Federal Register Vol. 81, No.54,

The Department of Homeland Security (DHS) U.S. Customs and Border Protection (CBP) published a notice of proposed rulemaking in the Federal Register, 80 FR 79487, Dec. 22, 2015, proposing to exempt portions of the system of records from one or more provisions of the Privacy Act because of criminal, civil, and administrative enforcement requirements. DHS reissued the DHS/CBP-007 Border Crossing Information (BCI) System of Records in the Federal Register on May 11, 2015 (80 FR 26937), to provide notice to the public that DHS/CBP was updating the categories of records to include the capture of certain biometric information and Advance Passenger Information System (APIS) records at the border. This final rule exempts portions of the new categories of records ingested from APIS that are claimed for APIS records pursuant to 5 U.S.C. 552a(j)(2) and 5 U.S.C. 552a(k)(2).

DHS received no comments on the NPRM and will implement the rulemaking as proposed.

For the reasons stated in the preamble, DHS amends chapter I of title 6, Code of Federal Regulations, as follows:

Public Participation

Interested persons are invited to participate in this rulemaking by submitting written data, views, or arguments on all aspects of the interim final rule. DHS also invites comments that relate to the economic, environmental, or federalism effects that might result from this interim final rule. Comments that will provide the most assistance to DHS will reference a specific portion of the interim final rule, explain the reason for any recommended change, and include data, information, or authority that support such recommended change.

As part of the President's new approach to Cuba policy, DHS and CBP examined their regulations and policies pertaining to Cuba, particularly as they relate to air travel between the two countries.1 The existing regulations pertaining to flights to and from Cuba (codified at 19 CFR part 122, subpart O) are no longer needed because they are either obsolete in light of intervening regulatory changes or substantively identical to the general CBP requirements applicable to aircraft seeking to fly into or out of the United States. Accordingly, DHS is amending 19 CFR part 122 to remove subpart O and to make conforming amendments to other provisions.

Under 19 CFR part 122, subpart O, only certain CBP-approved airports may accept aircraft traveling to or from Cuba. Section 122.153 (19 CFR 122.153) provides a process by which a port authority must submit a written request to CBP requesting that an airport receive approval to accept flights to or from Cuba. Section 122.153 also contains a list of approved airports. The remaining sections in subpart O pertain to other requirements for flights to and from Cuba, including notice of arrival, documents to be presented upon arrival, the release of passengers arriving from Cuba, and documents required for clearance. None of the regulatory requirements that apply specifically to flights to and from Cuba is mandated by statute, but rather are authorized by the broad authority granted to the Secretary of Homeland Security respecting all aircraft arriving in and departing from the United States under 19 U.S.C. 1433, 1644 and 1644a.2

Prior to 2011, only three U.S. airports were authorized to accept flights to and from Cuba: John F. Kennedy International Airport, Los Angeles International Airport, and Miami International Airport. In 2011, the President announced a series of changes to ease certain restrictions on travel to and from Cuba.3 The announcement stated that the regulation should be modified to allow a U.S. airport to apply to accept authorized flights if the airport has adequate customs and immigration capabilities and if an authorized carrier has expressed an interest in providing service between Cuba and the airport.4 In response, DHS issued a final rule in the Federal Register (76 FR 5058) on January 28, 2011, that amended 19 CFR 122.153 to allow additional airports to request approval to accept Cuba flights.

On December 17, 2014, the President announced that the United States would begin the process of normalizing relations with Cuba, including taking steps to re-establish diplomatic relations (which occurred on July 20, 2015), adjust regulations to more effectively empower the Cuban people, and facilitate an expansion of authorized travel under general licenses for the twelve existing categories of travel to Cuba authorized by law.5 As part of the President's new approach to relations with Cuba, the Department of the Treasury's Office of Foreign Assets Control (OFAC), and the Department of Commerce's Bureau of Industry and Security (BIS) have issued five sets of amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR), respectively.6 In February 2016, representatives from the Departments of State and Transportation signed an arrangement with Cuba that provides the basis for the restoration of scheduled air services between the United States and Cuba.7

In light of these intervening regulatory changes, the regulations specifically addressing flights to and from Cuba in 19 CFR part 122, subpart O are no longer necessary. Accordingly, DHS is removing that subpart. DHS is also making conforming amendments to certain provisions in titles 8 and 19 of the CFR: 8 CFR 234.2, 19 CFR 122.31, and 19 CFR 122.42. The removal of part 122, subpart O, will make clear that flights to and from Cuba are subject to the same entry and clearance requirements in 19 CFR part 122 as all other similarly situated international flights.

Part 122, subpart O, of title 19 CFR, consists of eight sections numbered from 122.151 to 122.158 (19 CFR 122.151-122.158). A description of each section follows, along with an explanation as to why it is no longer necessary, desirable, or consistent with the U.S. government's current approach towards Cuba.

Section 122.151 (19 CFR 122.151) consists of two definitions, one for the “United States” and one for “Cuba,” which apply within subpart O. The definition for the “United States” is duplicative of the one in 19 CFR 122.1(l), and is therefore unnecessary. “Cuba” is not defined in 19 CFR 122.1, but this definition is also unnecessary in light of the removal of the special regulations governing flights to and from Cuba.

Section 122.152 (19 CFR 122.152), regarding the application of subpart O, provides that the subpart applies to all aircraft entering or departing the United States to or from Cuba, except for public aircraft. As explained below, the other sections in subpart O are unnecessary, so there is no longer a need for this section.

Section 122.153 (19 CFR 122.153) covers the limitation on airports of entry and departure for flights to and from Cuba. Under this section, flights to or from Cuba are limited to the Miami International Airport, John F. Kennedy International Airport, Los Angeles International Airport, or any other airport approved by CBP according to the procedures in paragraph (b). Paragraph (b) of § 122.153 outlines the approval process, which allows an international airport, landing rights airport, or user fee airport to request CBP approval to become an airport of entry and departure for aircraft traveling to and from Cuba. Under this process, CBP would determine whether the airport is properly equipped to facilitate passport control and baggage inspection and whether there is an OFAC licensed carrier that is prepared to provide flights between the airport and Cuba. Approved airports are listed on the CBP Web site and in updates to a list of approved airports in paragraph (c) of § 122.153.

The limitations regarding airports authorized to provide flights to and from Cuba are not required by statute. The regulation, now codified at 19 CFR 122.153, was originally promulgated in 1980 and appeared at 19 CFR 6.3a. The preamble for the Federal Register document implementing the regulation stated that “[b]ecause of the present situation involving aliens attempting to reach the U.S. from Cuba, there is serious reason to believe that unsafe and unlawful means of transportation will be utilized.” 8 As to the authority underlying the new limits, the preamble stated the rule was being undertaken in accordance with regulations propounded by the Federal Aviation Administration (14 CFR 91.101), the Immigration and Naturalization Service (8 CFR parts 231 and 239), and the Department of Commerce (15 CFR 371.19). None of these authorities limits the number of airports that can service flights to or from Cuba or requires an application process to qualify airports to service Cuban flights in particular.

DHS has determined that the approval process set forth in § 122.153(b) is no longer necessary because the criteria for obtaining approval to accept flights to and from Cuba are not materially different than the requirements applicable to all other similarly situated airports and aircraft operators seeking to conduct international flights. In evaluating requests by aircraft for permission to land at an international, landing rights or user fee airport, CBP researches and evaluates the impact on the overall operations at a given airport regardless of its classification. CBP also evaluates, in consultation with the airport authority where appropriate, the ability of the proposed airport to handle the flight, travelers, baggage, and cargo. CBP ensures that each airport for which a new international flight is requested is equipped to facilitate passport control and baggage inspection, and has the appropriate infrastructure to properly service the plane from the runway to its assigned gate.9

The requirement in § 122.153 that the requesting airport must have an OFAC-licensed carrier service provider that is prepared to provide flights between the airport and Cuba is obsolete. OFAC no longer requires an air carrier to obtain a specific license to provide carrier services to or from Cuba. Rather, an air carrier may fly to or from Cuba pursuant to a general license under the CACR, so long as the air carrier is providing carrier services in connection with travel or transportation of persons, baggage, or cargo that is itself authorized under the CACR, 31 CFR part 515, and is no longer required to obtain a specific license from OFAC.10 See 31 CFR 515.317 and 515.572(a).

Accordingly, by eliminating § 122.153, CBP will make clear that it follows the same process in certifying flights to and from Cuba as it does with all international flights. Aircraft operators will be required to follow the usual procedures for international flights found in governing law, including the regulations in 19 CFR part 122, subpart B, for obtaining permission to land and to secure new international routes. The specific requirements vary depending on whether the airport is an international airport, a landing rights airport, or a user fee airport. See 19 CFR 122.11-122.13 (international airports); 122.14 (landing rights airports); 122.15 (user fee airports).

Section 122.154 (19 CFR 122.154) sets forth notice of arrival requirements. This section provides that all aircraft entering the United States from Cuba (except for OFAC-approved scheduled commercial aircraft of a scheduled airline) must give advance notice of arrival, not less than one hour before crossing the U.S. coast or border. The notice must provide the type of aircraft; name of the aircraft commander; number of U.S. citizen and alien passengers; place of last foreign departure; estimated time of crossing the border; and estimated time of arrival. Section 122.154 is being removed as it is redundant with other provisions within part 122. Generally, all inbound aircraft (not just those arriving from Cuba) are required to provide notice to CBP prior to arriving in the United States. Section 122.22 (19 CFR 122.22) generally requires all private aircraft pilots to transmit notice of arrival and manifest information to CBP at least 60 minutes prior to departure of the aircraft from the foreign port or place.11 The data required under § 122.22 includes the data required under § 122.154. Section 122.23 (19 CFR 122.23) requires similar notice of arrival information for certain non-public aircraft arriving from locations south of the United States. Section 122.31 (19 CFR 122.31) requires advance notice of arrival from all other aircraft, with the exception of aircraft of a scheduled airline arriving under a regular schedule. In addition, 19 CFR 122.49a, 122.49b, 122.49c, and 8 CFR 231.1(a) require commercial carriers to transmit electronic manifest information for all passengers and crew.

Section 122.155 (19 CFR 122.155) requires the aircraft commander of a flight arriving from Cuba to present to CBP the manifest required by 8 CFR 231.1(b),12 and the documents required by subpart E of 19 CFR part 122, upon arrival in the United States. As § 122.155 merely cross-references subpart E of 19 CFR part 122 and 8 CFR 231.1(b), the information referred to in this section is already required of all aircraft that are subject to the cited provisions. Furthermore, 19 CFR 122.22 imposes electronic manifest requirements on private aircraft that are commensurate with the electronic manifest requirements for commercial aircraft contained in subpart E.

Section 122.156 (19 CFR 122.156) concerns the release of passengers and aircraft. This section provides that neither passengers arriving from Cuba, nor the aircraft, will be released by Customs before the passengers are released by the Immigration and Naturalization Service or a Customs officer acting on behalf of that agency. This section is outdated due to the reorganization in 2002 which prompted the creation of CBP, in which customs and immigration functions were consolidated.13 Moreover, the requirement that all arriving persons report to a Customs officer and that all aliens seeking admission undergo immigration inspection is set forth in various provisions in the United States Code and titles 19 and 8 of the CFR.14 Clearance of aircraft departing the United States is covered generally in 19 CFR part 122, subparts F, G, H and I.

Section 122.157 (19 CFR 122.157) sets forth the documents that are required to clear an aircraft for departure. Under this section, the aircraft commander must present documents required by subpart H and a license issued by the Department of Commerce under 15 CFR 371.19 or by the Department of State under 22 CFR part 123. This section is outdated and is no longer necessary. First, 15 CFR 371.19 no longer exists. Under the current regulations, flights on a “temporary sojourn” to or from Cuba generally qualify for a license exception under the EAR provided they meet certain conditions, which are administered by BIS. In general, flying an aircraft to Cuba, even temporarily, constitutes an export or re-export to Cuba.15 However, the governing EAR provision authorizes departure from the United States of foreign registry civil aircraft on temporary sojourn in the United States and of U.S. civil aircraft for temporary sojourn abroad.16 Thus, if the aircraft departing the United States for Cuba meets the “temporary sojourn” definition to qualify for the license exception, there is no license requirement imposed on such aircraft. Second, clearance requirements for all international flights are currently covered under 19 CFR part 122, subparts C, F, G and H. 22 CFR part 123, which pertains to the importation or exportation of certain defense articles, contains other potential requirements for clearance. These requirements, however, are not specific to flights to and from Cuba and would apply regardless of the removal of 19 CFR part 122, subpart O.

Section 122.158 (19 CFR 122.158) states that all other provisions of part 122 relating to entry and clearance of aircraft are applicable to aircraft subject to subpart O. This section is duplicative of 19 CFR 122.0(a), which provides that the regulations in part 122 relate to the entry and clearance of aircraft and the transportation of persons and cargo by aircraft, and are applicable to all air commerce.

For the reasons discussed above, DHS has determined that 19 CFR part 122, subpart O is no longer necessary to regulate air travel to and from Cuba due to changes in the regulatory requirements governing travel and trade between the United States and Cuba, and the implementation of robust reporting requirements that apply to international flights generally. Therefore, DHS is amending 19 CFR part 122 to remove 19 CFR part 122, subpart O, pertaining to flights to and from Cuba. Flights to and from Cuba will continue to be subject to the remaining entry and clearance requirements in 19 CFR part 122, as well as all other legal requirements relating to travel and trade between the United States and Cuba including, but not limited to, the CACR and the EAR.

DHS is amending various sections in title 8 CFR and title 19 CFR to bring these sections into conformity with the removal of 19 CFR part 122, subpart O. These amendments are described below.

Section 234.2 of title 8 (8 CFR 234.2) sets forth landing requirements for aircraft carrying passengers or crew required to be inspected under the Immigration and Nationality Act. Section 234.2(a) specifies the general requirements regarding the place of landing for such aircraft and also includes a special requirement for flights to and from Cuba. Specifically, the last sentence in § 234.2(a) specifies that aircraft carrying passengers or crew required to be inspected on flights originating in Cuba land only at airports that have been authorized by CBP pursuant to 19 CFR 122.153 as an airport of entry for flights arriving from Cuba, unless advance permission to land elsewhere has been obtained from the Office of Field Operations at CBP Headquarters. DHS is amending § 234.2(a) to remove the last sentence.

Section 122.31 of title 19 (19 CFR 122.31) sets forth notice of arrival requirements for aircraft entering the United States from a foreign area. Paragraph (c)(1)(ii) specifies that aircraft arriving from Cuba must follow the advance notice of arrival procedures set forth in § 122.154 in part 122, subpart O. Paragraph (c)(1)(iii) specifies that certain aircraft arriving from areas south of the United States (other than Cuba) must follow the notice of arrival procedures set forth in § 122.23 in part 122. As a result of removing subpart O, flights arriving from Cuba will now give advance notice of arrival in accordance with the other provisions in 19 CFR part 122. Accordingly, DHS is removing paragraph (c)(1)(ii) from § 122.31 and making other conforming amendments to paragraph (c)(1).

Section 122.42 of title 19 (19 CFR 122.42) sets forth certain aircraft entry requirements. Paragraph (d) provides that an aircraft of a scheduled airline which stops only for refueling at the first place or arrival in the United States shall not be required to enter provided it meets certain conditions, except for flights to Cuba (provided for in subpart O of this part). To conform with the removal of subpart O, DHS is removing this exception language from paragraph (d) of § 122.42.

All aircraft entering/departing the United States from/to Cuba must be properly licensed or otherwise authorized to travel between the United States and Cuba. Several federal agencies administer the necessary authorizations, and it is the responsibility of the owner or person in command of the aircraft to ensure that the aircraft has the necessary authorization to travel.

OFAC administers the CACR, 31 CFR part 515, which prohibit, in relevant part, all persons subject to the jurisdiction of the United States from engaging in travel-related transactions involving Cuba unless authorized by OFAC. As mentioned before, air carriers are authorized to provide service to and from Cuba under a “general license” so long as the air carrier complies with the terms and conditions of the general license.

BIS administers the EAR, 15 CFR parts 730 through 774, which prohibit certain exports and re-exports to Cuba unless authorized by a license or license exception. As discussed above, flying an aircraft to Cuba constitutes an export or re-export under the EAR, but certain flights on a “temporary sojourn” qualify for a license exception. An aircraft that fails to qualify for the “temporary sojourn” license exception under 15 CFR 740.15 may require an individually validated license under the EAR in order to depart the United States for Cuba. Baggage and cargo onboard the aircraft may also require a license if it does not qualify for a license exception under the EAR.

Additionally, an aircraft traveling between the United States and Cuba may require a license from other federal agencies, as applicable, and must obtain economic and safety authorizations to provide air transportation service as an air carrier from the Office of the Secretary of Transportation and the Federal Aviation Administration. Air carriers and other commercial operators are required to adopt and implement the security requirements established by the Transportation Security Administration for individuals, property, and cargo aboard aircraft (see 49 CFR chapter XII, subchapter C (Civil Aviation Security)).

The Administrative Procedure Act (APA) requirements in 5 U.S.C. 553 govern agency rulemaking procedures. The APA generally requires that an agency provide prior notice and an opportunity for public comment before issuing a final rule.17 The APA also requires that a final rule have a 30-day delayed effective date.18 The APA provides a full exemption from the requirements of section 553 for rules involving a foreign affairs function of the United States.19 The APA also provides an exception from the prior notice and public comment requirement and the delayed effective date requirement if the agency for good cause finds that such procedures are impracticable, unnecessary or contrary to the public interest.20

This interim final rule is excluded from the rulemaking provisions of 5 U.S.C. 553 as a foreign affairs function of the United States because it concerns international flights between the United States and Cuba, consistent with U.S. foreign policy goals. These amendments to clarify and simplify the regulations regarding air travel between the United States and Cuba are consistent with the President's continued effort to normalize relations between the two countries.

Accordingly, DHS is not required to provide public notice and an opportunity to comment before implementing the requirements under this interim final rule.

In addition, with respect to the removal of the regulations in 19 CFR part 122, subpart O, that are duplicative of the entry and clearance requirements in the rest of part 122, DHS finds that good cause exists for dispensing with the prior notice and comment procedure as unnecessary under 5 U.S.C. 553(b)(B) and for dispensing with the requirement for a delayed effective date under 5 U.S.C. 553(d)(3). The Department, however, is interested in public comments on this interim final rule and, therefore, is providing the public with the opportunity to comment without delaying implementation of this rule. All comments received will become a matter of the public record.

In addition, DHS does not consider this rule to be a “significant regulatory action” under Executive Order 12866, section 3(f), Regulatory Planning and Review. Rules involving the foreign affairs function of the United States are exempt from the requirements of Executive Order 12866. As discussed above, DHS is of the opinion that clarifying and simplifying the regulations regarding restrictions on travel between the United States and Cuba is a foreign affairs function of the United States Government and as such, this rule is exempt from the requirements of Executive Order 12866. Finally, because DHS is of the opinion that this rule is not subject to the requirements of 5 U.S.C. 553, DHS does not consider this rule to be subject to the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).

This interim final rule is being issued in accordance with 8 CFR 2.1 and 19 CFR 0.2(a). Accordingly, this interim final rule is signed by the Secretary of Homeland Security.

For the reason stated in the preamble, 8 CFR part 234 and 19 CFR part 122 are amended as set forth below.

The Entity List (Supplement No. 4 to part 744) identifies entities and other persons reasonably believed to be involved, or to pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States. The EAR imposes additional license requirements on, and limits the availability of most license exceptions for, exports, reexports, and transfers (in-country) to those listed. The “license review policy” for each listed entity or other person 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 and other persons on the Entity List pursuant to sections of part 744 (Control Policy: End-User and End-Use Based) and part 746 (Embargoes and Other Special Controls) of the EAR.

The ERC, composed of representatives of the Departments of Commerce (Chair), State, Defense, Energy and, where appropriate, the Treasury, makes all decisions regarding additions to, removals from, or other modifications to the Entity List. The ERC makes all decisions to add an entry to the Entity List by majority vote and all decisions to remove or modify an entry by unanimous vote.

This rule implements the decision of the ERC to add forty-four persons under forty-nine entries to the Entity List. These forty-four persons 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 forty-nine entries added to the entity list consist of eight entries in China, four entries in Germany, three entries in Hong Kong, one entry in India, two entries in Iran, five entries in Malaysia, two entries in the Netherlands, one entry in Singapore, one entry in Switzerland and twenty-two entries in the U.A.E. There are forty-nine entries for the forty-four persons because four persons are listed in multiple locations, resulting in five additional entries.

The ERC reviewed § 744.11(b) (Criteria for revising the Entity List) in making the determination to add these forty-four persons under forty-nine entries to the Entity List. Under that paragraph, persons for whom there is reasonable cause to believe, based on specific and articulable facts, that they 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. Paragraphs (b)(1) through (5) of § 744.11 include an illustrative list of activities that could be contrary to the national security or foreign policy interests of the United States. Pursuant to § 744.11 of the EAR, the ERC determined that forty-four persons, located in the destinations of China, Germany, Hong Kong, India, Iran, Malaysia, Netherlands, Singapore, Switzerland, and the U.A.E., be added to the Entity List for actions contrary to the national security or foreign policy interests of the United States.

Specifically, the ERC determined that Frank Genin, Skylinks FZC, All Industrial International, Beaumont Trading AG, Behover General Trading/Information Technologies, Complete Freight Solutions, Cybernet MEA, Innovative Technology Solutions, Joinus Freight Systems HK Ltd, Syarikat Penghantaran TWW Sdn Bhd, Teofila Logistics, Amanda Sng, Beverly Apigo, Rose Ann Apigo, Hamideh Ghayour, Kapil Raj Arora, Mehdi Jafariyeh, T.V. Joe Ouseppachan, and Donna Lynn Ocampo be added to the Entity List on the basis of their attempts to procure items, including U.S.-origin items, for activities contrary to the national security and foreign policy interests of the United States. Specifically, Frank Genin used the aforementioned companies and employees thereof to supply U.S.-origin items to an Iranian party associated with the Iranian defense industry. Additionally, two Skylinks managing directors, Seyed Amin Ghorashi Sarvestani and Peyman Manoucher Azimi were convicted in the United States in 2013 for International Emergency Economic Powers Act (IEEPA) violations carried out through Skylinks and its parent company, Innovative Technology Systems (ITS). Three of these entities (Beaumont Trading AG, Frank Genin, and Skylinks FZC) are located in multiple locations, resulting in a total of twenty-three entries added under the destinations of Hong Kong, India, Malaysia, the Netherlands, Singapore, Switzerland, and the U.A.E.

The ERC determined that Industrio GmbH, Peter Duenker, Martin Hess and Wilhelm “Bill” Holler attempted to procure items, including U.S.-origin items, for activities contrary to the national security and foreign policy interests of the United States. Specifically, Industrio GmbH and its associates have been involved in supplying U.S.-origin items to an Iranian party associated with the Iranian defense industry. The Iranian party's customers include companies designated by the Department of the Treasury as Specially Designated Nationals (SDNs).

Pursuant to § 744.11(b) of the EAR, the ERC determined that the conduct of these twenty-three entities raises sufficient concern that prior review of exports, reexports or transfers (in-country) of items subject to the EAR involving these persons, and the possible imposition of license conditions or license denials on shipments to the persons, will enhance BIS's ability to prevent violations of the EAR.

In addition, the ERC determined that that there is reasonable cause to believe, based on specific and articulable facts, that Mahmood Akbari; Reza Hajigholamali; Patco Group Ltd.; Managed Systems and Services (MSAS)(FZC); and TGO General Trading LLC were involved in the illegal diversion of U.S.-origin items to Iran via the U.A.E. One of these persons (Reza Hajigholamali) is located in both Iran and the U.A.E., resulting in six entries added under the locations of Iran and the U.A.E. The ERC also determined that for eight entities located in China—Jereh International; Jinan Tongbaolai Oilfield Equipment Co. Ltd.; Yantai Jereh Oilfield Services Group Co., Ltd.; Chen Qu; Edward Fan; Gala Wang; Sharon Yang; and Tan Wei—there is reasonable cause to believe, based on specific and articulable facts, that they unlawfully diverted U.S.-origin oilfield equipment to Iran without the required Department of the Treasury, Office of Foreign Assets Control (OFAC) licenses, actions that violate the EAR.

Pursuant to § 744.11(b)(2) of the EAR, the ERC determined that the conduct of these thirteen entities raises sufficient concern that prior review of exports, reexports or transfers (in-country) of items subject to the EAR involving these persons, and the possible imposition of license conditions or license denials on shipments to the persons, will enhance BIS's ability to prevent violations of the EAR. Therefore, these thirteen entities are being added to the Entity List.

The ERC determined that four entities, EEZ SDN, Mohamad Sadeghi, Mohsen Torabi, and Muhamad Fazil bin Khalid, be added to the Entity List under Malaysia. These persons are involved, or have previously been involved, in an illicit procurement scheme to divert items subject to the EAR to prohibited end uses and end users in Iran. The actions of these persons have supported persons engaged in acts of terror and enhanced the military capability of Iran, which has been designated by the Secretary of State as a State Sponsor of Terrorism.

Pursuant to § 744.11(b)(1), (2) and (5) of the EAR, the ERC determined that the conduct of these four entities raises sufficient concern that prior review of exports, reexports or transfers (in-country) of items subject to the EAR involving these persons, and the possible imposition of license conditions or license denials on shipments to the persons, will enhance BIS's ability to prevent violations of the EAR.

Finally, the ERC determined that four entities located in the U.A.E., AdCom Systems, Advanced Targeting Systems Company, LLC (ATS), Gulf Eagle Contracting (GEC), and Gulf Eagle Industrial and Metal Profiles (GEIMP), be added to the Entity List. AdCom Systems and its three affiliated companies are seeking to export Missile Technology Control Regime (MTCR) Category I unmanned aerial vehicles (UAVs) to non-MTCR member countries. All Category I systems are inherently capable of delivering weapons of mass destruction, and the proliferation of such systems by AdCom and its affiliates undermines the international missile nonproliferation objectives that the United States relies on to promote its national security and foreign policy interests.

Pursuant to § 744.11(b) of the EAR, the ERC determined that the conduct of these four entities raises sufficient concern that prior review of exports, reexports or transfers (in-country) of items subject to the EAR involving these persons, and the possible imposition of license conditions or license denials on shipments to the persons, will enhance BIS's ability to prevent violations of the EAR.

For the forty-four persons under forty-nine entries added to the Entity List, BIS imposes a license requirement for all items subject to the EAR and a license review policy of presumption of denial. The license requirements apply to any transaction in which items are to be exported, reexported, or transferred (in-country) to any of the persons or in which such persons 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. The acronym “a.k.a.” (also known as) is 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 forty-four persons under forty-nine entries to the Entity List:

(1) Chen Qu, a.k.a., the following one alias: Chen Choo, No. 5, Jereh Road, Laishan District, Yantai Shandong Province, China;

(2) Edward Fan, No. 5, Jereh Road, Laishan District, Yantai Shandong Province, China;

(3) Gala Wang, Room 2506, Hengchang Building, No. 288, Hing Si Road, Jinan City, Shandong, China;

(4) Jereh International, No. 5, Jereh Road, Laishan District, Yantai Shandong Province, China;

(5) Jinan Tongbaolai Oilfield Equipment Co. Ltd., Room 2506, Hengchang Building, No. 288, Hing Si Road, Jinan City, Shandong, China;

(6) Sharon Yang, No. 5, Jereh Road, Laishan District, Yantai Shandong Province, China;

(7) Tan Wei, a.k.a., the following one alias: Terry Tan. No. 5, Jereh Road, Laishan District, Yantai Shandong Province, China; and

(8) Yantai Jereh Oilfield Services Group Co., Ltd., No. 5, Jereh Road, Laishan District, Yantai Shandong Province, China.

(1) Industrio GmbH, Dreichlinger Street 79, Neumarkt, 92318 Germany;

(2) Martin Hess, Dreichlinger Street 79, Neumarkt, 92318 Germany;

(3) Peter Duenker, a.k.a., the following one alias: Peter Dunker, Dreichlinger Street 79, Neumarkt, 92318 Germany; and

(4) Wilhelm “Bill” Holler, Dreichlinger Street 79, Neumarkt, 92318 Germany.

(1) Frank Genin, a.k.a., the following one alias: Franck Genin, RM 1905, 19/F, Nam Wo Hong Bldg., 148 Wing Lok Street, Sheung Wang, Hong Kong (See alternate addresses under U.A.E.);

(2) Joinus Freight Systems HK Ltd, a.k.a., the following one alias: JFS Global Logistics, Unit 07-07, 25F, Tower B, Regent Centre, 63 Wo Yi Hop Road, Kwai Chung, N.T. Hong Kong; and Suite 801-803, Park Sun Bldg, 97-107 Wo Yi Hop Road, Kwai Chung, Hong Kong; and

(3) Skylinks FZC, a.k.a., the following two aliases: Skylinks; and Skylinks Satellite Comm., RM 1905, 19/F, Nam Wo Hong Bldg., 148 Wing Lok Street, Sheung Wang, Hong Kong (See alternate addresses under U.A.E.).

(1) Beaumont Trading AG, a.k.a., the following one alias: Beaumont Tradex India, 412 World Trade Center, Conaught Place, New Delhi—110001, India; and 4th Floor Statesman House Building, Barakhamba Road, New Delhi 11001, India; and Express Towers, 1st Floor, Express Building, 9-10 Bahadurshah Zafar Marg, New Delhi-12, India (See alternate addresses under Switzerland and U.A.E.).

(1) Mahmood Akbari, a.k.a., the following alias: John Wassermann, No.34, Arash Blvd., Farid Afshar St., Zafar Ave., Tehran, Iran; and

(2) Reza Hajigholamali, No.34, Arash Blvd., Farid Afshar St., Zafar Ave., Tehran, Iran (See alternate addresses under U.A.E.).

(1) EEZ SDN, a.k.a., the following one alias: Elecronic Engineering Zone SDN BHD, 33-88 Menara Keck Seng, 203 Jalan Bukit Bintang, Kuala Lumpur, Malaysia; and A-17-8 Tower A, Menara Atlas, Plaza Pantai 5, Jalan 4/83A, off Jalan Pantai Baru, Kuala Lumpur, Malaysia; and B-3A-7 Empire Subang, Jalan SS16/1, Subang Jaya, Malaysia;

(2) Mohamad Sadeghi, 33-88 Menara Keck Seng, 203 Jalan Bukit Bintang, Kuala Lumpur, Malaysia; and A-17-8 Tower A, Menara Atlas, Plaza Pantai 5, Jalan 4/83A, off Jalan Pantai Baru, Kuala Lumpur, Malaysia;

(3) Mohsen Torabi, a.k.a., the following one alias: Moha Torab, 2nd Floor, Jalan 9A, Berangan, Kuala Lumpur, Malaysia; and 33-88 Menara Keck Seng, 203 Jalan Bukit Bintang, Kuala Lumpur, Malaysia; and A-17-8 Tower A, Menara Atlas, Plaza Pantai 5, Jalan 4/83A, off Jalan Pantai Baru, Kuala Lumpur, Malaysia;

(4) Muhamad Fazil bin Khalid, 33-88 Menara Keck Seng, 203 Jalan Bukit Bintang, Kuala Lumpur, Malaysia; and A-17-8 Tower A, Menara Atlas, Plaza Pantai 5, Jalan 4/83A, off Jalan Pantai Baru, Kuala Lumpur, Malaysia; and No. 2 Jalan 29C, Selayang Baru, Batu Caves, Selangor, Malaysia; and

(5) Syarikat Penghantaran TWW Sdn Bhd, Lot C-7, Block C Mas Advance Cargo Centre KLIA Cargo Village Southern Support Zone 64000, Sepang Selangor Darul Ehsan, Malaysia.

(1) All Industrial International, Knobbelswaansingel 19, 2496 LN, The Hague, Netherlands; and Breukelensestraat 44, 2574 RC, The Hague, Netherlands; and

(2) Kapil Raj Arora, Breukelensestraat 44, 2574 RC, The Hague, Netherlands; and Knobbelswaansingel 19, 2496 LN, The Hague, Netherlands.

(1) Amanda Sng, 211 Henderson Road, #13-02 Henderson Industrial Park, Singapore 159552.

(1) Beaumont Trading AG, a.k.a., the following one alias: Beaumont Tradex India, Haldenstrasse 5, Baar (Zug Canton), CH 6342 Switzerland (See alternate addresses in India and the U.A.E.).

(1) AdCom Systems, Industrial City of Abu Dhabi—ICAD, Abu Dhabi, U.A.E.;

(2) Advanced Targeting Systems Company, LLC (ATS), P.O. Box 34237, High Specialized Economical Zone M41, 103A13, Al Mussafah, Abu Dhabi, U.A.E.;

(3) Beaumont Trading AG, a.k.a., the following one alias: Beaumont Tradex India, DMCC Business Center, 49 Almas Tower—JLT Dubai, U.A.E. (See alternate addresses in India and Switzerland);

(4) Behover General Trading/Information Technologies, a.k.a., the following one alias: DBA Behover Information Technologies, P.O. Box 25756, Atrium Center Building, Burdubai, Dubai, U.A.E.; and Unit M3&4, Atrium Centre, Bank Street Dubai, U.A.E.; and P.O. Box 19741, Dubai, U.A.E.; and Unit 2009, Prism Tower, Business Bay, Dubai, U.A.E.; and P.O. Box 115904, Dubai, U.A.E.;

(5) Beverly Apigo, P.O. Box 28515, Dubai, U.A.E.; and 202 B Sama Tower Sheikh Tayed Road #3 Dubai, U.A.E. P.O. Box 16048; and BC2-414, RAK Free Trade Zone, P.O. Box 16048, Ras Al Khaimah, U.A.E.; and G1/RAK Free Trade Zone RAK—U.A.E.; and G-17 Sheikh Tayed Road #3, Ras Al Khaimah Free Trade Zone, Dubai, U.A.E.; and P.O. Box 10559 Ras Al Khaimah, U.A.E.; and P.O. Box 25344 Bur Dubai, Dubai, U.A.E.; and Suite 608 Atrium Center, Bank St., Bur Dubai, Dubai, U.A.E., P.O. Box 16048; and Suite 706 Atrium Center Bank Street, Bur Dubai, Dubai U.A.E.;

(6) Complete Freight Solutions, 704 The Atrium Ctr, Khalid Bin, Dubai, U.A.E.; and 1st Floor, Office No. 114, Yousef Al Otaiba Bldg, Above Emirates Islamic Bank Office, 2nd December Street (Old Al Dyafah Street), P.O. Box No. 29687, Satwa, Dubai, U.A.E.;

(7) Cybernet MEA, 202 B Sama Tower Sheikh Tayed Road #3, Dubai, U.A.E., P.O. Box 16048; and BC2-414, RAK Free Trade Zone, P.O. Box 16048 Ras Al Khaimah, U.A.E.; and G1/RAK Free Trade Zone RAK—U.A.E.; and G-17 Sheikh Tayed Road #3, Ras Al Khaimah Free Trade Zone, Dubai, U.A.E.; and No. 608 Atrium Center Bank Street, Dubai, U.A.E.; and P.O. Box 10559 Ras Al Khaimah, U.A.E.; and P.O. Box 116911 Dubai, U.A.E.; and P.O. Box 25344 Bur Dubai, Dubai, U.A.E.; and Suite 608 Atrium Center Bank Street, Bur Dubai, Dubai, U.A.E.; and Suite 706 Atrium Center Bank Street, Bur Dubai, Dubai U.A.E.;

(8) Donna Lynn Ocampo, P.O. Box 28515, Dubai, U.A.E.; and 202 B Sama Tower Sheikh Tayed Road #3 Dubai, U.A.E., P.O. Box 16048; and BC2-414, RAK Free Trade Zone P.O. Box 16048 Ras Al Khaimah, U.A.E.; and G1/RAK Free Trade Zone RAK—U.A.E.; and G-17 Sheikh Tayed Road #3 Ras Al Khaimah Free Trade Zone Dubai, U.A.E.; and P.O. Box 10559 Ras Al Khaimah, U.A.E.; and P.O. Box 25344 Bur Dubai, Dubai, U.A.E.; and Suite 608 Atrium Center, Bank St., Bur Dubai, Dubai, U.A.E. P.O. Box 16048; and Suite 706 Atrium Center Bank Street Bur Dubai, Dubai, U.A.E.;

(9) Frank Genin, a.k.a., the following one alias: Franck Genin, Villa No. 6 AL WASL RD, 332/45b Jumeira 1, Dubai, Dubai 25344, U.A.E.; and Suite 608 Atrium Center, Bank St., Bur Dubai, Dubai, U.A.E., P.O. Box 16048; and Suite 706 Atrium Center Bank Street Bur Dubai, Dubai U.A.E.; and P.O. Box 10559 Ras Al Khaimah, U.A.E.; and P.O. Box 25344 Bur Dubai, Dubai, U.A.E.; and 2nd Floor, #202 Sheik Zayed Road Dubai POB 25344 U.A.E.; and P.O. Box 28515, Dubai, U.A.E.; and 202 B Sama Tower Sheikh Tayed Road #3 Dubai, U.A.E. P.O.Box 16048; and BC2-414, RAK Free Trade Zone P.O. Box 16048 Ras Al Khaimah, U.A.E.; and G1/RAK Free Trade Zone RAK—U.A.E.; and G-17 Sheikh Tayed Road #3 Ras Al Khaimah Free Trade Zone, Dubai, U.A.E. (See alternate address under Hong Kong);

(10) Gulf Eagle Contracting (GEC), P.O. Box 31814, Al Dhafra Road, Abu Dhabi, U.A.E.;

(11) Gulf Eagle Industrial and Metal Profiles (GEIMP), P.O. Box 31814, Al Mussafah Industrial City, New Airport Road, Abu Dhabi, U.A.E.;

(12) Hamideh Ghayour, P.O. Box 155904, Dubai, U.A.E.; and Unit M3&4, Atrium Centre, Bank Street Dubai, U.A.E.;

(13) Innovative Technology Systems (ITS), 2nd Floor, #202 Sheik Zayed Road Dubai, POB 25344, U.A.E.; and Suite 608 Atrium Center, Bank Street, Bur Dubai, Dubai, U.A.E.; and Suite 706 Atrium Center Bank Street, Bur Dubai, Dubai, U.A.E.;

(14) Managed Systems and Services (MSAS)(FZC), No. A3089 Seif Sharjah U.A.E.; and SAIF Zone 250 M2 Warehouse P60-109, PO Box 122550, Sharjah, U.A.E.;

(15) Mehdi Jafariyeh, a.k.a., the following one alias: Mehdi Jeffery, P.O. Box 28515, Dubai, U.A.E.; and 202 B Sama Tower Sheikh Tayed Road #3 Dubai, U.A.E., P.O. Box 16048; and BC2-414, RAK Free Trade Zone P.O. Box 16048 Ras Al Khaimah, U.A.E.; and G 1/RAK Free Trade Zone RAK—U.A.E.; and G-17 Sheikh Tayed Road #3 Ras Al Khaimah Free Trade Zone, Dubai, U.A.E. and P.O. Box 10559 Ras Al Khaimah, U.A.E.; and P.O. Box 25344 Bur Dubai, Dubai, U.A.E.; and Suite 608 Atrium Center, Bank St., Bur Dubai, Dubai, U.A.E., P.O. Box 16048; and Suite 706 Atrium Center Bank Street Bur Dubai, Dubai, U.A.E.;

(16) Patco Group Ltd., P.O. Box 20470, Ajman, U.A.E.; and Ajman Free Zone Bldg., 48-Block-C Meena Road near Ajman Sea Port, Ajman, U.A.E.;

(17) Reza Hajigholamali, PO Box 20470, Ajman, U.A.E.; and Ajman Free Zone Bldg., 48-Block-C Meena Road near Ajman Sea Port, Ajman, U.A.E. (See alternate address under Iran);

(18) Rose Ann Apigo, P.O. Box 28515, Dubai, U.A.E.; and 202 B Sama Tower Sheikh Tayed Road #3 Dubai, U.A.E., P.O. Box 16048; and BC2-414, RAK Free Trade Zone P.O. Box 16048 Ras Al Khaimah, U.A.E.; and G1/RAK Free Trade Zone RAK—U.A.E.; and G-17 Sheikh Tayed Road #3 Ras Al Khaimah Free Trade Zone, Dubai, U.A.E.; and P.O. Box 10559 Ras Al Khaimah, U.A.E.; and P.O. Box 25344 Bur Dubai, Dubai, U.A.E.; and Suite 608 Atrium Center, Bank St., Bur Dubai, Dubai, U.A.E., P.O. Box 16048; and Suite 706 Atrium Center Bank Street, Bur Dubai, Dubai U.A.E.;

(19) Skylinks FZC, a.k.a., the following two aliases: Skylinks; and Skylinks Satellite Comm., P.O. Box 28515, Dubai, U.A.E.; and 202 B Sama Tower Sheikh Tayed Road #3 Dubai, U.A.E., P.O. Box 16048; and BC2-414, RAK Free Trade Zone P.O. Box 16048 Ras Al Khaimah, U.A.E.; and G1/RAK Free Trade Zone RAK—U.A.E.; and G-17 Sheikh Tayed Road #3 Ras Al Khaimah Free Trade Zone, Dubai, U.A.E.; and P.O. Box 10559 Ras Al Khaimah, U.A.E.; and P.O. Box 25344 Bur Dubai, Dubai, U.A.E.; and Suite 608 Atrium Center, Bank St., Bur Dubai, Dubai, U.A.E., P.O. Box 16048; and Suite 706 Atrium Center Bank Street, Bur Dubai, Dubai U.A.E. 3 (See alternate address under Hong Kong);

(20) T.V. Joe Ouseppachan, Office 228, Al Aatar Shopping Mall, P.O. Box 115824, Karama, Dubai, U.A.E.;

(21) Teofila Logistics, Office 228, Al Aatar Shopping Mall, P.O. Box 115824, Karama, Dubai, U.A.E.; and

(22) TGO General Trading LLC, a.k.a., the following one alias: Three Green Orbit, 19th Floor Festival Tower, Festival City, PO Box 36605, Dubai, U.A.E.

This rule implements decisions of the ERC to remove the following five entries from the entity list based on removal requests received by the BIS: Ukrspetsexport, located in the Ukraine; and Zener One Net, Zener Marine, Ivan Desouza, and Girish Purushothama, all located in the U.A.E.

Pursuant to § 744.11(b)(5) of the EAR, Ukrspetsexport was found to have exported military equipment to a country on the State Department's State Sponsors of Terrorism List and was subsequently added to the Entity List on March 28, 2013 (78 FR 18811). The ERC's decision to remove this entry from the Entity List was based on information received by the BIS and further review conducted by the ERC.

Zener One Net, Zener Marine, Ivan Desouza, and Girish Purushotham were added to the Entity List on June 5, 2014 (79 FR 32441), pursuant to § 744.11(b)(1) of the EAR. The removal of Zener One Net, Zener Marine, Ivan Desouza, and Girish Purushotham is based on the information provided in their appeal request, information provided by the companies and persons in cooperative exchanges, and further reviews conducted by the ERC.

In accordance with § 744.16(c), the Deputy Assistant Secretary for Export Administration has sent written notifications informing these persons of the ERC's decisions to remove them from the Entity List.

This final rule implements the decision to remove the following five entities located in the Ukraine and the U.A.E. from the Entity List.

(1) Ukrspetsexport, 36 Degtiarivska Blvd., Ukraine 04119 Kyiv.

(1) Girish Purushothama, P.O. Box 389, Dubai, U.A.E.; and P.O. Box 3905, Abu Dhabi, U.A.E.; and Plot S20206, Dubai, U.A.E.;

(2) Ivan Desouza, a.k.a., the following one alias: Ivan D'Souza, P.O. Box 389, Dubai, U.A.E.; and P.O. Box 3905, Abu Dhabi, U.A.E.; and Plot S20206, Dubai, U.A.E.;

(3) Zener Marine, P.O. Box 389, Dubai, U.A.E.; and Al Quoz Warehouse, Dubai, U.A.E.; and

(4) Zener One Net, P.O. Box 389, Dubai, U.A.E.

The removal of the five persons referenced above, which was approved by the ERC, eliminates the existing license requirements in Supplement No. 4 to part 744 for exports, reexports and transfers (in-country) to these entities. However, the removal of these five persons from the Entity List does not relieve persons of other obligations under part 744 of the EAR or under other parts of the EAR. Neither the removal of an entity from the Entity List nor the removal of Entity List-based license requirements relieves persons of their obligations under General Prohibition 5 in § 736.2(b)(5) of the EAR which provides that, “you may not, without a license, knowingly export or reexport any item subject to the EAR to an end-user or end-use that is prohibited by part 744 of the EAR.” Additionally, these removals do not relieve persons of their obligation to apply for export, reexport or in-country transfer licenses required by other provisions of the EAR. BIS strongly urges the use of Supplement No. 3 to part 732 of the EAR, “BIS's `Know Your Customer' Guidance and Red Flags,” when persons are involved in transactions that are subject to the EAR.

This final rule implements the decision of the ERC to modify two existing entries on the Entity List, under the destination of China. The ERC made determinations to make the following modifications: Add one alias and three additional addresses to the entry of Chengdu GaStone Technology Co., Ltd. (CGTC) and add four aliases and nine additional addresses to the entry of PRC Lode Technology Company.

This final rule makes the following modifications to two entries on the Entity list:

(1) Chengdu GaStone Technology Co., Ltd. (CGTC), a.k.a., the following one alias: Chengdu Jiashi Technology Co., 31F, A Tower, Yanlord Square, No. 1, Section 2, Renmind South Road, Chengdu China; and Internet of Things Industrial Park Economic Development District Xinan Hangkonggang (Southwest Airport), Shuangliu County, Chengdu; and 29th Floor, Yanlord Landmark, No. 1 Renmin South Road Section 2, Chengdu; and 29/F Yanlord Landmark Tower A, Chengdu, China; and

(2) PRC Lode Technology Company, a.k.a., the following the following four aliases: Lode Technology Company; Beijing Lode Technology Company, Ltd.; Beijing Nuodian Keji Youxian Gongsi; and Beijing Nuodian Technology. Room 8306 Kelun Building, 12A Guanghua Road, Chaoyang, Beijing 100020, China; and Room 801, Unit 1, Building 8 Caiman Street, Chaoyang Road, Beijing 100025, China; and Building 1-1, No. 67 Caiman Str., Chaoyang Road, Beijing 100123, China; and Room A407 Kelun Building, 12A Guanghua Road, Chaoyang, Beijing 100020, China; and Rm 602, 5/F, No. 106 NanHu Road, ChaoYang District, Beijing, China; and Suite 801, Unit 1, Building 8 Caiman Street Finance & Economics Center, Chaoyang Road, Chaoyang Disrict, Beijing; and Suite 306, Lianhua Building No. 159 Tianzhou Road, Xuhui District, Shanghai 200233; and Suite 6B3, Building 15, No. 300 Tianlin Road, Xuhui District, Shanghai 200233; and Suite 1901, Unit 1, Block 8, District E, Ziwei Garden City, Chang'an Technological Garden, Xi'an, 710119; and Suite 2002, Unit 4, Building 1 Zhongda Junyue Jinsha Phase 3 No. 15 Jinxiang Road, Qingyang District, Chengdu, 610031; and Suite 1506, Building 4, Dachengxiaoshi, No. 10 Qingjiang Zhong Road, Qingyang District, Chengdu, 610072; and Suite 904, Building A6, Shunfeng Emerald Garden, No. 168 Zhaofeng Road, Shijing, Baiyun District, Guangzhou, 510410; and No. 1263 Airport Road, Baiyun District, Guangzhou; and Suite 201, Tower A, Building 14, Qianxihe Garden Center, Nanchang, 330002 (See alternate addresses under Hong Kong).

Shipments of items removed from eligibility for a License Exception or export or reexport without a license (NLR) as a result of this regulatory action that were en route aboard a carrier to a port of export or reexport, on March 21, 2016, pursuant to actual orders for export or reexport to a foreign destination, may proceed to that destination under the previous eligibility for a License Exception or export or reexport without a license (NLR).

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 7, 2015, 80 FR 48233 (August 11, 2015), 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. For the forty-four persons under forty-nine entries added to the Entity List in this final rule, 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 persons being added to the Entity List. If this rule were delayed to allow for notice and comment and a delay in effective date, 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 receiving 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 other measures to try to limit the impact of the listing on the Entity List once a final rule was published. 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.

5. For the five entries removed from the Entity List in this final rule, pursuant to the Administrative Procedure Act (APA), 5 U.S.C. 553(b)(B), BIS finds good cause to waive requirements that this rule be subject to notice and the opportunity for public comment because it would be contrary to the public interest.

In determining whether to grant removal requests from the Entity List, a committee of U.S. Government agencies (the End-User Review Committee (ERC)) evaluates information about and commitments made by listed persons requesting removal from the Entity List, the nature and terms of which are set forth in 15 CFR part 744, Supplement No. 5, as noted in 15 CFR 744.16(b). The information, commitments, and criteria for this extensive review were all established through the notice of proposed rulemaking and public comment process (72 FR 31005 (June 5, 2007) (proposed rule), and 73 FR 49311 (August 21, 2008) (final rule)). These five removals have been made within the established regulatory framework of the Entity List. If the rule were to be delayed to allow for public comment, U.S. exporters may face unnecessary economic losses as they turn away potential sales to the other entity removed by this rule because the customer remained a listed person on the Entity List even after the ERC approved the removal pursuant to the rule published at 73 FR 49311 on August 21, 2008. By publishing without prior notice and comment, BIS allows the applicant to receive U.S. exports immediately since the applicant already has received approval by the ERC pursuant to 15 CFR part 744, Supplement No. 5, as noted in 15 CFR 744.16(b).

The removals from the Entity List granted by the ERC involve interagency deliberation and result from review of public and non-public sources, including sensitive law enforcement information and classified information, and the measurement of such information against the Entity List removal criteria. This information is extensively reviewed according to the criteria for evaluating removal requests from the Entity List, as set out in 15 CFR part 744, Supplement No. 5 and 15 CFR 744.16(b). For reasons of national security, BIS is not at liberty to provide to the public detailed information on which the ERC relied to make the decisions to remove these five entities. In addition, the information included in the removal request is information exchanged between the applicant and the ERC, which by law (section 12(c) of the Export Administration Act), BIS is restricted from sharing with the public. Moreover, removal requests from the Entity List contain confidential business information, which is necessary for the extensive review conducted by the U.S. Government in assessing such removal requests.

Section 553(d) of the APA generally provides that rules may not take effect earlier than thirty (30) days after they are published in the Federal Register. BIS finds good cause to waive the 30-day delay in effectiveness under 5 U.S.C. 553(d)(1) because this rule is a substantive rule which relieves a restriction. This rule's removal of five persons under five entries from the Entity List removes a requirement (the Entity-List-based license requirement and limitation on use of license exceptions) on these five persons being removed from the Entity List. The rule does not impose a requirement on any other person for these five removals from the Entity List.

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

Accordingly, part 744 of the Export Administration Regulations (15 CFR parts 730 through 774) is amended as follows:

I. Introduction A. Background

In April 2012, pursuant to section 4c(b) of the Commodity Exchange Act (the “CEA” or the “Act”),1 the Commission issued a final rule to repeal and replace part 32 of its regulations concerning commodity options.2 The Commission undertook this effort to address section 721 of the Dodd-Frank Act Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act” or “Dodd-Frank”),3 which, among other things, amended the CEA to define the term “swap” to include commodity options.4 Notably, § 32.2(a) provides the general rule that commodity option transactions must be conducted in compliance with any Commission rule, regulation, or order otherwise applicable to any other swap.5

In response to requests from commenters, the Commission added a limited exception to this general rule for physically delivered commodity options purchased by commercial users of the commodities underlying the options (the “trade option exemption”).6 Adopted as an interim final rule, § 32.3 provides that qualifying commodity options are generally exempt from the swap requirements of the CEA and the Commission's regulations, subject to certain specified conditions. To qualify for the trade option exemption, a commodity option transaction must meet the following requirements: (1) The offeror is either an eligible contract participant (“ECP”) 7 or a producer, processor, commercial user of, or merchant handling the commodity that is the subject of the commodity option transaction, or the products or byproducts thereof (a “commercial party”) that offers or enters into the commodity option transaction solely for purposes related to its business as such; (2) the offeree is, and the offeror reasonably believes the offeree to be, a commercial party that is offered or enters into the transaction solely for purposes related to its business as such; and (3) the option is intended to be physically settled so that, if exercised, the option would result in the sale of an exempt or agricultural commodity 8 for immediate or deferred shipment or delivery.9

Commodity option transactions that meet these requirements are generally exempt from the provisions of the Act and any Commission rule, regulation, or order promulgated or issued thereunder, otherwise applicable to any other swap, except for the requirements enumerated in § 32.3(b)-(d).10 These requirements include: Recordkeeping and reporting requirements; 11 large trader reporting requirements in part 20; 12 position limits under part 151; 13 certain recordkeeping, reporting, and risk management duties applicable to swap dealers (“SDs”) and major swap participants (“MSPs”) in subparts F and J of part 23; 14 capital and margin requirements for SDs and MSPs under CEA section 4s(e); 15 and any applicable antifraud and anti-manipulation provisions.16

In adopting § 32.3,17 the Commission stated that the trade option exemption is generally intended to permit parties to hedge or otherwise enter into commodity option transactions for commercial purposes without being subject to the full Dodd-Frank swaps regime.18 This limited exemption continued the Commission's longstanding practice of providing commercial participants in trade options with relief from certain requirements that would otherwise apply to commodity options.19 The Commission further explained that the applicable conditions in § 32.3(b)-(d) were primarily intended to preserve a level of visibility into the market for trade options while still reducing the regulatory compliance burden for trade option participants.20

Pursuant to § 32.3(b)(1), the determination as to whether a trade option must be reported pursuant to part 45 is based on the status of the parties to the trade option and whether or not they have previously reported swaps to an appropriate swap data repository (“SDR”) pursuant to part 45.21 If a trade option involves at least one counterparty (whether as buyer or seller) that has (1) become obligated to comply with the reporting requirements of part 45, (2) as a reporting party, (3) during the twelve month period preceding the date on which the trade option is entered into, (4) in connection with any non-trade option swap trading activity, then such trade option must also be reported pursuant to the reporting requirements of part 45. If only one counterparty to a trade option has previously complied with the part 45 reporting provisions, as described above, then that counterparty shall be the part 45 reporting counterparty for the trade option. If both counterparties have previously complied with the part 45 reporting provisions, as described above, then the part 45 rules for determining the reporting counterparty will apply.22

To the extent that neither counterparty to a trade option has previously submitted reports to an SDR as a result of its swap trading activities as described above, then such trade option is not required to be reported pursuant to part 45. Instead, § 32.3(b)(2) requires that each counterparty to an otherwise unreported trade option (i.e., a trade option that is not required to be reported to an SDR by either counterparty pursuant to § 32.3(b)(1) and part 45) completes and submits to the Commission an annual Form TO filing providing notice that the counterparty has entered into one or more unreported trade options during the prior calendar year.23 Form TO requires an unreported trade option counterparty to: (1) Provide its name and contact information; (2) identify the categories of commodities (agricultural, metals, energy, or other) underlying one or more unreported trade options which it entered into during the prior calendar year; and (3) for each commodity category, identify the approximate aggregate value of the underlying physical commodities that it either delivered or received in connection with the exercise of unreported trade options during the prior calendar year. Counterparties to otherwise unreported trade options must submit a Form TO filing by March 1 following the end of any calendar year during which they entered into one or more unreported trade options.24 In adopting § 32.3, the Commission stated that Form TO was intended to provide the Commission with a level of visibility into the market for unreported trade options that is “minimally intrusive,” thereby allowing it to identify market participants from whom it should collect additional information, or whom it should subject to additional reporting obligations in the future.25

Commission regulation § 32.3(b) provides that in connection with any commodity option transaction that is eligible for the trade option exemption, every counterparty shall comply with the swap data recordkeeping requirements of part 45, as otherwise applicable to any swap transaction.26 In discussing the trade option exemption conditions, however, the Commission noted in the preamble to the Commodity Options Release that “[t]hese conditions include a recordkeeping requirement for any trade option activity, i.e., the recordkeeping requirements of 17 CFR 45.2,” and did not reference or discuss any other provision of part 45 that contains recordkeeping requirements.27

Pursuant to Commission regulation § 45.2, records must be maintained by all trade option participants and made available to the Commission as specified therein.28 Notably, § 45.2 applies different recordkeeping requirements, depending on the nature of the counterparty. For example, if a trade option counterparty is an SD or MSP, it would be subject to the recordkeeping provisions of § 45.2(a). If a counterparty is a Non-SD/MSP, it would be subject to the less stringent recordkeeping requirements of § 45.2(b).29 Additional recordkeeping requirements in part 45, separate and apart from those specified in § 45.2 and which would apply to all trade option counterparties by operation of § 32.3(b) include:

• Each swap must be identified in all recordkeeping by the use of a unique swap identifier (“USI”); 30

• Each counterparty to any swap must be identified in all recordkeeping by means of a single LEI; 31 and

• Each swap must be identified in all recordkeeping by means of a unique product identifier (“UPI”) and product classification system.32

On May 7, 2015, the Commission published in the Federal Register a notice of proposed rulemaking that included several proposed amendments to the limited exemption for trade options in Commission regulation § 32.3 (“the Proposal”).33 The Commission proposed modifications to the recordkeeping and reporting requirements in existing § 32.3(b) that are applicable to trade option counterparties that are Non-SD/MSPs. The Commission also proposed a non-substantive amendment to existing § 32.3(c) to eliminate the reference to the now-vacated part 151 position limits requirements. These proposed amendments were generally intended to relax reporting and recordkeeping requirements where two commercial parties enter into trade options with each other in connection with their respective businesses while maintaining regulatory insight into the market for unreported trade options.

The Commission requested comment on all aspects of the Proposal.34 In response, the Commission received nine comment letters.35 Some of these comment letters raised issues concerning the treatment of trade options, and, more generally, commodity options, in relation to the swap definition.36 However, in the Proposal, the Commission did not address the general treatment of commodity options, including trade options, in relation to the swap definition, nor did the Commission solicit comments on such definitional issues. Rather, as discussed above, the Proposal contained only specific proposed modifications to the recordkeeping and reporting requirements in § 32.3(b) that are applicable to trade option counterparties that are Non-SD/MSPs, as well as a proposed non-substantive amendment to § 32.3(c). Since issues concerning the treatment of commodity options in relation to the swap definition fall outside the scope of the Proposal, the Commission declines to address such definitional issues in this final rule.

The following section will address the comments received on specific aspects of the Proposal in connection with explaining each of the amended regulations adopted herein.

The Commission proposed to amend § 32.3(b) such that a Non-SD/MSP will under no circumstances be subject to part 45 reporting requirements with respect to its trade option activities.37 The Commission explained in the Proposal that this proposed amendment was intended to reduce reporting burdens for Non-SD/MSP trade option counterparties, many of whom face technical and logistical impediments that prevent timely compliance with part 45 reporting requirements.38

NGSA, IECA, and APGA each supported deletion of part 45 reporting requirements for trade option counterparties that are Non-SD/MSPs.39 No commenter opposed deletion.

The Commission recognizes that many parties who are not SDs or MSPs and do not engage in significant swap activity apart from trade options do not have the infrastructure in place to support part 45 reporting to an SDR and that instituting such infrastructure would be costly, particularly for small end users. Therefore, the Commission believes that these parties, who apart from their trade option activities would have very limited reporting obligations under part 45, should not be required to comply with part 45 reporting requirements solely on the basis of having had to report a minimal number of historical or inter-affiliate swaps during the same twelve-month period.

Accordingly, for the reasons set forth above and in the Proposal, the Commission is adopting amended regulation § 32.3(b), as proposed, by eliminating part 45 reporting requirements for trade option counterparties that are Non-SD/MSPs.

The Commission proposed to amend Commission regulation § 32.3(b) such that a Non-SD/MSP would not be required to report otherwise unreported trade options on Form TO.40 The Commission further proposed to delete Form TO from appendix A to part 32. The Commission explained in the Proposal that these proposed amendments were intended to reduce reporting burdens for Non-SD/MSP trade option counterparties, many of whom face significant costs in preparing Form TO.41

AGA, Electric Associations, CEWG, APGA and NGSA each supported deletion of the Form TO reporting requirement.42 No commenter opposed deletion of Form TO. AGA commented that the proposed elimination of Form TO could “reduce a significant compliance cost and obviate the need for small end-users to track and report their trade options activity for a given calendar year.” 43 Electric Associations commented that “Form TO imposes substantial costs on end-users for personnel, legal advice and infrastructure,” and completing Form TO requires an end-user to “continuously track the commodity trade options it enters into, identify which of the commodity trade options have and have not been reported, and track the commodity trade options exercised. . . .” 44 CEWG commented that “elimination of the obligation to file Form TO will allow [Non-SD/MSP trade option counterparties] to (i) reduce the amount of resources dedicated to identifying and tracking their trade options and (ii) reallocate resources for optimal utilization.” 45 COPE commented that filing the actual Form TO is not burdensome, but rather it is the underlying tracking that is burdensome.46

The Commission recognizes that completing Form TO imposes costs and burdens on Non-SD/MSPs who enter into trade options, especially small end users. The Commission notes that Form TO data, which is submitted annually, consists of approximated aggregate values of otherwise unreported trade options exercised within three broad ranges, and within four “commodity categories.” 47 The Commission believes that, in view of the relatively limited surveillance and regulatory oversight benefits to be derived by the Commission from Form TO data, which is approximated, aggregated and undifferentiated, completion and submission of Form TO should no longer be required.

Accordingly, for the reasons set forth above, the Commission is amending regulation § 32.3(b), as proposed, by deleting the Form TO reporting requirement in connection with otherwise unreported trade options. Additionally, as proposed, the Commission is deleting appendix A to part 32, which contains Form TO.

The Commission proposed to further amend § 32.3(b) by adding a new requirement that Non-SD/MSP trade option counterparties provide notice by email to DMO within 30 days after entering into trade options, whether reported or unreported, that have an aggregate notional value in excess of $1 billion in any calendar year (the “$1 Billion Notice”).48 The Commission further proposed that, as an alternative to filing the $1 Billion Notice, a Non-SD/MSP could provide notice by email to DMO that it reasonably expects to enter into trade options, whether reported or unreported, having an aggregate notional value in excess of $1 billion during any calendar year (the “Alternative Notice”).49 Collectively, the $1 Billion Notice and the Alternative Notice were referred to in the proposal as the “Notice Requirement.” 50 The Commission explained in the Proposal that in light of the other proposed amendments that would generally remove reporting requirements for Non-SD/MSP counterparties to trade options, the proposed Notice Requirement would provide the Commission insight into the size of the market for unreported trade options and the identities of the most significant market participants, and would help guide the Commission's efforts to collect additional information through its authority to obtain copies of books or records should market circumstances dictate.51

Electric Associations, COPE and Southern each recommended against adoption of the proposed Notice Requirement.52 Electric Associations commented that it would be burdensome for Non-SD/MSPs to track and value trade options “in a manner different than their ordinary tracking, measuring and recordkeeping for other cash commodity transactions (intended to be physically settled),” and that such burden would be greater for smaller entities, which would need to track and value their trade options throughout the year, than it would be for large Non-SD/MSP counterparties, which could merely send the proposed Alternative Notice email to the Commission in January of each year.53 Southern commented that elimination of the Form TO reporting requirement would not be as meaningful if the Commission adopts the proposed $1 Billion Notice, because a Non-SD/MSP would nevertheless be required “to classify, value and track their trade options” all towards compliance with the Notice Requirement.54

AGA generally supported the Notice Requirement reporting framework, but commented that it is especially difficult to value many common types of trade options, such as long-term trade options and trade options with open-ended price or quantity terms, towards compliance with the proposed $1 Billion Notice.55

The Commission recognizes that the relief provided by eliminating Form TO and part 45 reporting for trade option counterparties that are Non-SD/MSPs would be more meaningful if Non-SD/MSP trade option counterparties are not required to classify, value and track their trade options for the exclusive purpose of complying with the proposed Notice Requirement. The Commission also recognizes that commenters have expressed that trade options, especially trade options that have a long duration or open price or quantity terms, may be difficult to value. Thus, the burdens on Non-SD/MSP trade option counterparties to classify, value and track their trade options towards compliance with the proposed Notice Requirement could be significant, and it is not evident that there are any steps these counterparties could take to more accurately classify, value and track their trade options, given the uncertainties inherent in this type of contract. Therefore, in view of the relatively limited use of such data (which would be submitted in aggregate form and not categorized by commodity or by instrumentation) for surveillance and regulatory oversight purposes, the Commission does not believe that the proposed Notice Requirement is necessary.

Accordingly, for the reasons set forth above, the Commission has chosen not to adopt as part of this final rule the proposed Notice Requirement, i.e., the proposed $1 Billion Notice and Alternative Notice requirements.

The Commission proposed to amend § 32.3(b) to clarify that trade option counterparties that are Non-SD/MSPs need not identify their trade options in all recordkeeping by means of either a USI or UPI, as required by §§ 45.5 and 45.7.56 Rather, with respect to part 45 recordkeeping requirements, the Commission proposed to clarify that trade option counterparties that are Non-SD/MSPs need only comply with the applicable recordkeeping provisions in § 45.2,57 along with the following proposed qualification: The Non-SD/MSP trade option counterparty must obtain an LEI pursuant to § 45.6 and provide such LEI to its counterparty if that counterparty is an SD/MSP. This proposed amendment would allow a trade option counterparty that is an SD/MSP to comply with applicable part 45 swap data recordkeeping and reporting obligations by properly identifying its Non-SD/MSP trade option counterparty by that counterparty's LEI.58

Electric Associations, COPE, IECA and Southern each recommended further reduction of trade option recordkeeping requirements for Non-SD/MSPs.59 Electric Associations commented that various types of end-users currently maintain records of trade options in “different systems, in different formats and for different retention periods than transactions referencing the same commodities that are intended to be financially settled, causing such records to not be retrievable in the same manner or format, or as quickly, as financially settled transactions.” 60 COPE commented that compliance with part 45 recordkeeping requirements in connection with trade options is burdensome for end-users, who must “identify and segregate trade options from other physical contracts, maintain the material required by CFTC regulations, and be prepared to provide requested data to the CFTC within five days.” 61 COPE recommended allowing physical end-users to keep records of trade options “in a manner no less stringent than that used for their physical commercial agreements, with an obligation to provide copies to the CFTC in a commercially reasonable time upon request.” 62 Southern recommended that the Commission provide further relief by permitting Non-SD/MSPs to “maintain the documents that they would otherwise already maintain in their ordinary course of business.” 63 Southern further commented that the recordkeeping requirements under § 45.2(b) are “very broad and vague,” and that carrying forward these requirements will result in a “tremendous burden” on Non-SD/MSPs, who “will need to undergo a significant effort to ensure `full, complete, and systematic records, together will all pertinent data and memoranda' are maintained for every trade option.” 64 The Commission did not receive any comments specifically addressing the requirement that a Non-SD/MSP trade option counterparty would need to obtain an LEI pursuant to § 45.6 and provide such LEI to its counterparty if that counterparty is an SD/MSP.

The Commission recognizes that requiring Non-SD/MSPs to comply with the swap data recordkeeping requirements of part 45 in connection with their trade options may result in burdens and costs for such participants, especially for small end users. The Commission believes that it would be appropriate to alleviate such burdens and costs for these market participants, without compromising the Commission's ability to properly oversee trade option activities. In particular, the Commission expects that Non-SD/MSPs maintain records concerning their trade option activities in the ordinary course of business. Furthermore, the Commission will remain able to collect information concerning trade option activities as necessary. For example, where a Non-SD/MSP enters into a trade option opposite an SD/MSP, the SD/MSP counterparty must continue to comply with all applicable swaps-related recordkeeping and reporting requirements of part 45 with respect to that transaction.65 In order to facilitate such reporting and recordkeeping by trade option counterparties that are SD/MSPs, the Commission will adopt, as proposed, the requirement that a Non-SD/MSP trade option counterparty must obtain an LEI pursuant to § 45.6 and provide such LEI to its counterparty if that counterparty is an SD/MSP. As stated above, this requirement allows an SD/MSP to properly identify its Non-SD/MSP trade option counterparty by that counterparty's LEI in all swap data recordkeeping and reporting relating to that transaction.66 As a result, the Commission will be able to gain insight into any trade option entered into by a Non-SD/MSP opposite a counterparty that is an SD/MSP. Additionally, under § 32.3(c)(2)[renumbered § 32.3(c)(1)], Non-SD/MSPs that are clearing members shall continue to comply with part 20 reporting and recordkeeping requirements in connection with their trade option activities.67

Accordingly, the Commission is amending regulation § 32.3(b) by deleting the requirement that a Non-SD/MSP must comply with the recordkeeping requirements of part 45 (as otherwise applicable to any swap) in connection with its trade option activities, subject to the exception that a Non-SD/MSP trade option counterparty must obtain an LEI pursuant to § 45.6 and provide such LEI to its counterparty if that counterparty is an SD/MSP.

Existing Commission regulation § 32.3(c)(2) subjects trade options to part 151 position limits, to the same extent that part 151 would apply in connection with any other swap.68 However, as stated above, part 151 has been vacated.69 Furthermore, trade options are not subject to position limits under the Commission's current part 150 position limit regime.70

In the Proposal, the Commission proposed to amend existing § 32.3(c) by deleting § 32.3(c)(2), including the reference to vacated part 151, because position limits do not currently apply to trade options. The Commission explained in the Proposal that this would not be a substantive change.71 Accordingly, for the reasons stated above, the Commission is deleting the cross-reference to vacated part 151 position limits from § 32.3(c), as proposed.

Several commenters requested assurance from the Commission that federal speculative position limits will not apply to trade options in the future as a result of the pending position limits rulemaking, which remains in the proposed rulemaking stage.72 The Commission believes that federal speculative position limits should not apply to trade options. To that end, the Commission intends to address this matter in the context of the proposed rulemaking on position limits, if such rule is adopted.

As discussed above, the Commission is adopting amendments to the trade option exemption in § 32.3 that: (1) Eliminate the part 45 reporting requirement for trade option counterparties that are Non-SD/MSPs; (2) eliminate the Form TO filing requirement; (3) eliminate the part 45 recordkeeping requirements for trade option counterparties that are Non-SD/MSPs, with the exception being that a Non-SD/MSP trade option counterparty must obtain an LEI pursuant to § 45.6 and provide such LEI to its counterparty if that counterparty is an SD/MSP; and (4) eliminate reference to the now-vacated part 151 position limits. In issuing this final rule, the Commission has reviewed all relevant comment letters and taken into account significant issues raised therein.73

The Commission believes that the baseline for this cost and benefit consideration is existing § 32.3. Although No-Action Letter 13-08, as discussed above, has offered no-action relief that is similar to certain aspects of the relief provided by this final rule, as a no-action letter, it only represents the position of the issuing Division or Office and cannot bind the Commission or other Commission staff.74 Consequently, the Commission believes that No-Action Letter 13-08 should not set or affect the baseline against which the Commission considers the costs and benefits of this final rule.

In the Proposal, the Commission invited comment on all aspects of its consideration of the costs and benefits associated with the Proposal, and the five factors the Commission is required to consider under CEA section 15(a). The Commission did not receive any comments from the public in this regard.

The Commission has considered whether elimination of part 45 reporting and recordkeeping requirements for trade option counterparties that are Non-SD/MSPs and the Form TO filing requirement could potentially reduce the amount of information available to the Commission to fulfill its regulatory mission, which could be a cost to the markets or the general public. However, the Commission shall remain able to collect sufficient information concerning trade option activities to fulfill its regulatory mission.75

The Commission expects that Non-SD/MSPs will continue to maintain records concerning their trade option activities in the ordinary course of business. Additionally, where a Non-SD/MSP enters into a trade option opposite an SD/MSP, the SD/MSP counterparty must continue to comply with all applicable swaps-related recordkeeping and reporting requirements of part 45 with respect to that transaction. In order to facilitate such reporting and recordkeeping by trade option counterparties that are SD/MSPs, the Commission has adopted a requirement in amended § 32.3(b) that a Non-SD/MSP trade option counterparty must obtain an LEI pursuant to § 45.6 and provide such LEI to its counterparty if that counterparty is an SD/MSP. As stated above, this requirement allows an SD/MSP to properly identify its Non-SD/MSP trade option counterparty by that counterparty's LEI in all swap data recordkeeping and reporting.76 Thus, the Commission may continue to gain insight into any trade option entered into by a Non-SD/MSP opposite a counterparty that is an SD/MSP. Furthermore, under § 32.3(c)(1), Non-SD/MSPs that are clearing members shall continue to comply with part 20 reporting and recordkeeping requirements in connection with their trade option activities. Therefore, the Commission believes that this final rule will not impose any additional costs on the markets themselves, or on the general public.

The Commission believes that this final rule has the benefit of reducing the regulatory burdens imposed by § 32.3(b), particularly through the elimination of part 45 reporting and recordkeeping requirements for trade option counterparties that are Non-SD/MSPs and the Form TO filing requirement, each of which commenters have described as burdensome.77

Section 15(a) of the CEA requires the Commission to consider the costs and benefits of its actions before promulgating a regulation under the CEA or issuing certain orders.78 Section 15(a) further specifies that the costs and benefits shall be evaluated in light of five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. The Commission considers the costs and benefits resulting from its discretionary determinations with respect to the section 15(a) factors.

The Commission recognizes that there may be trade-offs between reducing regulatory burdens and ensuring that the Commission has sufficient information to fulfill its regulatory mission. As discussed above, the amendments to § 32.3 reduce some of the regulatory burdens on end users while still maintaining the Commission's insight into the market for trade options, as necessary, to protect the public.

The Commission believes that the amendments to § 32.3 will reduce reporting and recordkeeping burdens on Non-SD/MSPs in the market for trade options, and will allow them to reallocate resources dedicated to trade options reporting to other more efficient purposes. Despite the deletion of swaps-related recordkeeping requirements in connection with trade options between two Non-SD/MSP counterparties, the Commission shall remain able to collect information concerning trade options as necessary to use in its market oversight role, thereby fulfilling the purposes of the CEA.79

The Commission believes that the amendments to § 32.3 will not have any competitiveness impact because the amendments apply to all Non-SD/MSP trade option counterparties in the same way. Although the obligations of SD/MSPs under the amended rule differ from those of Non-SD/MSPs, the Commission does not believe that these differences relate to any factors of competition between the two types of trade option counterparties.

The Commission believes that the amendments to § 32.3 will likely not have a significant impact on price discovery. Given that trade options are not subject to the real-time reporting requirements applicable to other swaps, meaning that current prices of consummated trade options are likely not available to many market participants, the Commission believes any effect on price discovery will be negligible.

The Commission believes that this final rule will not have a meaningful adverse effect on the risk management practices of the affected market participants and end users. Although the final rule is intended to reduce some of the regulatory burdens on certain market participants and end users, the Commission expects that where two Non-SD/MSPs enter into a trade option with one another, each participant will continue to maintain records concerning that contract, and its exercise, in its ordinary course of business. Furthermore, the Commission shall remain able to collect information concerning trade options as necessary to fulfill its regulatory mission.

The Commission has not identified any other public interest considerations for this final rule. As noted above, these amendments to § 32.3 will reduce some regulatory burdens while maintaining the Commission's access to information to fulfill its regulatory mission.

The Regulatory Flexibility Act (“RFA”) requires that agencies consider whether the rules they issue will have a significant economic impact on a substantial number of small entities and, if so, provide a regulatory flexibility analysis respecting the impact.80 The final rule, in amending § 32.3, will affect the recordkeeping and reporting requirements for Non-SD/MSP counterparties relying on the trade option exemption in § 32.3. Pursuant to the eligibility requirements in § 32.3(a), such a Non-SD/MSP may be an ECP and/or a commercial party (i.e., a producer, processor, or commercial user of, or a merchant handling the exempt or agricultural commodity that is the subject of the commodity option transaction, or the products or by-products thereof) offering or entering into the trade option solely for purposes related to its business as such. Although the Commission has previously determined that ECPs are not small entities for RFA purposes,81 the Commission is not in a position to determine whether non-ECP commercial parties affected by the amendments would include a substantial number of small entities on which the rule would have a significant economic impact because § 32.3 does not subject such entities to a minimum net worth requirement, allowing commercial entities of any economic status to enter into exempt trade options. Therefore, pursuant to 5 U.S.C. 604, the Commission offers this regulatory flexibility analysis addressing the impact of the proposal on small entities:

The Commission is taking this regulatory action to modify the trade option exemption in § 32.3 in response to comments from Non-SD/MSPs that the regulatory burdens currently imposed by § 32.3 are unnecessarily burdensome. The objective for issuing this rule is to reduce the recordkeeping and reporting obligations for trade option counterparties that are Non-SD/MSPs. As stated above, the legal basis for the rule is the Commission's plenary options authority in CEA section 4c(b).

The Commission did not receive any comment on the initial regulatory flexibility analysis.

The small entities to which the rule may apply are those commercial parties that would not qualify as ECPs and/or that fall within the definition of a “small entity” under the RFA, including size standards established by the Small Business Administration.82 Although more than 300 Non-SD/MSPs have reported their use of trade options to the Commission annually through Form TO, the limited information provided by Form TO is not sufficient for the Commission to determine whether and how many of those Non-SD/MSPs qualify as small entities under the RFA.

The rule will relieve trade option counterparties that are Non-SD/MSPs, which may include small entities, from certain recordkeeping and reporting requirements that would otherwise apply to them in connection with their trade option activities, such as part 45 reporting and recordkeeping requirements, and Form TO reporting requirements.

A potential alternative to relieving Non-SD/MSPs, which may include small entities, from certain recordkeeping and reporting requirements would be to either (1) not amend the current rule, which would maintain certain recordkeeping and reporting requirements that Non-SD/MSPs have represented are onerous, or (2) create a rule with more specific reporting and recordkeeping parameters for specific entities. The Commission believes that this final rule will have a positive economic impact on Non-SD/MSPs that are small entities because it would generally relax reporting and recordkeeping requirements across all trade option counterparties that are Non-SD/MSPs.

Therefore, the Chairman, on behalf of the Commission, hereby certifies pursuant to 5 U.S.C. 605(b) that this final rule will not have a significant economic impact on a substantial number of small entities.

The purposes of the Paperwork Reduction Act of 1995 (“PRA”) are, among other things, to minimize the paperwork burden to the private sector, ensure that any collection of information by a government agency is put to the greatest possible uses, and minimize duplicative information collections across the government.83 The PRA applies to all information, “regardless of form or format,” whenever the government is “obtaining, causing to be obtained [or] soliciting” information, and includes required disclosure to third parties or the public, of facts or opinions, when the information collection calls for answers to identical questions posed to, or identical reporting or recordkeeping requirements imposed on, ten or more persons.84 The PRA requirements have been determined to include not only mandatory but also voluntary information collections, and include both written and oral communications.85 Under the PRA, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number from the Office of Management and Budget (“OMB”).

The Commission believes that this final rule will not impose any new information collection requirements that require approval of OMB under the PRA. As a general matter, the final rule relaxes reporting and recordkeeping requirements for Non-SD/MSPs entering into trade options in connection with their respective businesses, including the withdrawal and removal of Form TO. Additionally, the Commission has chosen not to adopt as part of this final rule the proposed Notice Requirement, i.e., the proposed $1 Billion Notice and Alternative Notice requirements. Since this final rule does not impose any new information collection requirements, the final rule therefore does not result in the creation of any new information collection subject to OMB review or approval under the PRA. Furthermore, the Commission believes that this final rule will not cause a material net reduction in the current part 45 PRA burden estimates (OMB control number 3038-0096) to the extent that such reduced recordkeeping and reporting burdens for trade option counterparties that are Non-SD/MSPs will be insubstantial when compared to the overall part 45 PRA burden estimate as it relates to Non-SD/MSPs.

Accordingly, since there is no longer a need for Form TO, and since there will not be any other reporting or recordkeeping requirement falling under OMB Control Number 3038-0106, the Commission will file a request with OMB to discontinue OMB Control Number 3038-0106 (Form TO, Annual Notice Filing for Counterparties to Unreported Trade Options).

For the reasons stated in the preamble, the Commodity Futures Trading Commission amends 17 CFR part 32 as follows:

The Patient Engagement Advisory Committee (the Committee) was established on October 6, 2015 (80 FR 57007, September 21, 2015).

The Committee will provide advice to the Commissioner of Food and Drugs (the Commissioner), or designee, on complex issues relating to medical devices, regulation of devices, and their use by patients.

The Committee will be composed of a core of nine voting members including the Chair. Members and the Chair are selected by the Commissioner or designee from among authorities who are knowledgeable in areas such as clinical research, primary care patient experience, and healthcare needs of patient groups in the United States, or who are experienced in the work of patient and health professional organizations, methodologies for eliciting patient preferences, and strategies for communicating benefits, risks, and clinical outcomes to patients and research subjects. Members will be invited to serve for overlapping terms of up to 4 years. Almost all non-Federal members of this committee serve as Special Government Employees. The core of voting members may include one technically qualified member, selected by the Commissioner or designee, who is identified with consumer interests and is recommended by either a consortium of consumer-oriented organizations or other interested persons.

The function of the Committee is to provide advice to the Commissioner on complex issues relating to medical devices, the regulation of devices, and their use by patients. Agency guidance and policies, clinical trial or registry design, patient preference study design, benefit-risk determinations, device labeling, unmet clinical needs, available alternatives, patient reported outcomes, and device-related quality of life or health status issues are among the topics that may be considered by the Committee. The Committee provides relevant skills and perspectives in order to improve communication of benefits, risks, and clinical outcomes, and increase integration of patient perspectives into the regulatory process for medical devices. It performs its duties by identifying new approaches, promoting innovation, recognizing unforeseen risks or barriers, and identifying unintended consequences that could result from FDA policy.

The Committee name and function were established with the Committee charter on October 6, 2015. Therefore, the Agency is amending 21 CFR 14.100 to add the Committee name and function to its current list as set forth in the regulatory text of this document.

Under 5 U.S.C. 553(b)(3)(B) and (d) and 21 CFR 10.40(d) and (e), the Agency finds good cause to dispense with notice and public comment procedures and to proceed to an immediate effective date on this rule. Notice and public comment and a delayed effective date are unnecessary and are not in the public interest as this final rule is merely codifying the addition of the name and function of the Patient Engagement Advisory Committee to reflect the committee charter.

Therefore, the Agency is amending 21 CFR 14.100 to add paragraph (d)(5) as set forth in the regulatory text of this document.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 14 is amended as follows:

On November 19, 2015, BIA published a final rule addressing rights-of-way on Indian land and BIA land. See 80 FR 72492. In a document published December 21, 2015, BIA extended the effective date of the rule to March 21, 2016, in response to requests from tribes and industry in order to provide additional time to prepare for implementation to ensure compliance. See 80 FR 79258. BIA is again extending the effective date of the final rule. This document extends the effective date of the final rule to April 21, 2016, and likewise extends the deadline for providing BIA with documentation of past assignments to August 16, 2016. The substance of the rule remains unchanged and this will be the final extension of the effective date.

The BIA has determined that the extension of the effective date and compliance date without prior public notice and comment is in the public interest because it would allow more time for the public to comply with the rule. This is a rule of agency procedure or practice that is exempt from notice and comment rulemaking under 5 U.S.C. 553(b)(A).

In FR Rule Doc. No. 2015-28548, published November 19, 2015, at 80 FR 72492, make the following corrections:

The Event Director for the New Bern Mumfest, with approval from the North Carolina Department of Transportation, owner of the drawbridge, has requested a temporary deviation from the current operating regulations set out in 33 CFR 117.843(a) to accommodate safe passage for pedestrians and vehicles during Mumfest.

The US 70 (Alfred C. Cunningham) Bridge is a double bascule lift bridge and has a vertical clearance in the closed position of 14 feet above mean high water. Under this temporary deviation, the drawbridge will open every two hours, on the hour, from 9 a.m. through 8 p.m. on Saturday, October 8, 2016 and from 9 a.m. through 7 p.m. on Sunday, October 9, 2016. From 8 p.m. on Saturday, October 8, 2016 through 9 a.m. on Sunday, October 9, 2016, the drawbridge will open on signal.

Vessels able to pass under the bridge in the closed position may do so at anytime. Mariners are advised to proceed with caution. The bridge will be able to open for emergencies and there is no alternate route for vessels unable to pass through the bridge in the closed position. The Coast Guard will also inform the users of the waterways through our Local and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessel operators can arrange their transits to minimize any impact caused by the temporary deviation.

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

The Consolidated Appropriation Act of 2014 signed by President Obama in January 2014, adopted a new name, Purchased/Referred Care (PRC), for the CHS program. The name change was official with passage of the Fiscal Year (FY) 2014 appropriation. The new name better describes the purpose of the program funding, which is for both purchased care and referred care outside of IHS. The name change does not change the program, and all current policies and practices will continue and is not intended to have any effect on the laws that govern or apply to CHS. IHS will administer PRC in accordance with all laws applicable to CHS. This final rule will use the term PRC.

On December 5, 2014, the Department published proposed regulations in a Notice of Proposed Rulemaking (NPRM) in the Federal Register (79 FR 72160) to amend the IHS medical regulations at 42 CFR part 136 by adding a new subpart I to apply Medicare payment methodologies to all physician and other health professional services and non-hospital-based services provided through CHS, now PRC, or purchased by urban Indian organizations. In the NPRM, the Department invited the public to comment on the proposed provisions; subsequently, in a Federal Register document published on January 14, 2015 (80 FR 1880), the 45-day comment period was extended to February 4, 2015. Under 42 CFR 136.23, when necessary services are not reasonably accessible or available to IHS beneficiaries, the IHS and Tribes are authorized to pay for medical care provided to IHS beneficiaries by non-IHS or Tribal, public or private health care providers, depending on the availability of funds. Similarly, under section 503 of the IHCIA, 25 U.S.C. 1653, urban Indian organizations may refer eligible urban Indians, as defined under section 4 of the IHCIA, tonon-I/T/U public and private health care providers and, depending on the availability of funds, may also cover the cost of care. The PRC Program is authorized to pay for medical care provided to IHS beneficiaries by non-IHS or Tribal, public or private health care providers, depending on the availability of funds. I/T/Us reimburse for authorized services at the rates provided by contracts negotiated at the local level with individual providers or according to a provider's billed charges. Given the small market share of individual I/T/U programs, I/T/Us historically have paid rates in substantial excess of Medicare's allowable rates or rates paid by private insurers for the same services. Despite establishing medical priorities to cover the most necessary care, IHS is still unable to provide care to all of its beneficiaries. The demand for PRC care consistently exceeds available funding. IHS recently reported to Congress that IHS and tribal PRC programs denied an estimated $760,855,000 for an estimated 146,928 contract care services needed by eligible beneficiaries in FY 2013. This rule finalizes the Medicare-like rates NPRM and ensures PRC programs reimburse non-hospital services, including physician services, at rates comparable to other federal programs; the savings realized by adopting and implementing this rule will increase patient access to care.

HHS proposed to amend the regulations at 42 CFR part 136 by adding a new Subpart I to describe the payment methodologies to all physician and health care professional services and all non-hospital-based services that are not covered currently under 42 CFR part 136 subpart D. The final rule would amend the regulation at 42 CFR part 136, by adding a new Subpart I to apply the Medicare payment methodologies to all physician and other health professional services and non-hospital-based services purchased by an IHS or Tribal PRC program, or urban Indian organizations.

IHS has added an applicability provision in § 136.201. This provision specifies that the rule applies to IHS-operated PRC programs, urban Indian health programs, and Tribally-operated programs, but only to the extent the Tribally-operated programs opt-in to the requirements of the rule. IHS has added a definition section to the rule at § 136.202. In that section, important terms used in the rule are defined, including Notification of a Claim, Provider, Supplier, Referral and Repricing Agent. In § 136.203 (§ 136.201 of the NPRM), flexibility to allow PRC programs to negotiate rates that are higher than Medicare rates is added. With a narrow exception, the discretion to negotiate rates equal to or less than rates accepted by the provider or supplier's MFC is limited. In the absence of a negotiated amount, the amount the provider or supplier bills the general public is eliminated from the methodology and replaced with the amount the provider or supplier accepts from its MFC.

The Agency received 57 comments from Tribes, Tribal organizations, medical associations, and individuals. The Agency carefully reviewed the submissions by individuals, groups, Indian and non-Indian organizations. IHS did not consider three of these comments, because they were received after the closing date. Of the 54 timely comments, nine commenters supported the proposed regulation; thirty-eight commenters support the proposed regulation with changes; three commenters did not support the proposed regulation; and four commenters provided general comments.

Comment: The majority of commenters support the rule as a positive step toward achieving the goal of expanding PRC rates to non-hospital-based providers and suppliers. Many commenters stated the rule's potential impact on individual providers would be diffuse and de minimus and that the proposed rule would provide an enormous benefit to the IHS and Tribal health care programs. Commenters noted that IHS and Tribal health programs often pay higher payment rates than private health insurers and other Federal programs, such as Medicare and the Veterans Health Administration. In addition, many commenters suggested that implementing rates for non-hospital-based providers will increase the volume of services being sought which will result in providers achieving more volume to offset the decrease in rates.

Response: IHS agrees with the commenters that this rule is necessary and important towards achieving payment parity with other Federal health care programs.

Comment: There were a number of commenters that support the proposed rule, but with changes. Several commenters expressed the view, that as drafted, the proposed rule does not provide enough flexibility to ensure continued access to care through the PRC program. Specifically, many commenters felt that a rigid take-it-or-leave-it rate structure would result in many health care providers refusing to do business with I/T/Us. Many Tribal stakeholders recommended providing Tribal and urban Indian health programs with the option to negotiate higher rates, but to limit maximum rates to what the provider or supplier would accept from non-governmental payers, including insurers, for the same service. Advocates for non-IHS and Tribal providers also recommended incorporating flexibility to negotiate rates.

Response: IHS highlighted concerns about the impact the rule could have on access to care in the preamble to the NPRM and was pleased with the thoughtful responses received. IHS agrees with commenters that more flexibility must be built into the rule. IHS also agrees with Tribal stakeholders that Tribes should be provided more flexibility to negotiate rates that exceed Medicare rates and agrees that controls should be put into place to ensure that negotiated rates remain fair and reasonable. Section 136.203 provides that if a specific amount has been negotiated with a specific provider or supplier or its agent by the I/T/U, theI/T/U will pay that amount, provided such amount is equal to or better than the provider or supplier's MFC rate, as evidenced by commercial price lists or paid invoices and other related pricing and discount data, to ensure the I/T/U is receiving a fair and reasonable pricing arrangement. Further, the MFC rate does not apply if the I/T/U determines the prices offered to the I/T/U are fair and reasonable and the purchase of the service is otherwise in the best interest of the I/T/U. It will be incumbent on the provider of services to provide the necessary documentation to ensure the rates charged are fair and reasonable.

Comment: In addition to the ability to negotiate rates under the rule, several Tribal stakeholders also want an opt-out clause from the proposed rule for Tribal and urban Indian health care programs. The majority of commenters feel Tribal sovereignty and self-determination must also be respected to allow the Tribes the flexibility to negotiate with providers and determine how best to meet the needs of their community when providing health care. They indicated that flexibility is one of the foundational principles underlying the Indian Self-Determination and Education Assistance Act (ISDEAA) and Tribes and Tribal organizations that negotiate agreements under that Act with the IHS should have the right to choose not to apply this new rule.

Response: IHS agrees with Tribal stakeholders that Tribal health programs should have the option to administer PRC programs outside of the rule. Rather than memorialize this option as an opt-out clause, IHS is finalizing the recommendation as an opt-in provision in section 136.201. The opt-in provision is intended to be consistent with 25 U.S.C. 458aaa-16(e), which provides, with certain exceptions, that Tribes are not subject to rules adopted by the IHS unless they are expressly agreed to by the Tribe in their compact, contract or funding agreement with IHS. Although 25 U.S.C. 458aaa-16(e) only expressly applies to Tribes compacted under Title V of the ISDEAA, IHS is extending opt-in flexibility to Tribes contracted under Title I of the ISDEAA too. IHS is not incorporating a comparable provision allowing urban Indian health programs to opt-in or opt-out of the requirements of the rule. Urban Indian health programs are funded through procurement contracts or grants with IHS, not ISDEAA contracts, and the principles underlying self-determination and the opt-in flexibility do not extend to such agreements.

Comment: One commenter believes that reducing physician payments will provide a disincentive to participate in the PRC program and will result in less beneficiary access to care.

Response: IHS acknowledges the implementation of rates could impact access to care, and believe sufficient language has been incorporated to ensure that beneficiary access to care is not compromised.

Comment: One commenter believes the rule would magnify the existing disparity between the average ambulance provider's total costs and their reimbursement.

Response: The implementation of the rule is not intended to require a provider or supplier to incur a financial loss. To the extent the Medicare rate structure results in the provider or supplier incurring a financial loss, the flexibility added to the final rule should permit providers and suppliers to negotiate fair and reasonable rates with I/T/Us.

Comment: The majority of commenters stated that IHS should also engage in provider outreach and monitoring to ensure the rule is effectively implemented. Further, once the final rule is issued, the IHS, in collaboration with Tribes, should develop and issue a “Dear provider letter” for all I/T/Us to educate their network of providers regarding this regulation. Commenters believe that education and outreach to providers will be a critical component in successfully implementing the rule.

Response: IHS agrees. IHS took similar steps when it promulgated the hospital-based rate under 42 CFR part 136 subpart D. IHS intends to work with Tribes to educate the providers that participate in IHS and Tribal PRC programs.

Comment: One commenter indicates that some IHS Area Offices utilize case management to better monitor the services that are being purchased through PRC. The commenter proposed that IHS Area Offices have a medical physician on staff for utilization review.

Response: IHS agrees with the commenter but the proposal offered is beyond the scope of this final rule.

Comment: One commenter is concerned that the amount a provider “bills the general public” for the same service is too vague. The term “general public” is subject to multiple interpretations. The commenter recommended limiting payment to the amount the provider “accepts as payment for the same service from nongovernmental entities, including insurance providers.”

Response: IHS agrees with the commenter that the proposed language may be open to more than one interpretation. To avoid multiple interpretations and to align this subsection with others changes made to § 136.203, the reference to “bills the general public” has been deleted and provisions have been inserted providing for payment not to exceed the provider or supplier's MFC rate, as evidenced by commercial price lists or paid invoices and other related pricing and discount data to ensure that the I/T/U is receiving a fair and reasonable pricing arrangement. Additionally, in the event that a Medicare rate does not exist for an authorized item or service, and no other payment methodology provided by the rule is applicable, IHS has included a provision in 136.203(a)(3) that authorizes payment at 65% of authorized charges.

Comment: The majority of commenters believe the rule should not imply that professional services are never covered by the existing PRC regulations. The current PRC rate regulations apply to “all Medicare participating hospitals, which are defined for purposes of that subpart to include all departments and provider-based facilities of hospitals.” The commenters believe this includes physicians and other health care professionals if they are employed directly by the hospital or even “under arrangements.”

Response: The PRC rate regulations at part 136 subpart D apply to hospitals and critical access hospitals pursuant to section 1866(a)(1)(U) of the Social Security Act which requires providers to agree to provide services under the Contract Health Services, now PRC, program or other programs funded by IHS through the execution of a Medicare participating provider agreement. The agreement executed by hospitals and critical access hospitals under section 1866 does not govern payment for professional services under Medicare, even for services provided by physician employees of a hospital or for “billing under arrangements,” and, accordingly, does not generally govern the acceptance of payment for services under Medicare Part B. To eliminate any confusion, the terms Supplier and Provider have been defined in § 136.201 to only include entities that are not subject to Part 136 Subpart D. Supplier means a physician or other practitioner, a facility, or other entity (other than a provider) not already governed by or subject to 42 CFR part 136 subpart D, that furnishes items or services under this new Subpart. Provider, as used in this subpart only, means a provider of services not governed by or subject to 42 CFR part 136 subpart D, and may include a skilled nursing facility, comprehensive outpatient rehabilitation facility, home health agency, or hospice program.

Comment: The majority of commenters requested training for Tribes. Many commenters suggested IHS develop a training and technical assistance initiative to prepare I/T/U sites to implement the rule. Tribes expressed concern about the lack of training and technical assistance associated with the implementation of the regulation for Payment to Medicare-participating hospitals for authorized CHS (42 CFR 136.30). IHS should work with several software products theI/T/Us can use and commenters recommended that IHS negotiate a volume discount for Tribes to purchase the software.

Response: IHS agrees that training is necessary to ensure that the rule is implemented properly and effectively. Many suggestions for training, however, are beyond the scope of this final rule and will be addressed through subsequent communication with Tribes.

Comment: Commenters indicated that IHS should also develop and implement a process in consultation with Tribes to monitor and report on the success of the rule once it is implemented.

Response: IHS agrees that monitoring the effectiveness of the rule is important. Obtaining data from programs that are implementing the rule is essential to determining its success; however, reporting requirements exceed the scope of this final rule.

Comment: The majority of commenters stated that the proposed rule would have significant Tribal implications and substantial direct effects on one or more Indian Tribes. As a result, pursuant to the HHS Tribal Consultation Policy, Tribal consultation is required. Tribes stated in their comments that they welcomed the opportunity to comment on the proposed rule through the notice and public comment process required by the Administrative Procedure Act, but they stated that the Director of the IHS must also engage in Tribal consultation on the proposed rule before any action is taken to finalize this rule.

Response: IHS consulted with Tribes, during listening sessions and other meetings, on whether Tribes thought IHS should pursue applying PRC rates for non-hospital-based services. It has been noted that while these interactions indicated that regulations may have been a good idea, the level of discussion did not get into the complexities of developing a regulation and how such regulations would impact Tribes given the variation in access to specialty care and the number of hospitals across the Indian health system. IHS recognizes that specific provisions of the rule were not developed in consultation with Tribes. In the development of this final rule, however, IHS has collaborated significantly with the Director's PRC Workgroup. The PRC workgroup is composed of technical experts who have a deep understanding of the complexities of administering PRC programs. The rule has been revised to provide the flexibility many Tribal stakeholders have requested, and as finalized, will not apply to any Tribally-operated PRC program until it elects to opt-in in accordance with § 136.201. IHS recognizes that these steps may not relieve all concerns regarding Tribal consultation. Accordingly, IHS is also publishing this final rule with a comment period in which to receive additional feedback from stakeholders, to determine whether any revisions should be made to the rule.

Comment: One commenter recommended IHS pursue legislation, not a regulation.

Response: Regulations (or rules) implement the public policy of enacted legislation and establish specific requirements. IHS bases its authority on 42 U.S.C. 2003 to establish the methodology and payment rates for the IHS PRC.

Comment: One commenter is concerned that there is nothing explicit in the regulation that prevents the provider from avoiding the Medicare rate by choosing not to submit a claim at all, and seeking redress from the patient directly. Because the Medicare rates may be substantially lower than the provider's billed rate, the providers might avoid a PRC claim entirely and bill the patient for the full amount. The commenter is also concerned that more patients will be taken to collection agencies when they cannot afford to pay when the provider bills the patients directly.

Response: IHS recognizes that the rule does require providers to accept payment from PRC programs and understands that this may on occasion result in patients incurring financial responsibility. IHS beneficiaries already incur financial responsibility for care that IHS cannot cover. In FY 2013, PRC denied an estimated $760,855,000 for an estimated 146,928 services needed by eligible American Indian and Alaska Native individuals. Those numbers only account for IHS administered programs. IHS notes incurring financial responsibility may be avoided by obtaining a PRC authorized referral from IHS prior to treatment. If a referral is issued by IHS, it means that the provider has accepted IHS payment rates, and the patient may not be charged for the service. A definition section was added to the rule at § 136.202 and defined Referral there to clarify for beneficiaries and providers when the requirements for payment acceptance have been triggered. IHS also added a definition for Notification of a Claim, as it too triggers payment acceptance under the rule. Finally, the definition of Repricing Agent was moved to the newly created definition section.

Comment: One commenter stated there needs to be some oversight by either Centers for Medicare & Medicaid Services or other appropriate agencies written into the regulation that includes a way in which all Medicare-participating medical providers have to, by law, accept PRC patients and accept the rates established by 42 CFR part 136 subpart D.

Response: No changes will be made as a result of this comment. IHS is promulgating this rule pursuant to its own rulemaking authority, under which there is no basis for another agency to enforce compliance.

Comment: The majority of commenters state that any changes made, or proposed in the PRC program, must be careful to not adversely impact the effectiveness of the PRC programs. Any change to improve the efficiency or financial operations of the PRC program must be carefully evaluated to ensure that they do not impose additional administrative or financial burdens on the PRC program and the patients they serve. A meaningful and well-intentioned change could actually restrict access and cost the program more resources than it would save.

Response: IHS believes these concerns have been addressed through the flexibilities which have been added to the final rule, the training IHS intends to offer to PRC administrators, and the outreach and education IHS intends to provide to PRC-participating providers and suppliers.

Comment: Some commenters expressed serious concern regarding the long delay between publication of the proposed rule and issuing the final rule on limiting charges for services furnished by Medicare participating inpatient hospitals to individuals eligible for care purchased by Indian health programs, as provided for by Sec. 506 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Once this final rule is adopted, they stated, it should be implemented in a reasonable but expedient manner.

Response: IHS acknowledges the concern and provides that the rule will be effective 60 days from publication and applicable to services provided after the effective date. The rule will apply to outpatient services provided after the effective date of the rule. The rule will apply to inpatient services with an admission that falls on or after the effective date of the rule. However, IHS also recognizes programs may not be fully equipped to implement the rule when it becomes effective. In accordance with 42 CFR 136.201(c), Tribal health programs may choose to opt-in to the rule immediately, or whenever they are able to fully implement the rule. A health program operated by the IHS or by an urban Indian organization through a contract or grant under Title V of the IHCIA, Public Law 94-437 should implement the rule as soon as possible, but must implement the rates specified herein no later than one year from the date of publication in the Federal Register.

These regulations do not impose any new information collection requirements. Specifically, federal acquisition regulations already govern the collection of contractor pricing data and agency regulations and procedures already govern the collection of information necessary to process claims. The IHS will use the IHS purchase order form number IHS-843 for collection of information. OMB No. 0917-0002.

The IHS has examined the impact of this final rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any one year). An April 2013 study released by the Government Accountability Office (GAO) found that if Federal PRC programs had paid Medicare rates for physicians' services in 2010, they could have realized an estimated $32 million in annual savings to pay for additional services.

The GAO formulated its estimate using actual IHS data, which it obtained from the IHS fiscal intermediary. The GAO narrowed those claims to payments for physician and other nonhospital services. These are the same services at issue in this final rule. Since IHS is the payer of last resort, the GAO excluded services where IHS would not have had primary responsibility, such as services covered by the patient's insurance or another third party payer. The GAO also excluded nonhospital services that were not covered by the Medicare Physician Fee Schedule, as well as anesthesiologists, based upon lack of information to determine comparable Medicare rates.

Once the GAO had isolated the necessary IHS payment data, the GAO compared the IHS payments to the corresponding rate on the 2010 Medicare Physician Fee Schedule. The GAO adjusted the payment rates according to the physician's approximated geographic location and the service setting, based upon Medicare practice. The GAO also compared the IHS payments to those that would have been made by private insurers using a commercial claims and encounters database. The GAO specifically compared payments for services occurring in the same county to account for any variation in payments due to location, by averaging the rate paid by the private insurers for a service in each county and comparing that average rate with IHS payments in the same county.

The GAO evaluated the reliability of the data it had relied upon in its estimates, including the IHS claims data, the Medicare Physician Fee Schedule data, and the private insurance database. The GAO reviewed the documentation and discussed the database with officials it considered knowledgeable in this area. The GAO also performed data reliability checks to test the internal consistency and reliability of the data. The GAO determined that the data was sufficiently reliable for its purposes after taking these steps.

IHS agrees with the methodology utilized by the GAO in its report to select, verify, and compare the necessary elements of the GAO estimate. While the GAO study did not consider the additional flexibility added to this final rule at the request of Tribes or payments made to anesthesiologists, IHS anticipates that most PRC programs and PRC payments under this final rule will closely follow the policy that the GAO considered when developing its study. For this reason, the GAO estimate from the April 2013 study is applicable to the regulatory impact analysis of the final rule.

In 2014, IHS performed an analysis similar to the GAO study with claims data from the IHS fiscal intermediary for fiscal year (FY) 2012. Instead of analyzing the entire IHS system, as GAO had done with data from 2010, IHS focused on the potential impact to IHS PRC programs in the states of North and South Dakota. IHS was able to closely review the specific contracts in place between IHS and physicians in these two states by narrowing the geographic focus of its analysis. IHS found that North Dakota providers who had an agreement in place with IHS during FY 2012 would have received, on average, 31% less if payment rates for professional services and non-hospital-based care had been capped at the Medicare rate, while South Dakota providers would have experienced the opposite and received, on average, 31% more. It is important to note that, of those providing PRC services in FY 2012, only 15-16% had an agreement with IHS in either of these two states. The remaining 84-85% did not have an agreement in place with IHS in FY 2012 and IHS estimates that these providers would have been paid, on average, 35% less in North Dakota and 52% less in South Dakota if the payments had been capped at Medicare rates. While most of the providers without an agreement would have been paid less under this analysis, IHS estimated that 26% in North Dakota and 21% in South Dakota would have received higher payments, because their billed charges were less than the Medicare rates.

Overall, IHS estimated that in FY2012, it could have saved $2,074,638.28 in North Dakota and $5,498,089.09 in South Dakota if PRC payments for professional services and non-hospital-based care had been capped at the Medicare rates. IHS noted that referral numbers and authorizations for payment are dependent on appropriation levels for each year. The estimates provided by the IHS study were based upon the specific factors for FY 2012, including rates and funding levels in place at that point in time. The IHS analysis looked closely at the potential impact on providers in these two states, but it did not perform all of the detailed steps taken by the GAO to determine potential savings. Based upon its limited analysis, though, IHS determined that capping the PRC rates for professional services and non-hospital-based care would likely result in savings for IHS PRC programs.

Both the GAO study and the IHS analysis note the possible consequences of this policy change. The GAO study determined that providers overall would receive less if the payments for professional services and non-hospital-based care are capped at the applicable Medicare rates. The IHS analysis acknowledged that most providers, especially those without a contract with IHS, would receive less under such a policy change, but IHS also found that some providers would receive more per individual claim. During the interview portion of its study, the GAO spoke with a few providers who already had contracts with IHS to be paid at or below Medicare rates. IHS also estimated that adverse impacts on providers could be mitigated by the additional referrals that would result from the PRC savings. In addition to the providers, the GAO study noted possible concerns regarding access to care for patients. The IHS analysis did not delve into this particular issue. However, neither the GAO study nor the IHS analysis anticipated the additional flexibility that would be built into this final rule, as part of the policy change. If IHS finds that providers in particular areas are choosing not to participate based upon the change in policy and the supply of providers in that area is not sufficient to meet demand, thereby impacting patient access to care, IHS has certain flexibility to negotiate higher rates under this final rule to ensure that patients are not negatively impacted. Tribally-operated PRC programs will have the same flexibility, if they choose to opt-in to this final rule. IHS beneficiaries as a whole will be able to benefit from the change in policy, since the savings will allow IHS to provide additional PRC services.

Although the GAO study and the IHS analysis did not include other types of non-hospital services or funding that goes to Tribal PRC programs, particular Tribes and tribal organizations may decide not to opt-in to this final rule. Even if all of the Tribally-operated PRC programs choose to participate, IHS estimates that the increase in purchasing power brought about by this final rule would be unlikely to exceed $100 million annually. Furthermore, if any PRC programs utilize the additional flexibility added to this final rule and choose to negotiate rates above the applicable Medicare rates, the impact would be even less likely to exceed $100 million annually. Office of Management and Budget (OMB) has determined that this is a significant regulatory action under Executive Order 12866.

The Secretary has determined this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the RFA, 5 U.S.C. 601-612. The final rule will not cause significant economic impact on health care providers, suppliers, or entities since only a small portion of the business of such entities concern IHS beneficiaries. The April 2013 study released by the GAO found that of the physicians sampled, the PRC program represented a small portion of their practice and was not a significant source of revenue. Although the sampling of physicians was small, all of the sampled physicians were in the top 25% in terms of volume of paid services covered by PRC. IHS believes the sample to be representative of higher volume practitioners currently providing services paid for by PRC. Accordingly, pursuant to 5 U.S.C. 605(b), the final rule is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

Section 202 of the Unfunded Mandates Reform Act of 1995 requires that agencies assess anticipated costs and benefits before issuing any rule whose requirements mandate expenditure in any one year by State, local, or Tribal governments, in the aggregate, or by the private sector, of $141 million. This proposal would not impose substantial Federal mandates on State, local or Tribal governments or private sector.

In accordance with the provisions of Executive Order 12866, this regulation was reviewed by OMB.

For the reasons set forth in the preamble, the Indian Health Service is amending 42 CFR part 136 as set forth below:

This is a summary of the Commission's Structure and Practices of the Video Relay Service Program and Telecommunications Relay Services and Speech-to-Speech Services for Individuals with Hearing and Speech Disabilities, Report and Order, document FCC 16-25, adopted on March 1, 2016, and released on March 3, 2016, in CG Docket Nos. 10-51 and 03-123. The full text of document FCC 16-25 will be available for public inspection and copying via ECFS, and during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street SW., Room CY-A257, Washington, DC 20554. Document FCC 16-25 can also be downloaded in Word or Portable Document Format (PDF) at: https://www.fcc.gov/general/disability-rights-office-headlines. To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to [email protected] or call the Consumer and Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (TTY).

Document FCC 16-25 does not contain new or modified information collection requirements subject to the Paperwork Reduction Act (PRA) of 1995, Public Law 104-13. In addition, therefore, it does not contain any new or modified information collection burden for small business concerns with fewer than 25 employees, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

The Commission will not send a copy of FCC 16-25 pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A), because the Commission adopted no rules therein, as defined in 5 U.S.C. 804(3). Rather, the Commission modified the rates applicable to compensation paid to VRS providers from the TRS Fund.

1. In 2013, the Commission adopted a Report and Order amending its telecommunications relay service (TRS) rules to improve the structure, efficiency, and quality of the VRS program, reduce the risk of waste, fraud, and abuse, and ensure that the program makes full use of advances in commercially-available technology. Structure and Practices of the Video Relay Services Program, Telecommunications Relay Services and Speech-to-Speech Services for Individuals with Hearing and Speech Disabilities, CG Docket Nos. 10-51, 03-123, Report and Order and Further Notice of Proposed Rulemaking, published at 78 FR 40407, July 5, 2013 (VRS Reform Order), and 78 FR 40582, July 5, 2013 (VRS Reform FNPRM), aff'd in part and vacated in part sub nom. Sorenson Communications, Inc. v. FCC, 765 F.3d 37 (D.C. Cir. 2014) (Sorenson). The VRS Reform Order established the rates at which VRS providers are compensated from the Interstate Telecommunications Relay Service Fund (TRS Fund) for a four-year period beginning July 1, 2013, and adopted structural reforms designed to establish a more level playing field for all VRS providers.

2. Pursuant to the TRS rules, VRS providers submit the number of minutes of service they provide to the TRS Fund administrator on a monthly basis and are compensated for these minutes based on rates set annually by the Commission. The Commission currently uses a three-tier compensation rate structure that allows smaller providers to receive more compensation per minute, on average, than larger providers. A tiered compensation rate structure allows providers to earn a higher compensation rate on the initial minutes of service provided each month. Pursuant to the three-tiered VRS rate structure as modified in the VRS Reform Order, the Tier I rate (the highest rate) applies to a provider's first 500,000 monthly VRS minutes, the Tier II rate applies to a provider's second 500,000 monthly minutes, and the Tier III rate (the lowest rate) applies to monthly minutes in excess of 1,000,000. As a result, smaller providers receive more compensation per minute, on average, than larger providers.

3. In the VRS Reform Order, the Commission recognized a need to better align VRS compensation rates with the allowable costs of this service, pending a further determination as to VRS compensation methodology. To that end, and as an alternative to immediately reducing rates to a level based on average costs, the Commission adopted a four-year schedule that gradually adjusts the VRS compensation rates downward every six months, beginning July 1, 2013, and ending June 30, 2017. (In document FCC 16-25, the term “average,” when used to describe multiple providers' costs, means an average of provider costs weighted in proportion to each provider's total minutes.) Subsequently, in a Further Notice of Proposed Rulemaking released November 3, 2015, the Commission proposed to temporarily freeze the compensation rates of providers handling 500,000 or fewer monthly minutes. Structure and Practices of the Video Relay Services Program, Telecommunications Relay Services and Speech-to-Speech Services for Individuals with Hearing and Speech Disabilities, CG Docket Nos. 10-51, 03-123, Further Notice of Proposed Rulemaking, published at 80 FR 72029, November 18, 2015, (VRS Rate Freeze FNPRM).

4. The Commission adopts its proposal to temporarily “freeze” the compensation rates of providers handling 500,000 or fewer monthly minutes (the smallest VRS providers) and directs the TRS Fund administrator to pay compensation, subject to a possible true-up, at a compensation rate of $5.29 per VRS minute for the period from July 1, 2015, to October 31, 2016. This rate is applicable to a VRS provider in any month for which the provider submits 500,000 or fewer compensable VRS minutes for compensation from the TRS Fund.

5. The record of this proceeding confirms that for each of the smallest VRS providers, the per-minute costs incurred or projected by the provider in calendar years 2015 and 2016, respectively, are higher than the “blended” compensation rate applicable to that provider in that year under the four-year schedule adopted in the VRS Reform Order. (A provider's “blended” compensation rate for a calendar year is the average of the Tier I rates applicable in the first and second halves of the calendar year, weighted by the provider's projected minutes for each half.) The individual cost information filed by the smallest VRS providers, which the Commission finds to be credible, while updating the cost data previously filed with Rolka Loube, confirms Rolka Loube's initial assessment that the deficits incurred by the smallest VRS providers may be jeopardizing their continuation of service. Further, the smallest VRS providers credibly argue that available financing arrangements will not permit them to maintain operations indefinitely in accordance with the Commission's minimum TRS standards while continuing to operate at a loss. Therefore, the Commission finds that, absent rate relief, it is likely that the smallest providers either (1) will be unable to maintain their operations in 2016 or (2) will be unable to continue to grow their operations significantly in the direction of reaching optimum levels of efficiency. As a result, the Commission's objective to offer such providers “a reasonable opportunity to . . . reach the optimum scale to compete effectively” may be undermined. See VRS Reform Order, 78 FR 40602, July 5, 2013.

6. As the Commission has previously recognized, the presence of diverse providers can spur improvements in the availability, efficiency, and functional equivalence of VRS. Further, public interest considerations favor the grant of interim relief. The record confirms that certain service features offered by small VRS providers may be uniquely helpful in advancing the goal of functionally equivalent service for certain subsets of VRS consumers. Specialized features offered by the smallest VRS providers include Spanish language VRS and emergency alert functions for schools for the deaf.

7. Based on these various considerations, the Commission concludes that it should temporarily halt the scheduled reduction in the VRS compensation rates applicable to the smallest VRS providers, consistent with its objective in the VRS Reform Order to permit smaller providers a reasonable opportunity to grow and to attain efficiencies comparable to those of larger VRS providers. Accordingly, the Commission adopts its proposal in the VRS Rate Freeze FNPRM to apply a rate of $5.29 per minute to compensation claimed by the smallest VRS providers for a limited period. This rate, which was in effect prior to July 1, 2015, is lower than the smallest VRS providers' average projected allowable costs for 2015 but higher than their average projected allowable costs for 2016. It is also lower than any individual provider's allowable costs for 2015. The Commission concludes that application of a $5.29 per minute compensation rate to the smallest VRS providers will generally provide a reasonable level of support for the operations of the smallest VRS providers and will not risk providing significant overcompensation for such providers. In addition, application of this rate to the smallest VRS providers, in lieu of the previously scheduled rates, will not impose a heavy cost burden on the TRS Fund.

8. Regarding the period for which this rate freeze should apply, the Commission adopts the proposal in the VRS Rate Freeze FNPRM for an adjusted compensation rate of $5.29 per minute to be effective for 16 months, beginning retroactively on July 1, 2015, the beginning of the current Fund Year, and ending on October 31, 2016. This 16-month rate freeze allows the smallest VRS providers the opportunity to achieve market share growth and improvements in efficiency while benefitting from further implementation of structural reforms—such as the establishment of the ACE platform, which will address interoperability and other matters and is scheduled for launch this year.

9. While rates should not be frozen indefinitely, the Commission agrees with a number of commenting parties that, in order to avoid subjecting the smallest VRS providers to a sudden drop in compensation upon the expiration of the 16-month period, the compensation rate for the smallest providers should be adjusted downward in the same increments previously directed in the VRS Reform Order. In other words, for the smallest VRS providers the “glide path” originally established in the VRS Reform Order will resume after a 16-month freeze. The resulting per-minute rates for the smallest VRS providers for the period from January 1, 2015, to the end of the four-year period are: (1) January 2015-October 2016, $5.29; (2) November 2016-April 2017, $5.06; (3) May-June 2017, $4.82.

10. In response to the VRS Rate Freeze FNPRM, a number of commenters urge the Commission to expand the proposed scope of the rate freeze beyond the smallest VRS providers. For example, some parties argue that VRS providers that are larger than the smallest providers, but significantly smaller than the largest provider, also have a need for rate relief based on a comparison of their costs with applicable compensation rates. The information provided to the Commission does not indicate that any VRS providers other than the smallest providers will have allowable costs exceeding the average compensation rate applicable to such providers in 2015 and 2016. The Commission recognizes that among the three largest VRS providers, there are substantial differences in per-minute costs. However, as noted in the VRS Rate Freeze FNPRM, the Commission previously restructured the rate tiers—and “froze” the Tier II rate at $4.82 for the first three years of the transition period—in order to allow the smaller of these providers “ `a full opportunity to improve efficiencies and achieve scale.' ” Again, these providers have not shown that they will incur allowable costs in excess of their revenues in 2015 and 2016. The Commission notes that several parties attempt to renew claims made in prior proceedings alleging that the categories of allowable costs are too narrow to permit recovery of all reasonable VRS costs. Those claims were considered and rejected in the VRS Reform Order. See VRS Reform Order, 78 FR 40599, July 5, 2013. Further, while a number of parties contend that implementation of structural reforms has imposed additional costs, no party has submitted specific estimates or documentation regarding such implementation costs.

11. In summary, while some parties contend that the compensation rates for currently profitable providers should be frozen, allegedly to prevent reductions in the quality of VRS, the Commission does not perceive any immediate risk that any of the larger VRS providers have been or will be unable to continue to provide service that meets the Commission's minimum TRS standards in 2015 and 2016. The Commission notes, however, that there is an open rulemaking on a number of broader VRS ratemaking proposals and issues. See VRS Reform FNPRM, 78 FR 40582, July 5, 2013. Some of the comments filed in response to the VRS Rate Freeze FNPRM address those matters, as well as raising new issues regarding quality of service and the viability of future competition in the VRS market. To the extent relevant, the Commission may address these comments when it completes action on the broader VRS rulemaking proposals.

12. In summary, the Commission directs the TRS Fund administrator, Rolka Loube, to compensate the smallest VRS providers at a rate of $5.29 per minute, applicable from July 1, 2015, through October 31, 2016. More specifically, from the effective date of this Report and Order through October 31, 2016, the Commission directs the administrator to pay compensation to the smallest VRS providers at a rate of $5.29 per minute. Second, the Commission directs the administrator to pay each of the smallest VRS providers a one-time lump sum reflecting the difference between the compensation they would have received if they had been paid at a rate of $5.29 per minute and the compensation they actually received at the lower applicable rates, for all compensable calls completed during the period between July 1, 2015, and the effective date of document FCC 16-25. In addition, to avoid subjecting the smallest VRS providers to a sudden drop in compensation upon the expiration of the 16-month period, the Commission directs the administrator to pay compensation to the smallest VRS providers at a rate of $5.06 per minute from November 1, 2016, through April 30, 2017, and at a rate of $4.82 per minute from May 1, 2017, through June 30, 2017.

13. As required by the Regulatory Flexibility Act (RFA), the Commission has prepared the Final Regulatory Flexibility Certification (FRFC) as to the policies and rules adopted in document FCC 16-25. The Commission will send a copy of document FCC 16-25, including the FRFC, to the Chief Counsel for Advocacy of the Small Business Administration (SBA). (See 5 U.S.C. 603(a).)

14. After consideration of the comments received in response to the VRS Rate Freeze FNPRM, the Commission modifies in part the four-year compensation rate plan for video relay service (VRS) adopted in the 2013 VRS Reform Order. Although the Commission believes that the four-year schedule of VRS compensation rate reductions continues to be justified in order to gradually move compensation rates close to a level close to average allowable provider costs, the Commission modifies the schedule as applied to the smallest VRS providers, i.e., those providing 500,000 or fewer compensable minutes of use of VRS per month. Spreading rate reductions over a four-year period was largely intended to provide a reasonable opportunity for the smallest providers to reach minimum efficient scale while benefitting from the VRS Reform Order initiatives, which were intended to address many of the issues that have made it difficult for small providers to operate efficiently.

15. The smallest providers have achieved significant reductions in their per-minute costs but have yet to approach the size or efficiency levels of their larger rivals. Further, some small providers offer service features that may be helpful in advancing the goal of functionally equivalent service for certain subsets of VRS consumers, such as Spanish language speakers and deaf-owned businesses. Therefore, the Commission adopts the temporary, limited compensation rate “freeze” proposed in the VRS Rate Freeze FNPRM. Specifically, from the effective date of document FCC 16-25 through October 31, 2016, the Commission directs the TRS Fund administrator to pay compensation to the three smallest VRS providers at a rate of $5.29 per minute. In addition, the Commission directs the administrator to pay each of the smallest VRS providers a one-time lump sum reflecting the difference between the compensation they would have received if they had been paid at a rate of $5.29 per minute and the compensation they actually received at the lower applicable rates, for all compensable calls completed during the period between July 1, 2015, and the effective date of document FCC 16-25. In addition, to avoid subjecting the smallest VRS providers to a sudden drop in compensation upon the expiration of the 16-month period, the Commission directs the administrator to pay compensation to the smallest VRS providers at a rate of $5.06 per minute from November 1, 2016, through April 30, 2017, and at a rate of $4.82 per minute from May 1, 2017, through June 30, 2017.

16. In document FCC 16-25, the Commission adopts its proposal to temporarily “freeze” the compensation rates applicable to the smallest VRS providers and determines, as it concluded in the Initial Regulatory Flexibility Analysis, that this measure will not impose any additional compliance requirements on small businesses and would temporarily ease the impact of existing VRS regulations on small entities by temporarily increasing the VRS compensation rate for small entities above the rate currently in effect. Therefore, the Commission certifies that the rule amendments in document FCC 16-25 will not have a significant economic impact on a substantial number of small entities.

Pursuant to the authority contained in sections 4(i), 201(b), and 225 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 201(b), 225, document FCC 16-25 is adopted.

NMFS is required to estimate the total amount of yellowtail flounder catch from the scallop fishery by January 15 each year. If the scallop fishery is expected to catch less than 90 percent of its Georges Bank (GB) or Southern New England/Mid-Atlantic (SNE/MA) yellowtail flounder sub-ACL, the Regional Administrator (RA) has the authority to reduce the scallop fishery sub-annual catch limit (sub-ACL) for these stocks to the amount projected to be caught, and increase the groundfish fishery sub-ACL for these stocks up to the amount reduced from the scallop fishery. This adjustment is intended to help achieve optimum yield for these stocks, while not threatening an overage of the ACLs for the stocks by the groundfish and scallop fisheries.

Based on the most current available data, we project that the scallop fishery will have unused quota in the 2015 fishing year. We expect that the scallop fishery will catch up to 30 mt of GB yellowtail flounder, or 79 percent of its 2015 fishing year sub-ACL, and up to 44 mt of SNE/MA yellowtail flounder, or 66 percent of its 2015 fishing year sub-ACL. Because the scallop fishery is not expected to catch its entire allocation of GB and SNE/MA yellowtail flounder, this rule reduces the scallop sub-ACL for both stocks to the upper limit projected to be caught, and increases the groundfish sub-ACLs for these stocks by the same amount, effective April 18, 2016, through April 30, 2016.

This results in a transfer of 7.9 mt of GB yellowtail flounder and 22.3 mt of SNE/MA yellowtail flounder, from the scallop fishery to the groundfish fishery. Table 1 summarizes the revisions to the 2015 fishing year sub-ACLs, and Table 2 shows the revised allocations for the groundfish fishery as allocated between the sectors and common pool based on final sector membership for fishing year 2015. This transfer is based on the upper limit of expected yellowtail flounder catch by the scallop fishery, which is expected to minimize any risk of an ACL overage by the scallop fishery while still providing additional fishing opportunities for groundfish vessels.

Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Fishery Conservation and Management Act, the NMFS Assistant Administrator has determined that the management measures implemented in this final rule are necessary for the conservation and management of the Northeast multispecies fishery and consistent with the Magnuson-Stevens Act, and other applicable law.

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

The NMFS Assistant Administrator finds good cause pursuant to 5 U.S.C. 553(b)(B) to waive prior notice and the opportunity for public comment for this in season sub-ACL adjustment because notice and comment would be impracticable and contrary to the public interest. Because NMFS is required to project GB and SNE/MA yellowtail flounder catch in the scallop fishery on or around January 15 of each year, there is insufficient time to allow for prior public notice and comment for the transfer of quota for these yellowtail flounder stocks from the scallop fishery to the groundfish fishery. The NE multispecies fishing year ends on April 30, 2016. If NMFS allowed for the time necessary to provide for prior notice and comment, it would be unlikely that the transfer would occur in time to allow groundfish vessels to harvest the additional quota of these stocks before the end of the fishing year. As a result, groundfish fishermen would be prevented from offsetting their current negative economic circumstances due to the severe decreases in ACLs of several important groundfish stocks, thus undermining the intent of the rule. Giving effect to this rule as soon as possible will help relieve fishermen from more restrictive ACLs for the yellowtail stocks and help achieve optimum yield in the fishery. For these same reasons, the NMFS Assistant Administrator also finds good cause pursuant to 5 U.S.C. 553(d)(3) to waive the 30-day delay in effectiveness for this action for these same reasons. Further, there is no need to allow the industry additional time to adjust to this rule because it does not require any compliance or other action on the part of individual scallop or groundfish fishermen.

Because notice and opportunity for comment are not required pursuant to 5 U.S.C. 553 or any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are inapplicable. Therefore, a regulatory flexibility analysis is not required and one has not been prepared.

NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

The first seasonal apportionment of the Pacific halibut bycatch allowance specified for the deep-water species fishery in the GOA is 85 metric tons as established by the final 2015 and 2016 harvest specifications for groundfish of the GOA (80 FR 10250, February 25, 2015), for the period 1200 hours, A.l.t., January 20, 2016, through 1200 hours, A.l.t., April 1, 2016.

In accordance with § 679.21(d)(6)(i), the Administrator, Alaska Region, NMFS, has determined that the first seasonal apportionment of the Pacific halibut bycatch allowance specified for the trawl deep-water species fishery in the GOA has been reached. Consequently, NMFS is prohibiting directed fishing for the deep-water species fishery by vessels using trawl gear in the GOA. The species and species groups that comprise the deep-water species fishery include sablefish, rockfish, deep-water flatfish, rex sole, and arrowtooth flounder.

After the effective date of this closure the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of the deep-water species fishery by vessels using trawl gear in the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of March 14, 2016.

The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

This action is required by § 679.21 and is exempt from review under Executive Order 12866.

Beginning in 1995, fishing for Pacific halibut and sablefish with fixed gear in the IFQ regulatory areas defined in 50 CFR 679.2 has been managed under the IFQ Program. The IFQ Program is a regulatory regime designed to promote the conservation and management of these fisheries and to further the objectives of the Magnuson-Stevens Fishery Conservation and Management Act and the Northern Pacific Halibut Act. Persons holding quota share receive an annual allocation of IFQ. Persons receiving an annual allocation of IFQ are authorized to harvest IFQ species within specified limitations. Further information on the implementation of the IFQ Program, and the rationale supporting it, are contained in the preamble to the final rule implementing the IFQ Program published in the Federal Register, November 9, 1993 (58 FR 59375) and subsequent amendments.

This announcement is consistent with § 679.23(g)(1), which requires that the directed fishing season for sablefish managed under the IFQ Program be specified by the Administrator, Alaska Region, and announced by publication in the Federal Register. This method of season announcement was selected to facilitate coordination between the sablefish season, chosen by the Administrator, Alaska Region, and the halibut season, adopted by the International Pacific Halibut Commission (IPHC). The directed fishing season for sablefish with fixed gear managed under the IFQ Program will open 1200 hours, A.l.t., March 19, 2016, and will close 1200 hours, A.l.t., November 7, 2016. This period runs concurrently with the IFQ season for Pacific halibut announced by the IPHC. The IFQ halibut season will be specified by a separate publication in the Federal Register of annual management measures pursuant to 50 CFR 300.62.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the opening of the sablefish fishery thereby increasing bycatch and regulatory discards between the sablefish fishery and the halibut fishery, and preventing the accomplishment of the management objective for simultaneous opening of these two fisheries. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of March 14, 2016.

The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

This action is required by § 679.23 and is exempt from review under Executive Order 12866.