SFAR No. 114, § 91.1609, from December 30, 2016 to December 30, 2018, to maintain the prohibition on flight operations in the Damascus (OSTT) FIR by all U.S. air carriers; U.S. commercial operators; persons exercising the privileges of a U.S. airman certificate, except when such persons are operating a U.S.-registered aircraft for a foreign air carrier; and operators of U.S.-registered civil aircraft, except when such operators are foreign air carriers.

The FAA will continue to actively monitor the situation and, based on evaluations, determine the extent U.S. civil operators may be able to safely operate in the Damascus (OSTT) FIR in the future. Amendments to this SFAR No. 114, § 91.1609, may be appropriate if the risk to aviation safety and security changes. Thus, the FAA may amend or rescind this SFAR No. 114, § 91.1609, as necessary prior to its expiration date.

Because the circumstances described herein warrant a continuation of the flight restrictions imposed by SFAR 114, I find that notice and public comment under 5 U.S.C. 553(b)(3)(B) are impracticable and contrary to the public interest. I also find that this action is fully consistent with the obligations under 49 U.S.C. 40105 to ensure that I exercise my duties consistently with the obligations of the United States under international agreements.

Changes to Federal regulations must undergo several economic analyses. First, Executive Orders 12866 and 13563 direct that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96-354), as codified in 5 U.S.C. 603 et seq., requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (Pub. L. 96-39), as amended, 19 U.S.C. Chapter 13, prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, the Trade Agreements Act requires agencies to consider international standards and, where appropriate, that they be the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), as codified in 2 U.S.C. Chapter 25, requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more annually (adjusted for inflation with base year of 1995). This portion of the preamble summarizes the FAA's analysis of the economic impacts of this final rule.

In conducting these analyses, FAA has determined this final rule has benefits that justify its costs. This rule is a significant regulatory action as defined in section 3(f) of Executive Order 12866, as it raises novel policy issues contemplated under that Executive Order; further, this rule is “significant” as defined in DOT's Regulatory Policies and Procedures. This rule will not have a significant economic impact on a substantial number of small entities. This rule will not create unnecessary obstacles to the foreign commerce of the United States. This rule will not impose an unfunded mandate on State, local, or tribal governments, or on the private sector by exceeding the threshold identified above.

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

For SFAR No. 114, § 91.1609, the FAA determined that incremental costs were minimal for U.S. operators of large transport category airplanes (four part 121 operators and two part 125M operators) because they had voluntarily ended their overflights in March, 2011, before the FAA's August 18, 2014 issuance of FDC NOTAM 4/4936. The FAA also determined that the incremental costs of SFAR No. 114 were minimal for about 15 “on-demand” large carriers (part 121 and part 121/135) and about 75 small “on-demand” operators (parts 135, 125, 125M, and 91K). These operators had previously flown into and out of Syria or conducted overflights in the OSTT FIR. But because of sanctions imposed by the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) and the ongoing conflict, the FAA believed that few, if any, of these “on-demand” operators were still operating in the OSTT FIR immediately before the FAA issued FDC NOTAM 4/4936.

Due to significant and increased hostilities, and because the OFAC sanctions remain in place, the reasons for the FAA's previous finding of minimal cost for SFAR No. 114 remain unchanged. Therefore, the FAA finds that the incremental cost of the SFAR No. 114 extension will be minimal.

The Regulatory Flexibility Act of 1980 (Pub. L. 96-354, “RFA”), 5 U.S.C. 601 et seq., establishes “as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation. To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such proposals are given serious consideration.” The RFA covers a wide-range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions.

Agencies must perform a review to determine whether a rule will have a significant economic impact on a substantial number of small entities. If the agency determines that it will, the agency must prepare a regulatory flexibility analysis as described in the RFA. However, if an agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities, 5 U.S.C. 605(b) provides that the head of the agency may so certify and a regulatory flexibility analysis will not be required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear.

Prior to the hostilities leading to the earlier published SFAR No. 114, § 91.1609, there were many small entities conducting operations through the now restricted airspace. After the FAA published SFAR No. 114, § 91.1609, the FAA received no request to use this airspace. Given no requests have occurred, the FAA believes the earlier determination of minimal cost is accurate. Thus, extending the airspace restriction will not impose a significant economic impact. Therefore, as provided in § 605(b), the head of the FAA certifies that this rulemaking will not result in a significant economic impact on a substantial number of small entities.

The Trade Agreements Act of 1979 (Pub. L. 96-39), as amended, prohibits Federal agencies from establishing standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Pursuant to this Act, the establishment of standards is not considered an unnecessary obstacle to the foreign commerce of the United States, so long as the standard has a legitimate domestic objective, such as the protection of safety, and does not operate in a manner that excludes imports that meet this objective. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards.

The FAA has assessed the effect of this final rule and determined that its purpose is to protect the safety of U.S. civil aviation from a hazard outside the U.S. Therefore, the rule is in compliance with the Trade Agreements Act.

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

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

The Paperwork Reduction Act of 1995 (44 U.S.C. 3501(d)) requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. The FAA has determined that there is no new requirement for information collection associated with this final rule.

In keeping with U.S. obligations under the Convention on International Civil Aviation, it is FAA policy to conform to International Civil Aviation Organization (ICAO) Standards and Recommended Practices to the maximum extent practicable. The FAA has determined that there are no ICAO Standards and Recommended Practices that correspond to this regulation.

While the FAA's flight prohibition does not apply to foreign air carriers, DOT codeshare authorizations prohibit foreign air carriers from carrying a U.S. codeshare partner's code on a flight segment that operates in airspace for which the FAA has issued a flight prohibition. Further, following the downing of Malaysian Airlines Flight 17, there is increased attention in the international community and ICAO to conflict-related threats to civil aircraft. Foreign air carriers and other foreign operators may choose to avoid, or be advised/directed by their civil aviation authorities to avoid, airspace for which the FAA has issued a flight prohibition.

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

The FAA has reviewed the implementation of this SFAR and determined it is categorically excluded from further environmental review according to FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.6f. The FAA has examined possible extraordinary circumstances and determined that no such circumstances exist. After careful and thorough consideration of the action, the FAA finds that this Federal action does not require preparation of an Environmental Assessment or Environmental Impact Statement in accordance with the requirements of NEPA, Council on Environmental Quality (CEQ) regulations, and FAA Order 1050.1F.

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

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

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

An electronic copy of a rulemaking document may be obtained by using the Internet—

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

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

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

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

Except for classified material, all documents the FAA considered in developing this rule, including economic analyses and technical reports, may be accessed from the Internet through the Federal eRulemaking Portal referenced above.

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

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

Background U.S. Sanctions Against Burma

In Executive Order 13047 of May 20, 1997, President Bill Clinton declared a national emergency to deal with the unusual and extraordinary threat to the national security and foreign policy of the United States posed by the actions and policies of the Government of Burma in response to a deepening pattern of severe repression by the State Law and Order Restoration Council, the then-governing regime in Burma, and prohibited new investment in Burma by U.S. persons.

To take additional steps with respect to the national emergency and to implement the Burmese Freedom and Democracy Act of 2003 (Pub. L. 108-61, 50 U.S.C. 1701 note) signed into law on July 28, 2003, President George W. Bush issued on the same day Executive Order 13310 (E.O. 13310), which banned all imports into the United States of products of Burma and the export of financial services from the United States or by U.S. persons, wherever located, to Burma. E.O. 13310 also blocked the property and property interests of persons listed in its Annex or designated pursuant to criteria set forth in E.O. 13310. To address the Government of Burma's continued repression of the country's democratic opposition, President Bush issued two additional Executive Orders, Executive Order 13448 of October 18, 2007 and Executive Order 13464 of April 30, 2008, that further expanded the scope of the national emergency and took additional steps with respect to it. Each of these two Executive Orders blocked the property and interests in property of persons listed in its Annex or designated pursuant to criteria set forth in the Executive Orders. President Barack Obama subsequently issued two Burma-related Executive Orders, Executive Order 13619 of July 11, 2012 (E.O. 13619) and Executive Order 13651 of August 6, 2013 (E.O. 13651), that further modified the scope of the national emergency and took additional steps with respect to it. E.O. 13619 blocked the property and interests in property of persons listed in its Annex or designated pursuant to criteria set forth in the Executive Order. E.O. 13651 revoked the ban imposed in E.O. 13310 on the importation of products of Burma and imposed a ban on importing into the United States jadeite or rubies, and articles of jewelry containing jadeite or rubies, mined or extracted from Burma.

Consistent with Executive Orders 13310, 13448, and 13464, and the Trade Sanctions Reform and Export Enhancement Act of 2000 (22 U.S.C. 7201 et seq.), BIS amended the EAR by creating new § 744.22 (see 72 FR 60248, October 24, 2007; 74 FR 770, January 8, 2009), to impose a license requirement for exports, reexports, or transfers (in country) of items subject to the EAR, except agricultural commodities, medicine, or medical devices designated as EAR99, to persons listed in or designated pursuant to Executive Orders 13310, 13448, or 13464. As part of the initial October 2007 regulatory changes, Burma was moved from Computer Tier 1 to Computer Tier 3 in part 740 of the EAR (License Exceptions), thereby restricting Burma's access to high-performance computers and certain related technology and software under License Exception APP (§ 740.7). In Supplement No. 1 to part 740 (Country Groups), Burma was moved from Country Group B (countries raising few national security concerns) to Country Group D:1 (countries raising national security concerns). This move further limited the number of license exceptions available for exports or reexports to Burma. Burma remained in Country Group D:3 (countries raising proliferation concerns related to chemical and biological weapons).

As set forth in § 744.22 of the EAR, exports, reexports or transfers of items subject to the EAR, except agricultural commodities, medicine, or medical devices designated as EAR99, to any person whose property and interests in property were blocked pursuant to Executive Orders 13310, 13448 or 13464, required a license under the EAR and were reviewed under a general policy of denial. The requirement applied to such “blocked” persons either listed in the Annexes to one of these three Executive Orders or to persons designated pursuant to one of the Executive Orders. Persons included in an Annex or designated pursuant to one of these Executive Orders were identified with the reference [BURMA] on Treasury's Office of Foreign Assets Control (OFAC's) list of Specially Designated Nationals and Blocked Persons on OFAC's Web site at http://www.treas.gov/OFAC.

In Executive Order 13742 of October 7, 2016, President Obama terminated the national emergency declared in Executive Order 13047 and revoked that Executive Order and the five additional Burma-related Executive Orders, including Executive Orders 13310, 13448 and 13464. Consistent with the President's action, in this final rule, BIS removes and reserves § 744.22 of the EAR.

In recognition of Burma's substantial advances to promote democracy identified by President Obama in Executive Order 13742, BIS is also removing Burma from Country Group D:1 and placing it in Country Group B, a change that typically broadens the scope of license exceptions which may be available for exports and reexports of items under the EAR. Note, however, that Burma will remain in Country Group D:3 (countries raising proliferation concerns related to chemical and biological weapons). Burma will also remain in Country Group D:5 (U.S. Arms Embargoes), consistent with § 126.1 of the International Traffic in Arms Regulations, 22 CFR 120-130, and State Department Federal Register notices. Therefore, the country is subject to the general license exception restrictions described in section 740.2(a)(12) of the EAR that apply to 9x515 or “600 series” items destined to, shipped from, or manufactured in a destination listed in Country Group D:5, except as narrowly provided in subparagraphs (a)(12)(i) and (ii). Further, Burma will remain in Computer Tier 3 in part 740 (License Exceptions) pending additional consideration. Finally, as a general matter, exports and reexports to Burma, and transfers (in country), remain subject to EAR part 744 end user and end-use based controls.

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

2. Notwithstanding any other provision of law, no person is required to respond to, nor is subject to a penalty for failure to comply with, a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless that collection of information displays a currently valid OMB control number. This rule affects one approved collection: The Simplified Network Application Processing + Redesign system (control number 0694-0088), which carries a burden hour estimate of 43.8 minutes, including the time necessary to submit license applications, among other things, as well as miscellaneous and other recordkeeping activities that account for 12 minutes per submission. This rule is expected to decrease the number of submissions under this collection.

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

4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public participation, and a delay in effective date, are inapplicable because this regulation involves a military or foreign affairs function of the United States under 5 U.S.C. 553(a)(1). This final rule implements the President's Executive Order 13742 of October 7, 2016, terminating the national emergency with respect to Burma that had been in effect since May 20, 1997, revoking certain Burma-related Executive Orders that expanded or otherwise modified the national emergency, and waiving other statutory blocking and financial sanctions on Burma. This rule serves the foreign policy interests of the United States by removing Burma sanctions under the EAR that were directly related to three of the revoked Executive Orders and conforming the treatment of Burma under the EAR with the change in U.S. foreign policy toward the country already in effect pursuant to Executive Order 13742. No other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule by 5 U.S.C. 553, or by any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., are not applicable. Therefore, this regulation is issued in final form and is made effective immediately upon publication.

Accordingly, parts 740 and 744 of the Export Administration Regulations (15 CFR parts 730-774) are amended as follows:

Background

The Entity List (Supplement No. 4 to part 744 of the EAR) identifies entities and other persons reasonably believed to be involved in, or that pose a significant risk of being or becoming involved in, activities that are contrary to the national security or foreign policy of the United States. The EAR imposes additional licensing requirements on, and limits the availability of most license exceptions for, exports, reexports, and transfers (in-country) to those persons or entities listed on the Entity List. The license review policy for each listed entity is identified in the License Review Policy column on the Entity List and the impact on the availability of license exceptions is described in the Federal Register notice adding entities or other persons to the Entity List. BIS places entities on the Entity List based on certain sections of part 744 (Control Policy: End-User and End-Use Based) and part 746 (Embargoes and Other Special Controls) of the EAR.

The End-user Review Committee (ERC) is composed of representatives of the Departments of Commerce (Chair), State, Defense, Energy, and where appropriate, the Treasury. The ERC makes decisions to add an entry to the Entity List by majority vote and to remove or modify an entry by unanimous vote. The Departments represented on the ERC have approved these changes to the Entity List.

This rule implements the decision of the ERC to add twenty-three entities to the Entity List. These twenty-three entities are being added on the basis of § 744.11 (License requirements that apply to entities acting contrary to the national security or foreign policy interests of the United States) of the EAR. The twenty-three entries being added to the Entity List consist of two entries in the Crimea region of Ukraine, and twenty-one entries in Russia.

Under § 744.11(b) (Criteria for revising the Entity List) of the EAR, persons for whom there is reasonable cause to believe, based on specific and articulable facts, have been involved, are involved, or pose a significant risk of being or becoming involved in, activities that are contrary to the national security or foreign policy interests of the United States and those acting on behalf of such persons may be added to the Entity List. The entities being added to the Entity List have been determined to be involved in activities that are contrary to the national security or foreign policy interests of the United States. Specifically, in this rule, BIS adds entities to the Entity List for violating international law and fueling the conflict in eastern Ukraine. These additions ensure the efficacy of existing sanctions on Russia. The specific additions to the Entity List and related authorities are as follows:

Fifteen entities are added based on activities that are described in Executive Order 13661 (79 FR 15533), Blocking Property of Additional Persons Contributing to the Situation in Ukraine, issued by the President on March 16, 2014. This Order expanded the scope of the national emergency declared in Executive Order 13660, finding that the actions and policies of the Government of the Russian Federation with respect to Ukraine—including the deployment of Russian military forces in the Crimea region of Ukraine—undermine democratic processes and institutions in Ukraine; threaten its peace, security, stability, sovereignty, and territorial integrity; and contribute to the misappropriation of its assets, and thereby constitute an unusual and extraordinary threat to the national security and foreign policy of the United States.

Executive Order 13661 includes a directive that all property and interests in property that are in the United States, that hereafter come within the United States, or that are or thereafter come within the possession or control of any United States person (including any foreign branch) of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: Persons determined by the Secretary of the Treasury, in consultation with the Secretary of State to have either materially assisted, sponsored or provided financial, material or technological support for, or goods and services to or in support of a senior official of the government of the Russian Federation or to operate in the defense or related materiel sector in Russia. Under Section 8 of the Order, all agencies of the United States Government are directed to take all appropriate measures within their authority to carry out the provisions of the Order.

BIS, pursuant to Executive Order 13661, and in consultation with the Departments of State, Defense, Energy, and the Treasury, has designated the fifteen entities specified in the next two paragraphs.

Seven subsidiaries of Almaz-Antey Air Defense Concern Main System Design Bureau, JSC, an entity listed on the Entity List on September 17, 2014 (79 FR 55608), as follows: DJSC Factory Krasnoe Znamya; FSUE FNPC Nizhegorodsky Scientific Research Institute of Radiotechnics (NNIIRT); OAO All-Russia Research Institute of Radio Equipment (JSC VNIIRA); JSC GOZ Obukhov Plant; JSC Institute of Instrumentation—Novosibirsk Plant Comintern (NPO NIIP-NZIK); OJSC Ural Production Company Vector (UPP Vector); and Scientific and Production Association “Lianozovo Electromechanical Plant” (NPO LEMZ).

Eight subsidiaries of Joint-Stock Company Concern Radio-Electronic Technologies, an entity listed on the Entity List on July 22, 2014 (79 FR 42455), as follows: ElTom Research and Production Company; Ekran Scientific Research Institute, FSUE; JSC Scientific Research Institute of Aircraft Equipment (NIIAO); Kaluga Scientific Research Radio Technology Institute (KRRTI); Research and Production Association KVANT; Research and Production Association M.V. Frunze; Ryazan State Instrument Enterprise (RSIE); and Svyaz Design Bureau, OJSC.

The fifteen entities added to the Entity List under Executive Order 13661 meet the criteria of Section 1, subparagraph B of the Order, as did the two parent entities identified above and added to the Entity List in 2014, because they operate in Russia's arms or related materiel sector. BIS adds the thirteen entities to the Entity List under this rule, and imposes a license requirement for exports, reexports, or transfers (in-country) of all items subject to the EAR and a license review policy of presumption of denial. The license requirement applies to any transaction in which items are to be exported, reexported, or transferred (in-country) to any of the entities or in which such entities act as purchaser, intermediate consignee, ultimate consignee, or end-user. In addition, no license exceptions are available for exports, reexports, or transfers (in-country) to the persons being added to the Entity List in this rule. This license requirement implements an appropriate measure within the authority of the EAR to carry out the provisions of Executive Order 13661.

Eight entities are added based on activities that are described in Executive Order 13685 (79 FR 77357), Blocking Property of Certain Persons and Prohibiting Certain Transactions with Respect to the Crimea Region of Ukraine, issued by the President on December 19, 2014. This Order took additional steps to address the Russian occupation of the Crimea region of Ukraine with respect to the national emergency declared in Executive Order 13660 of March 6, 2014, and expanded in Executive Order 13661 of March 16, 2014, and Executive Order 13662 of March 20, 2014. In particular, Executive Order 13685 prohibited the export, reexport, sale or supply, directly or indirectly, from the United States or by a U.S. person, wherever located, of any goods, services, or technology to the Crimea region of Ukraine. Under Section 10 of the Order, all agencies of the United States Government are directed to take all appropriate measures within their authority to carry out the provisions of the Order.

The Department of the Treasury's Office of Foreign Assets Control (OFAC), pursuant to Executive Order 13685 on behalf of the Secretary of the Treasury and in consultation with the Secretary of State, has designated the following eight entities operating in the Crimea region of Ukraine: Crimean Ports; Crimean Railway; Institut Stroiproekt, AO; Karst, OOO; LLC Ruschemtrade; OLID Ltd.; Trans-Flot JSC; and Transpetrochart Co. Ltd. Four of these entities (LLC Ruschemtrade; OLID Ltd.; Trans-Flot JSC; and Transpetrochart Co. Ltd.) are also linked to OJSC Sofracht. OJSC Sovfracht was added to the Entity List on September 7, 2016 (81 FR 61601) and is an OFAC-designated Specially Designated National (SDN).

In conjunction with OFAC's designation of the eight entities, BIS adds all eight of the entities to the Entity List under this rule and imposes a license requirement for exports, reexports, or transfers (in-country) of all items subject to the EAR and a license review policy of presumption of denial. The license requirement applies to any transaction in which items are to be exported, reexported, or transferred (in-country) to any of the entities or in which such entities act as purchaser, intermediate consignee, ultimate consignee, or end-user. In addition, no license exceptions are available for exports, reexports, or transfers (in-country) to the persons being added to the Entity List in this rule. This license requirement implements an appropriate measure within the authority of the EAR to carry out the provisions of Executive Order 13685.

The acronyms “a.k.a.” (also known as) and “f.k.a.” (formerly known as) are used in entries on the Entity List to help exporters, reexporters and transferors to better identify listed persons on the Entity List.

This final rule adds the following twenty-three entities to the Entity List:

(1) Crimean Ports, a.k.a., the following three aliases:

28 Kirov Street, Kerch, Crimea Region of Ukraine 98312; and

(2) Crimean Railway, a.k.a., the following three aliases:

34 Pavlenko Street, Simferopol, Crimea Region of Ukraine 95006.

(1) DJSC Factory Krasnoe Znamya, a.k.a., the following five aliases:

Shabulina Travel 2a, Ryazan, 390043, Russia;

(2) Ekran Scientific Research Institute, FSUE, a.k.a., the following one alias:

Kirov Avenue 24, Samara 443022, Russia; and Krzhizhanovskogo Street 20/30, Moscow, 117218, Russia;

(3) ElTom Research and Production Company, a.k.a., the following one alias:

Garshin Street 11, Tomilino, Lyuberetsky, Moscow, 140070, Russia;

(4) FSUE FNPC Nizhegorodsky Scientific Research Institute of Radiotechnics (NNIIRT),

Shaposhnikov Street 5, Nizhny Novgorod, 603950, Russia;

(5) Institut Stroiproekt, AO, a.k.a., the following six aliases:

D. 13 Korp. 2 LiteraA Prospekt Dunaiski, St. Petersburg 196158, Russia; and 13/2 Dunaisky Prospect, St. Petersburg 196158, Russia;

(6) JSC GOZ Obukhov Plant, a.k.a., the following one alias:

Prospekt Obukhovskoi Oboroni 120, Saint Petersburg, 192012, Russia;

(7) JSC Institute of Instrumentation—Novosibirsk Plant Comintern (NPO NIIP-NZIK),

Planetnaya Street 32, Novosibirsk, 630015, Russia;

(8) JSC Scientific Research Institute of Aircraft Equipment (NIIAO), a.k.a., the following three aliases:

Tupoleva 18, Zhukovsky, Moscow, 140182, Russia;

(9) Kaluga Scientific Research Radio Technology Institute (KRRTI), a.k.a., the following two aliases:

Lenin Street 2, Zhukov, Kaluga Oblast, 249192, Russia;

(10) Karst, OOO, a.k.a., the following four aliases:

D. 4 Litera A Pomeshchenie 69 ul. Kapitanskaya, St. Petersburg 199397, Russia; and 4 Kapitanskaya Street, Unit A, Office 69-N, St. Petersburg 199397, Russia;

(11) LLC Ruschemtrade,

St. Mashinostroitelnyj, 3, Rostov-on-Don 344090, Russia; and 86/1, Temryuk, Krasnodar 353500, Russia;

(12) OAO All-Russia Research Institute of Radio Equipment (JSC VNIIRA), a.k.a., the following three aliases:

Shkipersky Protok 19, V.I. St. Petersburg, 199106, Russia;

(13) OJSC Ural Production Company Vector (UPP Vector), a.k.a., the following two aliases:

Gagarin Street 28, Ekaterinburg, 620078, Russia;

(14) Olid Ltd., a.k.a., the following one alias:

ul Mira 4, Novorossiysk, Krasnodarskiy kray 630024, Russia;

(15) Research and Production Association KVANT, a.k.a., the following one alias:

Bolshaya Saint Petersburg 73, Velikii-Novgorod 173003, Russia;

(16) Research and Production Association M.V. Frunze, a.k.a., the following two aliases:

Gagarin Prospect 174, Nizhny Novgorod, 606950, Russia;

(17) Ryazan State Instrument Enterprise (RSIE), a.k.a., the following two aliases:

Seminarskaya Street 32, Ryazan, 390000, Russia;

(18) Scientific and Production Association “Lianozovo Electromechanical Plant” (NPO LEMZ), a.k.a., the following four aliases:

Dmitrovskoye Shosse 110, Moscow, 127411, Russia;

(19) Svyaz Design Bureau, OJSC, a.k.a., the following one alias:

Prospect Sokolova 96, Rostov-on-Don 344010, Russia;

(20) Trans-Flot JSC, a.k.a., the following one alias:

ul Ventseka 1/97, Samara 443099, Russia; and

(21) Transpetrochart Co. Ltd.,

Prospekt Engelsa 30, St. Petersburg 194156, Russia.

In addition to the Entity List changes described above, this final rule revises the licensing policy in three sections of part 742 of the EAR to clarify that BIS's review of license applications for exports, reexports and transfers (in-country) to Russia will take into account and protect U.S. national security interests.

Part 742 of the EAR specifies the licensing policy for CCL based controls. The licensing policies in the respective sections of part 742 provide applicants with advance notice of the likelihood of any particular license application's approval or denial. In addition to considering the licensing policies described in these CCL based controls, BIS reviews each application on its own merits, taking into account the bona fides of the parties involved in the transaction, as well as whether the transaction would be detrimental to U.S. national security and foreign policy interests or not, and considering recent international events that may be relevant to whether the U.S. Government should approve or deny a license application.

In this final rule, BIS revises the CCL based controls sections of the EAR to clarify that it will review license applications to export or reexport to Russia items subject to the EAR and controlled for chemical and biological weapons proliferation (CB), nuclear nonproliferation (NP) or national security (NS) reasons under a presumption of denial, if the items proposed for export or reexport would make a direct and significant contribution to Russia's military capabilities. This final rules revises §§ 742.2 and 742.3 of the EAR to clarify that license applications for items controlled for CB and NP reasons will be reviewed in accordance with the revised licensing policies in paragraph (b)(4) of both §§ 742.2 and 742.3 and with the revised licensing policy in paragraph (b)(7) of § 742.4 of the EAR. This rule revises § 742.4(b)(7) of the EAR to clarify that license applications for items controlled for NS reasons will be reviewed under a presumption of denial if the items would make a direct and significant contribution to Russia's military capabilities, including but not limited to, the major weapons systems described in Supplement No. 7 to part 742 of the EAR.

BIS is imposing this review policy in order to protect U.S. national security interests and to ensure the efficacy of existing sanctions on Russia for violating international law and fueling the conflict in eastern Ukraine. These changes will also assist applicants because they provide advance warning that BIS's review of license applications will specifically take into account these considerations that are needed in order to protect U.S. national security interests.

As noted above, the U.S. Government has already been taking into account these national security concerns when reviewing license applications for items subject to the EAR proposed for shipment to Russia. Therefore, BIS does not anticipate that the changes in this final rule will result in an increase in the number of license applications for items destined to Russia that are denied. However, BIS anticipates that license applicants will benefit by this clarification of existing policy in part 742 of the EAR.

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

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

2. Notwithstanding any other provision of law, no person is required to respond to nor be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This regulation involves collections previously approved by OMB under control number 0694-0088, Simplified Network Application Processing System, which includes, among other things, license applications and carries a burden estimate of 43.8 minutes for a manual or electronic submission. Total burden hours associated with the PRA and OMB control number 0694-0088 are not expected to increase as a result of this rule. You may send comments regarding the collection of information associated with this rule, including suggestions for reducing the burden, to Jasmeet K. Seehra, Office of Management and Budget (OMB), by email to [email protected], or by fax to (202) 395-7285.

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

4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public comment and a delay in effective date are inapplicable because this regulation involves a military or foreign affairs function of the United States. (See 5 U.S.C. 553(a)(1)). BIS implements this rule to protect U.S. national security or foreign policy interests by preventing items from being exported, reexported, or transferred (in country) to the entities being added to the Entity List. If the effective date of this rule were delayed to allow for notice and comment, then the entities being added to the Entity List by this action would continue to be able to receive items without a license and to conduct activities contrary to the national security or foreign policy interests of the United States. In addition, publishing a proposed rule would give these parties notice of the U.S. Government's intention to place them on the Entity List and would create an incentive for these persons to either accelerate their receipt of items subject to the EAR to conduct activities that are contrary to the national security or foreign policy interests of the United States, and/or to take steps to set up additional aliases, change addresses, and/or take other measures to try to limit the impact of the listing on the Entity List once a final rule is published.

In addition to the Entity List changes described above, the changes this regulation makes to the licensing policy in three sections of the CCL based controls part of the EAR (§§ 742.2, 742.3, and 742.4) involve a military or foreign affairs function of the United States. (See 5 U.S.C. 553(a)(1)). These licensing policy changes are needed in order to protect U.S. national and foreign policy interests. These changes make clear that BIS's review of license applications for exports, reexports and transfers (in-country) to Russia will take into account and protect U.S. national security interests. This review policy is needed in order to protect U.S. national security interests and to ensure the efficacy of existing sanctions on Russia for violating international law and fueling the conflict in eastern Ukraine.

Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule by 5 U.S.C. 553, or by any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., are not applicable. Accordingly, no regulatory flexibility analysis is required and none has been prepared.

For the reasons stated in the preamble, the Bureau of Industry and Security amends parts 742 and 744 of the Export Administration Regulations (15 CFR parts 730-774) as follows:

The Bureau of Industry and Security (BIS) is amending the Export Administration Regulations (EAR) to revise the nuclear nonproliferation (NP) controls that apply to certain items identified on the Commerce Control List (CCL), consistent with U.S. commitments as a participating country in the Nuclear Suppliers Group (NSG). The NSG is a multilateral export control forum that consists of 48 participating countries. The NSG maintains a list of dual-use items that could be used for nuclear proliferation activities. The list is maintained in the NSG Annex to the “Guidelines for the Transfer of Nuclear Related Dual Use Equipment, Materials, Software and Related Technology” (the NSG Annex). NSG participating countries share a commitment to prevent nuclear proliferation and the development of nuclear related weapons of mass destruction. In furtherance of that commitment, they have undertaken to impose export controls on listed items. The NSG Guidelines and the Annex thereto are designed to ensure that nuclear trade for peaceful purposes does not contribute to the proliferation of nuclear weapons or related proliferation activities.

This final rule amends the CCL by revising Export Control Classification Number (ECCN) 2B206: (1) To reflect the changes affecting certain linear displacement measuring systems listed in the NSG Annex, based on the understandings reached at the NSG Plenary meeting held in Seoul, Republic of Korea, on June 23 and 24, 2016; and (2) to further revise the description of these systems on the CCL to fully conform to their description on the NSG Annex. This rule also revises ECCN 2B229 to reflect the changes affecting certain centrifugal multiplane balancing machines listed in the NSG Annex, based on the understandings reached at the NSG Plenary meeting held in Bariloche, Argentina, on June 3-5, 2015. In addition, this rule corrects an error in the technical parameters of ECCN 6A203.d, which describes certain radiation-hardened TV cameras identified on the NSG Annex.

This rule amends ECCN 2B206 to more accurately and completely reflect the description of certain dimensional inspection machines listed in the NSG Annex. These changes are related to BIS's September 20, 2016, final rule (81 FR 64656) that included certain amendments to ECCN 2B006 to reflect the December 2015 updates to the List of Dual-Use Goods and Technologies maintained by participating governments in the Wassenaar Arrangement (WA). The amendments to ECCN 2B006 also affected the scope of the NP controls in that ECCN. Specifically, the September 20, 2016, final rule revised the controls that applied to certain measuring systems by changing the technical parameters in a manner that removed certain linear displacement measuring systems identified on the NSG Annex from control under ECCN 2B006.

As a result of the aforementioned change in the scope of the NP controls in ECCN 2B006, this rule amends ECCN 2B206 by adding a new paragraph .c, consistent with the description of the measuring systems in NSG Annex 1.B.3.b.3. New 2B206.c controls linear displacement measuring systems that contain a “laser” and that maintain, for at least 12 hours over a temperature range of ± 1 K around a standard temperature and a standard pressure, both: (1) A “resolution” over their full scale of 0.1µm or better; and (2) a “measurement uncertainty” equal to or better (less) than (0.2 + L/2000) µm (L is the measured length in millimeters). This rule also adds a Control Note and a Technical Note for new 2B206.c. The Control Note to new paragraph .c indicates that 2B206.c does not control measuring interferometer systems, without closed or open loop feedback, that contain a “laser” to measure slide movement errors of machine tools, dimensional inspection machines, or similar equipment. The Technical Note to new paragraph .c states that “linear displacement,” for purposes of 2B206.c, means the change of distance between the measuring probe and the measured object.

The text of new paragraph .c to ECCN 2B206 also reflects the updates to the NSG Annex based on the understandings reached at the 2016 NSG Plenary meeting held in Seoul, Republic of Korea. Specifically, paragraph .c.1 reads “Containing a laser,” which replaces the phrase “Contain a laser” that was previously used in 1.B.3.b.3.a on the NSG Annex. In addition, paragraph .c.2 contains the phrase “Capable of maintaining,” which replaces the word “Maintain” that was previously used in 1.B.3.b.3.b on the NSG Annex. Amendments to other ECCNs on the CCL, based on the 2016 NSG Plenary understandings, will be published by BIS in a separate rule.

This rule also moves the “Control Notes to ECCN 2B206” and the “Technical Note to ECCN 2B206,” which were previously located at the end of this ECCN, to the beginning of the “Items” paragraph for ECCN 2B206 (i.e., immediately before 2B206.a), because these notes apply to the entire ECCN, unlike the aforementioned notes for new 2B206.c. In addition, the “ECCN Controls” paragraphs, which were previously included under the “List of Items Controlled” for this ECCN, have been removed, because they duplicated the text of the “Control Notes to ECCN 2B206” and, as such, were redundant and potentially confusing.

In addition, this rule corrects two typographical errors in the “Items” paragraph of ECCN 2B206. First, the phrase “1.7 + 1/800 µm threshold” in the Technical Note to 2B206.a.2 is revised to read “1.7 + L/800 µm threshold” to conform with the threshold indicated in 2B206.a.2. Second, the word “simultaneously” in the introductory text of 2B206.b is replaced with the word “simultaneous”.

This final rule amends ECCN 2B229 (Centrifugal multiplane balancing machines) by revising paragraph .b.3 to update certain scientific terminology and clarify the technical parameters, therein, to read as follows: “A minimum achievable residual specific unbalance equal to or less than 10 g-mm/kg per plane.” This change reflects the 2015 NSG Plenary changes to the description of centrifugal balancing machines in NSG Annex 3.B.3.b and does not affect the scope of the NP controls on these machines. Instead, this rule revises the previous text in ECCN 2B229.b.3 (i.e., “Capable of balancing to a residual imbalance equal to or less than 0.01 kg × mm/kg per plane”) only to update and clarify the controls described therein, without changing their scope.

This rule amends ECCN 6A203 to correct an error in the technical parameters for radiation-hardened TV cameras described in 6A203.d. Specifically, this rule revises the phrase “total radiation dose greater than 50 × 104 Gy (silicon)” to read “total radiation dose greater than 5 × 104 Gy (silicon),” consistent with the description of these cameras in NSG Annex 1.A.2. Previously, as amended by BIS's final rule published on September 5, 2014 (79 FR 52958), this technical parameter overstated the total radiation dose by a factor of ten (i.e., incorrectly indicating a multiple of “50,” instead of “5”).

All of the items affected by the amendments to ECCN 2B229, 2B206 or 6A203, as described above, require a license for NP reasons and AT reasons to the destinations indicated under NP Column 1 or AT Column 1, respectively, on the Commerce Country Chart (see Supplement No. 1 to part 738 of the EAR). In addition, these items may require a license for reasons described elsewhere in the EAR (e.g., the end-user/end-use controls described in part 744 of the EAR or the embargoes and other special controls described in part 746 of the EAR).

The changes made by this rule only marginally affect the scope of the EAR controls on the affected items in ECCN 2B206, 2B229, or 6A203. Specifically, the amendments in this rule, which add a new paragraph .c to ECCN 2B206 and revise ECCN 2B229.b.3 and ECCN 6A203.d, are not the result of any change in the scope of the controls for these items on the NSG Annex. Therefore, the purpose of this final rule is not to increase the scope of the NP controls in these ECCNs beyond what should have been the case, previously, but merely to accurately reflect the controls on the affected items, consistent with the descriptions in NSG Annex 1.B.3.b.3, 3.B.b.3, and 1.A.2, respectively.

The addition of a new paragraph .c to ECCN 2B206 to control linear displacement measuring systems, consistent with the description of these systems in NSG Annex 1.B.3.b.3, effectively reinstates the NP controls and anti-terrorism (AT) controls, but not the national security (NS) controls, that applied to such systems under ECCN 2B006, prior to the publication of BIS's September 20, 2016, final rule (81 FR 64656) that amended ECCN 2B006 to reflect the December 2015 updates to the Wassenaar Arrangement (WA) List of Dual-Use Goods and Technologies. The September 20, 2016, amendments to ECCN 2B006 removed certain linear displacement measuring systems identified on the NSG Annex from control under ECCN 2B006. This final rule amends ECCN 2B206 to reinstate the NP and AT controls that applied to the affected linear displacement measuring systems prior to the September 20, 2016, final rule. The 2016 NSG Plenary updates reflected in new paragraph 2B206.c.1, and the corrections in the Technical Note to 2B206.a.2 and the introductory text of 2B206.b, do not affect the scope of the controls in ECCN 2B206. Therefore, BIS does not anticipate a significant change in the number of license applications that will have to be submitted, as a result of the amendments made to ECCN 2B206 by this rule.

The amendments to ECCN 2B229 do not affect the scope of the NP controls that apply to centrifugal multiplane balancing machines. These amendments revise 2B229.b.3, consistent with NSG Annex 3.B.3.b, to update certain scientific terminology and clarify the technical parameters, therein, and are not intended to affect the scope of the controls in this ECCN. Therefore, BIS does not anticipate a significant change in the number of license applications that will have to be submitted, as a result of the amendments made to ECCN 2B229 by this rule.

The amendments to ECCN 6A203 correct an error in the technical parameters for radiation-hardened TV cameras described in 6A203.d, which previously misstated the technical parameters for these cameras by indicating a multiple of “50,” instead of “5” (as indicated in NSG Annex 1.A.2), for the “total radiation dose.” Because only a small number of license applications are submitted to BIS for these cameras, BIS does not anticipate a significant change in the number of license applications that will have to be submitted, as a result of the amendments made to ECCN 6A203 by this rule.

Although the Export Administration Act expired on August 20, 2001, the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 2001 Comp., p. 783 (2002), as amended by Executive Order 13637 of March 8, 2013, 78 FR 16129 (March 13, 2013), and as extended by the Notice of August 4, 2016 (81 FR 52587 (Aug. 8, 2016)), has continued the Export Administration Regulations in effect under the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.). BIS continues to carry out the provisions of the Export Administration Act, as appropriate and to the extent permitted by law, pursuant to Executive Order 13222 as amended by Executive Order 13637.

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been designated a “significant regulatory action,” although not economically significant, consistent with Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget.

2. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This rule contains a collection of information subject to the requirements of the PRA. This collection has been approved by OMB under Control Number 0694-0088 (Multi-Purpose Application), which carries a burden hour estimate of 58 minutes to prepare and submit form BIS-748. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing the burden, to Jasmeet Seehra, Office of Management and Budget, by email to [email protected], or by fax to (202) 395-7285; and to the Regulatory Policy Division, Bureau of Industry and Security, Department of Commerce, 14th Street & Pennsylvania Avenue NW., Room 2705, Washington, DC 20230 or by email to [email protected].

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

4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public participation, and a delay in effective date, are inapplicable because this regulation involves a military and foreign affairs function of the United States (See 5 U.S.C. 553(a)(1)). Immediate implementation of these amendments is non-discretionary and fulfills the United States' international commitment to administer controls on specified items consistent with the Guidelines, and the Annex thereto, maintained by the Nuclear Suppliers Group (NSG). The NSG contributes to international security and regional stability through the harmonization of export controls and seeks to ensure that exports do not contribute to the development of nuclear weapons. The NSG consists of 48 member countries that act on a consensus basis and the amendments set forth in this rule revise the scope of nuclear nonproliferation controls in the EAR to more fully reflect the controls implemented by other NSG participating countries, consistent with the NSG Guidelines and the Annex thereto. Because the United States is a significant exporter of the items addressed in this rule, immediate implementation of these regulatory provisions is necessary in order for the NSG to continue to meet its objectives. Any delay in implementation will create a disruption in the movement of affected items globally because of disharmony between the export controls maintained by the United States and the export control measures implemented by other NSG members, resulting in tension between member countries. Export controls work best when all countries implement the same export controls in a timely and coordinated manner.

Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this final rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under the Administrative Procedure Act or by any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not applicable. Therefore, this regulation is issued in final form.

For the reasons stated in the preamble, part 774 of the Export Administration Regulations (15 CFR parts 730-774) is amended as follows:

Background

On August 17, 2016, U.S. Customs and Border Protection (CBP) published a Notice of Proposed Rulemaking (NPRM) in the Federal Register (81 FR 54763) proposing to amend title 19 of the Code of Federal Regulations (19 CFR) in order to harmonize the documentation requirements applicable to different classes of vehicles and engines that are subject to the Clean Air Act's (CAA's) emission standards.

Sections 203(a) and (b)(2) of the CAA, 42 U.S.C 7522, deal with the importation of new motor vehicles and new motor engines and the requirement of a Certificate of Conformity (COC) as prescribed by regulation authorized by the CAA. Without a valid COC, the admission of new motor vehicles and new motor engines into the United States will be denied. Section 208 of the CAA, 42 U.S.C. 7542, provides that the Administrator of the U.S. Environmental Protection Agency (EPA) may require a manufacturer to produce, among other items, all records, files, and papers necessary to demonstrate compliance with applicable CAA provisions. Section 213(d) of the CAA, 42 U.S.C. 7547, requires that nonroad vehicles and engine standards be enforced in the same manner as those applicable to onroad vehicles and engines.

These statutory provisions are implemented in the CBP regulations at §§ 12.73 and 12.74 of title 19 of the Code of Federal Regulations (19 CFR 12.73 and 12.74). Section 12.73 provides for “Motor vehicle and engine compliance with Federal antipollution emission requirements,” and section 12.74 provides for “Nonroad and stationary engine compliance with Federal antipollution emission requirements.” EPA makes available Declaration Forms 3520-1 (for the importation of passenger vehicles, highway motorcycles and their corresponding engines) and 3520-21 (for the importation of heavy-duty engines and nonroad engines, including engines already installed in vehicles or equipment) for purposes of compliance with the CAA.

The final rule conforms the entry filing requirements applicable to EPA Declaration Form 3520-21 to those that are currently applicable to EPA Declaration Form 3520-1. Sections 12.73(i) and 12.74(b) and (d) are amended to require importers of stationary, nonroad or heavy-duty highway engines (including engines incorporated into vehicles or equipment) to file EPA Declaration Form 3520-21 at the time of entry, except when filing a weekly entry from a foreign trade zone (FTZ) in accordance with 19 CFR 146.63(c)(1). An importer of engines is exempt from the requirement to file an EPA Declaration Form 3520-21 if the importer holds a valid EPA COC and the engines are labeled to show compliance with applicable emission requirements.

Further, the final rule permits importers to file the required EPA Declaration Forms with CBP electronically. The electronic transmission of EPA Declaration Forms 3520-1 and 3520-21 to CBP will automate and enhance the interaction between the EPA and CBP by facilitating electronic collection, processing, sharing, and review of requisite trade data and documents during the cargo import and export process. Lastly, this rule updates regulatory citations and deletes obsolete provisions.

The NPRM solicited for public comments on the proposed rulemaking. The public comment period closed on September 16, 2016.

Four commenters responded to the solicitation of comments to the proposed rule. A description of the comments received, together with CBP's analysis, is set forth below.

Comment: Two commenters expressed a concern with regard to EPA's handling of Type 06 (FTZ) “weekly estimate” entry filings. According to the proposed rule, EPA is requiring all filers to demonstrate compliance with all applicable laws and regulations at the time of cargo release, in particular the filing of EPA Declaration Forms 3520-1 and 3520-21. (19 CFR 12.73(i)(2)). The commenters stated that many vehicle and engine importers would not be able to provide accurate information, such as VIN or engine serial numbers, at the time of entry. When the weekly estimated entry is prepared and filed, the identity of the vehicles and/or engines is many times unknown since the vehicle/engine has not gone into production or has not been ordered for distribution. Both commenters propose to implement the “dual option” system that is being used by other Partner Government Agencies (PGAs), separating the “regular” Type 06 entry filers, which are required to present PGA data at time of entry/cargo release, from the “weekly” Type 06 entry filers, which are required to present PGA data at the time of entry summary.

CBP Response: CBP reviewed the concerns raised by the commenters and is in agreement with the commenters' proposal. When a Type 06 (FTZ) entry is filed, the vehicle and engine data used by EPA is required at time of entry/ACE cargo release. When a “weekly estimate” Type 06 entry is filed, the vehicle and engine data used by EPA is required at time of entry summary.

Comment: One of the commenters asked CBP to extend the exemption from filing EPA Declaration Form 3520-21 to any engines and equipment that are exempt from filing that form under the provisions of 40 CFR 1068.201 (test engines and equipment) and 40 CFR 1068.230 (engines and equipment for export). The commenter stated that 40 CFR part 1068, subpart C, provides for the exemption of certain engines and equipment from “some or all of the prohibited acts” of 40 CFR 1068.101(a)(1). The commenter further stated that EPA has deemed such engines and equipment as appropriate for entry into the U.S. commerce and as such are substantively no different from engines and equipment that are covered by a valid COC that is issued under the standard-setting part (e.g. 40 CFR part 1033).

CBP Response: CBP does not agree that the exemption for filing EPA Declaration Form 3520-21 should be extended to engines and equipment for testing and export covered by 40 CFR 1068, subpart C. CBP also does not agree that such engines and equipment are “substantively no different” from engines produced under a valid COC. If engines and equipment are produced under an exemption for testing or export, the exemption is needed because these engines and equipment are different than the certified engines and equipment. It is therefore not correct to consider any exemption under Part 1068 as a basis for determining engines and equipment to be “appropriate for entry into the U.S. commerce.” Exempted engines and equipment are permitted to enter the U.S. commerce subject to certain terms and conditions to ensure compliance with the regulations. Filing import information such as that prescribed by EPA Declaration Form 3520-21 assists with compliance oversight.

Comment: Another commenter expressed a concern with the proposed regulatory language at 19 CFR 12.74(c)(3) which references temporary exemptions, including the partially complete engine exemption under 40 CFR 1068.325(g). The commenter stated that the proposed language requires a CBP bond, whereas the underlying EPA regulation at 40 CFR 1068.325 states that EPA “may ask” CBP to require a specific bond amount. It is the opinion of the commenter that the proposed language in 19 CFR 12.74(c)(3) would go beyond the EPA requirements and increase the burden on users of the partially complete engine exemption by making the bond and associated administrative process an absolute requirement. The commenter suggested to use “may be required” instead of the proposed “is required” language. The commenter further noted that a similar change would be needed at the beginning of 12.74(c) to harmonize the proposed language in the NPRM with the conditional language in 40 CFR 1068.325.

CBP Response: CBP believes that there is a no conflict between the EPA regulation and the proposed rule regarding the bond requirements and that the proposed rule does not need to be harmonized with the EPA regulation. The proposed rule does not change the substantive bond requirement for conditional entry for nonconforming nonroad engines claiming exemption under the EPA regulations, it only allows for conditional release in conjunction with a bond filed in the Automated Commercial Environment (ACE).

The commenter potentially confuses the different contexts of import bond requirements. The confusion stems from the use of the term “bond” in EPA regulations and CBP regulations. Under 19 CFR 127.74(c)(3) and 19 CFR 113.62, CBP requires a single entry or a continuous bond, to be applied for the conditional release of imported engines as required in all cases (“Basic Import Entry” bond). In contrast, the “bond” referenced in 40 CFR 1068.325, which “may be required,” is addressing situations where EPA “may” want to secure compliance with relevant EPA regulations and have CBP require additional bonding.

Lastly, the substance of 19 CFR 12.74(c) is unchanged by the proposed rule, and has been in place since published in 1998. The only change is to provide for the use of Basic Import Entry bonds submitted through ACE.

Comment: The same commenter requested that the proposed language in 19 CFR 12.74 include permanent exemptions listed in 40 CFR 1068.315(a)-(h), including the manufacturer-owned exemption in 40 CFR 1068.315(b), to make it clear that permanent exemptions also present a valid basis for admission. According to the commenter, CBP and EPA regulations will have apparent inconsistences and it will be easy for users of those regulations to be confused if no clarifying section is added.

CBP Response: CBP agrees with the inclusion of the permanent exemptions listed in 40 CFR 1068.315 with the exemptions listed in 19 CFR 12.74(c)(3). As such, the regulatory language for 19 CFR 12.74(c)(3) will be amended accordingly below. In addition, the introductory text in section 19 CFR 12.73(h) will be amended by adding reference to 40 CFR parts 85, 86 and 1068 to fully cover the current list of both permanent and temporary exemptions and exclusions found in all applicable EPA regulatory parts.

Comment: The commenter also requested clarification as to whether an imported on-highway motorcycle engine that is separate from, and not installed in, an on-highway motorcycle is subject to 19 CFR 12.73. The commenter pointed out that the EPA Declaration Form 3520-1, recognized by CBP, includes a Code W = “Non-chassis mounted engine to be used in . . . a motorcycle . . . which will be covered by an EPA COC prior to the introduction into commerce.” Unlike other codes on the form, there is no listed underlying regulation associated with the use of Code W.

CBP Response: CBP agrees that a clarification is appropriate as suggested by the commenter. The regulatory text in 19 CFR 12.73(a) will be amended to include separately-imported on-highway motorcycle engines.

Comment: The same commenter requested clarification of a passage in the Preamble in the NPRM which says “although existing 19 CFR 12.73 does not expressly require the submission of the EPA Declaration Form 3520-1, it does require that the same information captured by that form be submitted to CBP.” Specifically, the commenter asked whether the EPA exemption policy for certificate-holding manufacturers (OEMs) to import new motor vehicles and engines without filing Declaration Forms 3520-1 or 3520-21 still applied under 19 CFR 12.73. The commenter expressed concern that if this exemption did no longer apply, it would be inconsistent with both current EPA and CBP requirements, as well as guidance issued by EPA that summarizes the filing exemptions for OEMs.

CBP Response: The statement in the NPRM simply pointed out that the current regulations at 19 CFR 12.73 do not specifically refer to EPA Declaration Form 3520-1, but require all the data elements listed in that form. 19 CFR 12.73(i)(3) (A)-(K) currently provides a list of the information that must be included in an importer's declaration. This information mirrors the information that is required to be filled in the EPA Declaration Form 3520-1 itself. CBP is only updating the regulations to specifically reference EPA Declaration Form 3520-1 and is not changing the provision that exempts OEMs who import products for which they hold a valid EPA COC from filing the form.

Comment: A commenter stated that it supported CBP's plan to harmonize the filing requirements. However, it pointed out that EPA must update the existing EPA guidance document titled “Procedures for Importing Vehicles and Engines into the U.S.” which states the following on Page 3, related to importers currently subject to the requirements of EPA Declaration Form 3520-21: “As with vehicles, OEMs importing new certified engines do not need to submit EPA Declaration Form 3520-21 to U.S. Customs.” The commenter further noted that EPA must also update Declaration Form 3520-21 to reflect the change of the filing requirements.

CBP Response: CBP agrees that certain statements in certain EPA guidance documents contradict each other regarding when OEMs currently need to file EPA Declaration Form 3520-21. In consultation with CBP, EPA will ensure that all of EPA's documentation regarding the amended regulations accurately reflects that OEMs importing their own certified engines do not need to file EPA Declaration Form 3520-21.

Comment: The fourth commenter wrote that she had no objection to the proposed changes as long as the compliance with anti-pollution emission standards was not compromised for the sake of efficiency. The commenter further stated that accurate records for vehicle and engine imports must be maintained in order to ensure compliance with the CAA.

CBP Response: CBP believes that electronic filing of EPA Declaration Forms will support key modernization initiatives, expedite the entry and clearance process, enhance targeting and enforcement objectives, and connect CBP with PGAs and the trade community through a single-window access point.

After review of the comments, CBP has decided to adopt as final the proposed rule published in the Federal Register on August 17, 2016 with the changes described above.

Executive Orders 13563 and 12866 direct agencies to assess the costs and benefits of available regulatory alternatives and, if a 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.

The Regulatory Flexibility Act (5 U.S.C. 601 et. seq.), as amended by the Small Business Regulatory Enforcement and 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). This final rule would modify the requirements for the submission of EPA Declaration Form 3520-21. Currently, importers are required to fill out the form, but are only required to submit it to CBP upon request. This final rule would require importers to file EPA Declaration Form 3520-21 with CBP with the filing of entry information, and no later than the filing of entry summary, unless the importer is a manufacturer of nonroad or stationary engines, including engines incorporated into vehicles and equipment, and holds a valid EPA certificate of conformity for those engines and the engines are labeled to show compliance with applicable emission requirements. As this form has already been completed by the filer by the time the filing is required under this rule, the cost of actually submitting it to CBP is negligible. This rule would also explicitly add electronic filing as an accepted method of form submission. Importers will still be able to file the form by paper if they so choose. This change will affect all importers who are covered by EPA Declaration Form 3520-21, including small importers. Therefore, it is likely to have an impact on a substantial number of small entities. However, the only costs incurred are the negligible costs of submitting the already completed form to CBP along with other required entry documents. These costs do not rise to the level of significance. Therefore, CBP certifies that this final rule will not have a significant economic impact on a substantial number of small entities.

The collection of information contained in this final rule was previously reviewed and approved by OMB in accordance with the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) under control numbers OMB 2060-0104 (EPA Declaration Form 3520-1, “Importation of Motor Vehicles and Motor Vehicle Engines Subject to Federal Air Pollution Standards”), OMB 2060-0320 (EPA Declaration Form 3520-21, “Importation of Engines, Vehicles and Equipment Subject to Federal Air Pollution Standards”), and OMB 1405-0105 (Department of State form DS-11504, “Request for Customs Clearance of Merchandise”). As importers are already required under existing regulations to complete the EPA Declaration Forms and either submit them to CBP or retain them in their records, and the burden estimates in the above-identified OMB approved information collection requests presume the forms are submitted to CBP, there are no new collections of information stated in this document. In this regard, it is noted that although existing 19 CFR 12.73 does not expressly require the submission of EPA Declaration Form 3520-1 by name, it does require that the same information captured by that form be submitted to CBP. Similarly, shipments sent from abroad to foreign diplomatic or consular missions in the U.S., or their personnel, currently must be cleared by respondents submitting to CBP a Department of State-approved form DS-1504; therefore, this document does not impose any new collections of information by requiring the DS-1504 to be presented to CBP for purposes of claiming an exemption from emission documentation requirements.

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

For the reasons set forth above, part 12 of title 19 of the Code of Federal Regulations (19 CFR part 12) is amended as set forth below.

A. Background

Section 13 of the Toxic Substances Control Act (TSCA) (15 U.S.C. 2612) governs the entry of those chemical substances and mixtures, and articles containing such chemical substances or mixtures into the customs territory of the United States and authorizes the Secretary of the Treasury, authority subsequently delegated to the U.S. Customs and Border Protection (CBP), to refuse entry of any chemical substance, mixture, or article that: (1) fails to comply with any rule in effect under TSCA; or (2) is offered for entry in violation of TSCA section 5 or 6 (15 U.S.C. 2604 or 2605) or Subchapter IV (15 U.S.C. 2681 et seq.), or in violation of a rule or order under those provisions or in violation of an order issued in a civil action brought under TSCA section 5 or 7 (15 U.S.C. 2604 or 2606) or Subchapter IV (15 U.S.C. 2681 et seq.). Section 13 also sets forth procedural requirements in connection with an entry refusal and authorizes CBP, after consultation with EPA, to issue rules for the administration of section 13.

Section 13 of TSCA is implemented in the CBP regulations at §§ 12.118-12.127 and 127.28 of title 19 of the Code of Federal Regulations (19 CFR 12.118-12.127, and 127.28). On August 29, 2016, U.S. Customs and Border Protection (CBP) published a Notice of Proposed Rulemaking (NPRM) in the Federal Register (81 FR 59157) proposing to amend the CBP regulations regarding the requirement to file a Toxic Substances Control Act (TSCA) certification when importing into the customs territory of the United States chemicals in bulk form or as part of mixtures and articles containing a chemical or mixture.

The proposed amendments were intended to clarify the description, scope, and definitions of the requirements for the importation of chemical substances, mixtures and articles containing a chemical substance or mixture, as well as the requirements associated with TSCA-excluded chemicals.

This document revises the proposed change in § 12.119 regarding the scope of the regulation. To clarify the regulation based on the public comments, the term “Chemicals not subject to TSCA” in proposed § 12.119(b) is changed in the final rule to “TSCA-excluded chemicals”. In addition, because the proposed revision of the scope in § 12.119(c) was confusing with respect to the application of the regulations to articles in §§ 12.120 through 12.127, we are adding the phrase, “if so required by the Administrator by specific rule under TSCA” to § 12.119(c), which mirrors the current language of the regulation prior to the proposed amendment.

The final rule replaces the existing definition of the term “chemical substance in bulk form” in § 12.120(b) with a definition of “TSCA chemical substance in bulk form”, and adds new definitions for the terms “TSCA chemical substance as part of a mixture” in § 12.120(c) and “TSCA-excluded chemicals” in § 12.120(d). These definitions are revised and added to clarify that the certification obligations apply to both chemical substances and mixtures that are subject to TSCA, which require a positive certification, as well as those chemicals and mixtures that are not subject to TSCA, which require a negative certification (unless clearly identified as a TSCA-excluded chemical), and to ensure that terms used in the regulatory text are defined when necessary. “Mixture” is a statutory term in TSCA that does not apply to TSCA-excluded chemicals. TSCA-excluded chemicals require a negative certification whether imported as a single TSCA-excluded chemical mixed with other TSCA-excluded chemicals. This document also adds a definition of the term “Administrator” to mean the Administrator of the EPA, and “covered commodity” to include any merchandise that is an article, a TSCA chemical substance in bulk form, TSCA-excluded chemicals (as those terms are defined in § 12.120(a), (b), or (d)), or that is a mixture as defined in TSCA and describe a commodity that is subject to actions under § 12.122, et seq. and § 127.28.

In addition, in §§ 12.122(a) and (b), 12.123(b), 12.124(a), 12.125(b), and 127.28, this document revises references to “chemical substances, mixtures, or articles” to clarify that these regulations apply to TSCA chemical substances, mixtures, or articles as well as TSCA-excluded chemicals. In § 12.124, this final rule changes the name of the agency from “Customs Service” to “CBP”.

The final rule provides an electronic option for filing TSCA certifications, consistent with Executive Order (EO) 13659, Streamlining the Export/Import Process for America's Businesses, which seeks to reduce unnecessary procedural requirements relating to, among other things, importing into the United States, while continuing to protect our national security, public health and safety, the environment, and natural resources. See 79 FR 10657 (February 25, 2014). The final rule is consistent with the Security and Accountability for Every Port Act of 2006 (“SAFE Port Act,” 19 U.S.C. 1411(d)) which mandates that all federal agencies that require documentation for clearing or licensing the importation of cargo participate in the International Trade Data System (ITDS) by using a CBP-authorized Electronic Data Interchange (EDI) system as a single portal for the collection and distribution of standard electronic import and export data.

In order to submit an electronic TSCA certification, importers or their agents are required by the final rule to submit their entry filings to ACE or any other CBP electronic data interchange (EDI) system authorized to accept entries. This document also requires in § 12.121(a)(3) the submission of additional information relating to the certifying individual, including name, phone number, and email address for TSCA certifications submitted either in writing or electronically. The collection of contact information for the certifying individual will facilitate the resolution of issues related to particular shipments. This document also changes the reference to paragraph (a)(1) found in § 12.121(c) to be a reference to paragraph (a).

The final rule eliminates the blanket certification process. The discontinued paper-based blanket certification process had limited utility because each blanket certification was only valid at one port of entry for one year. In addition, the previous blanket certification process was more burdensome than the entry-specific certification process because it required filers to include a statement referring to the blanket certification and incorporate it by reference for each entry, as well as four data elements on the blanket certification itself, including product name, Harmonized Tariff Schedule of the United States (HTSUS) subheading number, and the name and address of the foreign supplier. Because the electronic TSCA certification process requires only a certification code, along with the name and contact information of the TSCA certifier, and because the paper-based blanket certification had limited application, we believe the elimination of the blanket certification process reduces the reporting burden for importers.

In addition, the final rule amends §§ 12.125 and 12.126 to allow importers to provide electronic notice of exportation and abandonment as an alternative to the paper-based written notice process allowed under the existing regulations.

The automation of these processes modernizes the way that CBP and EPA interact with importers of chemicals, and ensures effective application of regulatory controls. CBP estimates approximately 2.5 million TSCA positive certifications and 230,000 TSCA negative certifications are received annually. The electronic collection of TSCA certifications for processing in ACE improves information access, data integration with CBP entry information, and the data quality of TSCA certifications. As a result, CBP expects improved communication among EPA, CBP, and importers.

The final rule makes minor changes to §§ 12.118-12.127 by removing the word “shall” and revising the sentence grammar to simplify the language. The use of “shall” is imprecise and outdated. Plain language guidance recommends replacing “shall” with the word “must,” “will,” or another word that more appropriately conveys the intended meaning. This is part of the U.S. Government efforts to update regulatory text per plain language guidance.

On February 10, 2016, CBP published a notice in the Federal Register (81 FR 7133) announcing that CBP was modifying the National Customs Automation Program (NCAP) test concerning electronic filings of data to ACE, known as the Partner Government Agency (PGA) Message Set test, to allow for the transmission of TSCA certification data. As of November 16, 2016, CBP has received 150,661 electronic TSCA certifications through ACE pursuant to the PGA Message Set Test. This volume of electronic submissions indicates that the PGA Message Set Test has been successful and reliable with regard to the electronic submission of TSCA certifications to ACE. Consequently, this document announces the conclusion of the PGA Message Set Test with regard to the submission of the TSCA certification. All other aspects of the PGA Message Set Test remain on-going until ended by announcement in a subsequent Federal Register notice.

Fourteen commenters responded to the solicitation of comments to the proposed rule. A description of the comments received, together with CBP's analysis, is set forth below.

Comment: The trade generally argued against negative certification as applied to chemicals clearly labelled or identified as products that are excluded from TSCA regulation. The list of excluded products includes pesticides, food, food additives, drugs, cosmetics or devices, nuclear material, tobacco products, firearms and ammunition

Multiple commenters argued that the scope of the negative certification in the proposed rule is too broad. One commenter noted that the EPA's own regulations on TSCA, found at 40 CFR 707.20(b)(2)(ii), only require the submission of a negative certification where the imported chemical products are not otherwise clearly identified as a product not subject to TSCA. A different commenter stated that CBP should not require certification regarding chemicals that are excluded by the text of TSCA unless there was evidence of problems regarding the labels or other methods of regulating the TSCA-excluded chemicals.

Commenters further indicated that because the proposed rule would affect products already regulated by other agencies, it would create duplicative processes and be incompatible with Executive Order (E.O.) 13659, Streamlining the Export/Import Process for America's Businesses. Commenters requested that CBP work to harmonize the proposed rule with current and future EPA regulations, to include an exemption from the negative certification requirement where the imported products are already clearly labelled as a product that is expressly excluded by TSCA.

CBP Response: CBP and EPA agree that the negative certification requirement need not be applied to those chemicals that are otherwise clearly identified as a product excluded from TSCA, which are regulated by other agencies or statutes, including pesticides, food, food additives, drugs, cosmetics, devices, tobacco, tobacco product, nuclear material, firearms and ammunition, as described by § 3(2)(B) (ii)-(vi) of TSCA. The requirement to file a negative certification in § 12.121(a)(2) excludes TSCA-excluded chemicals that are clearly identified as such. This position is consistent with EPA's TSCA section 13 Import Policy, which addresses aspects of the CBP regulation implementing TSCA section 13. See 40 CFR 707.20(b)(2)(ii); 45 FR 82850 (December 16, 1980).

Comment: The proposed rule did not include a “blanket certification” that allowed an importer to qualify for TSCA compliance on reoccurring shipments of the same chemicals to the same port, with a one year duration. Commenters from multiple industries noted that the blanket certification process is useful for companies that import the same product to the same port repeatedly throughout a one-year period. Commenters requested CBP to clarify its rationale for proposing to discontinue the blanket certification, and further argued that a blanket certification process, in some form, would not only benefit the trade, but would be aligned with the goals of E.O. 13659, i.e., by reducing costs and promoting flexibility. One commenter argued that the ACE system cannot be deemed to be more efficient without some form of blanket certification. Commenters urged CBP either to maintain the existing paper-based blanket certification process, or to develop an electronic equivalent.

CBP Response: The reason for removing the blanket permit system is the difficulty of integrating that paper-based certification process, which required CBP to maintain files and track yearly renewals for verification and compliance, with an otherwise fully automated system. In addition, with the new requirement to submit information on the certifier, renewals would need to be made more frequently in order to keep certifier information updated. Electronic submission of TSCA certifications through ACE, allows for electronic releases without CBP manual processing or reviews.

CBP is aware that the transition from the paper-based system with blanket certifications to an electronic system without blanket certifications may present short-term challenges for filers and importers. However, efforts to preserve the blanket certification process in combination with electronic filing though ACE would actually restrict the system as a whole from achieving maximum efficiency as it would require all filers to undergo extra steps in the PGA message set to input information regarding whether the importer had a blanket certification on file, and for which ports.

Comment: The trade commented that the term “non-TSCA chemical” in the proposed regulation is confusing and should be replaced with the trade term “chemical substances excluded from TSCA,” because all chemicals are subject to TSCA unless excluded and the term “non-TSCA” is used by the trade to refer to chemicals that are subject to TSCA but not yet on the TSCA inventory.

The trade also commented that the phrase “articles containing a chemical substance” is ambiguous, because it can be interpreted to mean an object or vessel that is used to hold a chemical substance as well as an object that is made up of a chemical substance. Finally, the trade commented that a typo appears in the definition of a “covered commodity” at § 12.120(e) of the proposed rule because it claims “the definitions specified in paragraphs (a), (b), and (d). . .” should instead be “(a), (b), and (c). . .”

CBP Response: To address industry's concerns about the use of the proposed term “non-TSCA chemical,” this term is being changed to “TSCA-excluded chemicals.” The definition of the term “TSCA-excluded chemicals” will remain as it was under “non-TSCA chemical,” which is consistent with the appropriate provisions under TSCA.

The phrase “articles containing a chemical substance” is consistent with the scope as provided under section 13 of TSCA. The term “article” is defined in EPA regulations, as well as in this rule, and has been applied in a variety of TSCA programs and activities for many years. The phrase “chemical substances or mixtures as parts of articles” is used in the appropriate provisions of the § 12.121 reporting requirements of this rule, and this phrase has been used in a variety of TSCA programs and activities, including the TSCA section 13 import program. See, 42 FR 64572 (December 23, 1977) (noting that a chemical substance is considered to be imported `as part of an article' if the substance is not intended to be removed from that article and has no end use or commercial purpose separate from the article of which it is a part.). See also, Introduction to the Chemical Import Requirements of the Toxic Substances Control Act, USEPA (1999) (stating that chemical substances and mixtures are considered to be imported as part of an article only if the substances or mixtures are not intended to be removed/released from the article and they have no end use or commercial purpose separate from the article of which they are a part) and TSCA Chemical Data Reporting Fact Sheet: Imported Articles, USEPA (January 2016).

Section 12.120(e) of the proposed rule does not contain a typographical error. Paragraph (c) is not needed, because a “covered commodity” includes “mixtures,” including a chemical substance that is part of the mixture. The term “covered commodity” is used to cover all things covered by the rule, including chemicals not subject to TSCA, which would require either a negative certification or proper identification. It is important that the term “covered commodity” cover things not subject to TSCA, given that, for example, CBP can detain shipments that do not have a required negative certification. See 19 CFR 12.122(b)(3).

Comment: The proposed rule required an importer to indicate, for each entry subject to either a positive or negative certification requirement, the name, phone number and email address of the person who provided the certification, in writing or electronically through the ACE system.

Multiple commenters indicated that if such a requirement becomes part of the final rule, it should only be required at the header level rather than at each line entry. Commenters argued that this would be important for two reasons: to avoid imposing a repetitive manual task of re-inputting the same information for hundreds of lines; and to help importers meet their requirements to keep submissions under the 8 MB file size limitation.

One commenter stated that the provision of contact information for the certifier should be optional, expressing doubt as to the usefulness of such requirement given that the customs broker has historically served as the point of contact for any CBP or PGA inquiry. A separate commenter questioned the underlying intent for this requirement, requesting clarification as to whether it was intended to provide contact information in the event of a spill or emergency (in which case the commenter argued that the Material Safety Data Sheet already provides this information), or whether there would be legal ramifications imposed on the person providing the certification.

CBP Response: CBP and EPA need the identifying information so that they can contact the certifying individual when there is a question about the imported article, and for enforcement purposes. The certifying individual contact information is required to know who is certifying and whom to contact if needed. CBP and EPA acknowledge that this requirement may create additional clerical work for filers. However, ACE will allow the requested information to be entered once at the header level using the PG00 record within the PGA Message Set, and then populated under each entry line where specified. In addition, the new process will result in faster cargo clearance. CBP and EPA encourage filers who have importers with routine imports with the same certifying individual information to explore options with third-party software vendors to take advantage of existing technology.

Comment: Commenters requested information regarding how CBP and EPA will treat confidential business information (CBI) collected under the process outlined in the proposed rule, including: where the data will be stored, how the data will be protected, how long the data will be retained, and who will have access to the data.

CBP Response: Access to nonpublic data contained in the ACE system will be limited to CBP officers and relevant personnel at CBP headquarters, as well as limited personnel at partner government agencies. In addition, access to ACE data including Confidential Business Information (CBI) is limited to personnel with the appropriate roles and permissions and is managed by various audit controls on a continual basis.

Comment: Commenters expressed concern regarding what was alleged to be broadening of the scope of EPA authority under 19 CFR 12.120 to 12.127, by amending § 12.119 to cover “articles containing a chemical substance or mixture.” In contrast, the language of § 12.119 prior to amendment limits the scope of application to “articles containing a chemical substance or mixture if so required by the Administrator by specific rule under TSCA.” Commenters asked CBP to clarify what would be required under the revised rule, including the types of articles that would be subject to the different requirements.

CBP Response: Given the concerns expressed by the commenters, and CBP's desire to provide unambiguous authority to submit TSCA certification elements for imports electronically through the ITDS system, CBP is revising the language proposed for § 12.119 in order to maintain the scope provided for in the existing § 12.119, as applied to articles. CBP will, however, make stylistic changes to 19 CFR 12.119 in order to provide clarity as to which chemicals the certification requirement will not apply (i.e., TSCA-excluded chemicals). The final rule continues to provide that the regulation applies to “articles containing a chemical substance or mixture if so required by the Administrator by specific rule under TSCA.” CBP will continue to consider whether other changes to the scope of the rule are needed, and may revisit the issue in a future rulemaking.

Comment: One commenter argued that the final regulation implementing the Formaldehyde Emission Standards for Composite Wood Products Act of 2010, which lifts the article exemption for regulated composite wood products, would be impacted by the proposed rule by creating an identification burden on CBP and a compliance burden on the trade for determining regulated items and requirements. The trade stated that clear guidance and training should be available in order to avoid confusion.

CBP Response: Under the final rule, there should be no impact on the EPA's efforts to implement regulations under the Formaldehyde Emission Standards for Composite Wood Products Act of 2010. In order to ensure that the trade has time to adjust and understand the requirements, the prepublication version of the Formaldehyde Emission Standards for Composite Wood Products final rule provides that the compliance date regarding the import certification requirements of that rule will be delayed two years from publication of that rule. During this period, the EPA may conduct outreach with regulated parties and industry associations in order to familiarize the supply chain with the importer provisions. However, it is the importer's responsibility to determine whether the shipment is in compliance with a particular regulation is properly identified accordingly.

Comment: One commenter commented in reference to various policy issues regarding how the current Foreign Trade Zone (FTZ) system of filing and reporting will be adapted to the proposed rule. In short, the commenter does not think that TSCA certification requirements should be applied at the time of admission into the FTZ, but rather when the goods leave the FTZ and enter the stream of commerce. The commenter also noted that a “Dual Option” model whereby importers could file PGA data in weekly entry summaries for all FTZ related imports, but would provide PGA data on non-FTZ imports at the time of cargo release. In addition, the commenter seeks confirmation that the current manual Notice of Arrival mechanism will be preserved in ACE.

CBP Response: CBP notes that the importer is only required to make a good faith estimate when making entry of the merchandise, including the TSCA certifications thereof, when it files the weekly FTZ entry estimate pursuant to § 146.63(c)(1). CBP is aware that under this process, there may be occasions where a TSCA negative certification is issued by the importer in the weekly estimate, and yet the weekly summary reflects that TSCA chemical substances were in fact imported. CBP and EPA will address importers that demonstrate systematic or egregious discrepancies between weekly estimates and weekly summaries on a case-by-case basis and through available enforcement and compliance practices.

Current regulations provide for filing of the Notice of Arrival (NOA) with entry documentation. The proposed electronic implementation maintains that possibility. CBP is working to build functionality for the submission of PGA message set elements as merchandise is admitted to the FTZ through the e-214 process. At that time, there may be a consideration of whether the NOA is more appropriately filed at time of admission into a Foreign Trade Zone.

Comment: Commenters noted that the proposed rule fails to identify the certification requirements and other compliance measures required for imports that enter through either the informal entry process, or Section 321. Commenters indicated that given the increased value threshold to $800, there will likely be an increase in the number of imports that attempt to enter under Section 321, and thus, CBP needs to provide guidance to the trade as to how it will address TSCA certification, either positive or negative, for imports that enter under Section 321. Commenters argued that both the statutory language and the regulations implementing the TSCA clearly indicate that the law applies to all chemical products entering the United States, not just those in excess of $800 in value.

CBP Response: The recent amendments to Section 321 did not change the PGA data requirements, only the value of the shipments that qualify for entry free of duty and taxes. Thus, if TSCA import certification compliance was previously required for imports valued $200 or less, it will also be required when imports are valued $800 or less under the amended Section 321. CBP is considering options to address the broader question of how importers can best provide the appropriate PGA data, including TSCA certification, for imports that qualify under Section 321.

Accordingly, after review of the comments and further consideration, CBP has decided to adopt as final the proposed rule published in the Federal Register (81 FR 59157) on August 29, 2016, with the changes described above.

The costs for the regulated community to implement TSCA certification via this final rule would be minimal. CBP and EPA estimate that providing the name, phone number, and email address of the import certifier would result in a net increase in information collection burden of three minutes for each of the estimated 2.5 million TSCA positive certifications and 230,000 TSCA negative certifications (at a cost of about $3 per certification and assuming no filer takes advantage of the possibility of filing this address information at the header level, as noted above), yielding an annual maximum increased cost to filers of $8.41 million.

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 final rule is not a “significant regulatory action,” under section 3(f) of Executive Order 12866. Accordingly, OMB has not reviewed this regulation. An Economic Analysis for this action, which is contained in a document entitled “Economic Analysis for Custom and Border Protection (CBP) Final Rule on TSCA Import Certifications in ACE/ITDS,” is available in the docket for this rulemaking and is summarized in the previous section of this document.

The Regulatory Flexibility Act (RFA) of 1980 (5 U.S.C. 601 et seq.) requires federal agencies to assess the effects of regulations on small entities, including businesses, nonprofit organizations, and governments, and—in some instances—to examine alternatives to the regulations that may reduce adverse economic effects on significantly impacted small entities. Section 604 of the RFA, as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996, requires an agency to perform a regulatory flexibility analysis for a rule unless the agency certifies under section 605(b) that the regulatory action would not have a significant (economic) impact on a substantial number of small entities. The RFA does not specifically define “a significant economic impact on a substantial number” of small entities.

A small entity analysis (SEA) was conducted and summarized herein. The SEA consists of: two quantitative analyses of impacts of the final rule on small entities for TSCA positive certifications, a qualitative discussion of impacts for TSCA negative certifications, and an integrative analysis of the combined universe of TSCA positive and TSCA negative certifications (all entities affected by the rule). These analyses provide information on the magnitude and extent of cost impacts for the purpose of supporting a CBP certification that the final rule would not result in significant (economic) impact on a substantial number of small entities. For additional details, see the Economic Analysis for this action, which is contained in a document entitled “Economic Analysis for Customs and Border Protection (CBP) Final Rule on TSCA Import Certifications in ACE/ITDS,” and is available in the docket for this rulemaking.

For TSCA positive certifications, the first quantitative analysis is a screening analysis of cost impacts to the smallest entities associated with TSCA positive certifications; and the second, a more detailed distributional analysis of impacts associated with TSCA positive certifications. These analyses use cost impact percentages to measure potential impacts on small parent entities affected by the final rule. The cost impact percentage is defined as annualized compliance costs resulting from the TSCA positive certification portion of the final rule as a percentage of annual revenues or sales, a commonly available and objective measure of a company's business volume. As is the expected case for this rule, when increases in regulatory costs are minimal, they represent a small fraction of a typical entity's revenue, and therefore the impacts of the regulation are minimal.

The first quantitative analysis for TSCA positive certifications is a screening analysis that provides a concise estimate of small entity impacts under the final rule by examining whether an “average small parent entity” incurs significant economic impact. The results of this analysis are presented in Table 1. The second quantitative analysis is a detailed distributional analysis that provides an estimate of small entity impacts under the assumption that affected entities have the same size characteristics as the overall industry sector. The results of this analysis are presented in Table 2.

FDA is amending the animal drug regulations to reflect approval of 43 supplemental NADAs and 52 supplemental ANADAs for revised labeling reflecting a change in marketing status from OTC to Rx for antimicrobial drugs of importance to human medicine administered to food-producing animals in medicated drinking water. These applications were identified as being affected by guidance for industry (GFI) #213, “New Animal Drugs and New Animal Drug Combination Products Administered in or on Medicated Feed or Drinking Water of Food-Producing Animals: Recommendations for Drug Sponsors for Voluntarily Aligning Product Use Conditions with GFI #209,” December 2013 (http://www.fda.gov/downloads/AnimalVeterinary/GuidanceComplianceEnforcement/GuidanceforIndustry/UCM299624.pdf). Their change to Rx marketing status is consistent with the FDA CVM's initiative for the Judicious Use of Antimicrobials. The affected applications follow:

The animal drug regulations are also being amended to reflect several non-substantive changes in format. These technical amendments are being made to improve the consistency and readability of the regulations.

Elsewhere in this issue of the Federal Register, FDA is amending the animal drug regulations to reflect approval of similar supplemental NADAs and ANADAs changing the marketing status of antimicrobial drugs administered to food-producing animals in medicated feed.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, 21 CFR parts 520 and 529 are amended as follows:

FDA is amending the animal drug regulations to reflect approval of 71 supplemental NADAs and 35 supplemental ANADAs for revised labeling reflecting a change in marketing status from OTC use to use by VFD for antimicrobial drugs of importance to human medicine administered to food-producing animals in medicated feed. Where applicable, FDA is also withdrawing approval of those parts of the NADAs that pertain to use of these antimicrobial drugs for growth promotion indications. These actions are being taken at the sponsors' requests because these particular medicated feeds will no longer be manufactured or marketed.

These applications were identified as being affected by guidance for industry (GFI) #213, “New Animal Drugs and New Animal Drug Combination Products Administered in or on Medicated Feed or Drinking Water of Food-Producing Animals: Recommendations for Drug Sponsors for Voluntarily Aligning Product Use Conditions with GFI #209”, December 2013 (http://www.fda.gov/downloads/AnimalVeterinary/GuidanceComplianceEnforcement/GuidanceforIndustry/UCM299624.pdf). Their change to VFD marketing status is consistent with FDA CVM's initiative for the Judicious Use of Antimicrobials.

The animal drug regulations for medicated feeds are also being amended to reflect several non-substantive changes in format. These technical amendments are being made to improve the consistency and readability of the regulations.

The affected applications for Type A medicated articles for which supplemental applications with revised labeling were approved follow:

The affected applications for manufacturing combination drug medicated feeds follow:

The animal drug regulations are also being amended to reflect several non-substantive changes in format. These technical amendments are being made to improve the consistency and readability of the regulations.

Elsewhere in this issue of the Federal Register, FDA is amending the animal drug regulations to reflect approval of similar supplemental NADAs and ANADAs changing the marketing status of antimicrobial drugs administered to food-producing animals in medicated water.

Elanco US Inc., 2500 Innovation Way, Greenfield, IN 46140 has informed FDA that it has transferred ownership of, and all rights and interest in, NADA 141-110, providing for the manufacture of combination drug medicated turkey feeds containing STAFAC (virginiamycin) and COBAN (monensin) to Phibro Animal Health Corp., GlenPointe Centre East, 3d Floor, 300 Frank W. Burr Blvd., Suite 21, Teaneck, NJ 07666. As provided in the regulatory text of this document, the animal drug regulations are amended to reflect this change of sponsorship.

In addition, approval of the following applications for medicated feeds containing antimicrobial drugs of importance to human medicine administered to food-producing animals is being withdrawn at the sponsors' requests because the products are no longer manufactured or marketed:

Elsewhere in this issue of the Federal Register, FDA gave notice that approval of NADAs 034-085, 035-287, 046-668, 091-668, 108-116, 133-334, 139-473, 140-340, 140-443, 140-947, and 141-090, and ANADAs 200-171, 200-569, 200-570, and 200-580, and all supplements and amendments thereto, is withdrawn, effective January 6, 2017. As provided in the regulatory text of this document, the animal drug regulations are amended to reflect these voluntary withdrawals of approval.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, 21 CFR parts 556 and 558 are amended as follows: