Federal Register Vol. 81, No.90,

Federal Register Volume 81, Issue 90 (May 10, 2016)

Page Range28687-29109
FR Document

81_FR_90
Current View
Page and SubjectPDF
81 FR 28687 - Military Spouse Appreciation Day, 2016PDF
81 FR 28907 - In the Matter of Code Rebel Corporation; Order of Suspension of TradingPDF
81 FR 28890 - Sunshine Act MeetingPDF
81 FR 28929 - In the Matter of Striper Energy, Inc.; Order of Suspension of TradingPDF
81 FR 28906 - Sunshine Notice-June 1, 2016 Public HearingPDF
81 FR 28869 - Agency Information Collection Activities; Submission for OMB Review; Comment RequestPDF
81 FR 28824 - Welded Stainless Pressure Pipe From India: Affirmative Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final DeterminationPDF
81 FR 28827 - Citric Acid and Certain Citrate Salts From Canada: Final Results of Antidumping Duty Administrative Review; 2014-2015PDF
81 FR 28823 - Light-Walled Rectangular Pipe and Tube From Turkey: Final Results of Antidumping Duty Administrative Review; 2014-2015PDF
81 FR 28826 - Silicomanganese From India: Preliminary Results of Antidumping Duty Administrative Review; 2014-2015PDF
81 FR 28906 - Sunshine Act Meeting NoticePDF
81 FR 28880 - Submission for OMB Review; 30-Day Comment Request; NIH Office of Intramural Training & Education Application (OD)PDF
81 FR 28720 - Revision to the Research, Development and Demonstration Permits Rule for Municipal Solid Waste LandfillsPDF
81 FR 28866 - Pesticide Product Registrations; Receipt of Applications for New UsesPDF
81 FR 28864 - Protection of Stratospheric Ozone: Notice of Revocation and Voluntary Withdrawals of Programs From EPA's Section 608 Technician Certifying ProgramPDF
81 FR 28867 - Highland Plating Removal Site, Los Angeles, CA; Notice of Proposed CERCLA Settlement Agreement and Order on ConsentPDF
81 FR 28915 - Columbia ETF Trust I, et al.; Notice of ApplicationPDF
81 FR 28917 - Franklin Templeton ETF Trust, et al.; Notice of ApplicationPDF
81 FR 28869 - Formations of, Acquisitions by, and Mergers of Bank Holding CompaniesPDF
81 FR 28933 - Noise Exposure Map Notice; Receipt of Noise Compatibility Program and Request for Review Boise Air Terminal (Gowen Field) Boise, IDPDF
81 FR 28873 - Announcement of Requirements and Registration for “A Bill You Can Understand” Design and Innovation Challenge: Help Patients Understand Their Medical Bills and the Financial Aspect of HealthPDF
81 FR 28934 - Noise Exposure Map Notice for Harrisburg International Airport, Middletown, PennsylvaniaPDF
81 FR 28929 - Agency Information Collection Activities: Requests for Comments; Clearance of Renewed Approval of Information Collection: Small Unmanned Aircraft Registration System (sUAS)PDF
81 FR 28930 - Agency Information Collection Activities: Requests for Comments; Clearance of Renewed Approval of Information Collection: Application for Employment With the Federal Aviation AdministrationPDF
81 FR 28934 - Passenger Facility Charge (PFC) Program: Eligibility of Ground Access Projects Meeting Certain Criteria; CorrectionPDF
81 FR 28883 - Accreditation of R. Markey & Sons, Inc., Markan Laboratories, as a Commercial LaboratoryPDF
81 FR 28884 - Accreditation and Approval of SGS North America, Inc., as a Commercial Gauger and LaboratoryPDF
81 FR 28883 - Approval of Intertek USA, Inc., as a Commercial GaugerPDF
81 FR 28882 - Accreditation and Approval of Quality Custom Inspections and Laboratories, LLC, as a Commercial Gauger and LaboratoryPDF
81 FR 28828 - Taking and Importing of Marine MammalsPDF
81 FR 28856 - Notice of Commission Staff AttendancePDF
81 FR 28862 - Notice of Technical ConferencePDF
81 FR 28857 - Review of Generator Interconnection Agreements and Procedures-American Wind Energy Association; Supplemental Notice of Technical ConferencePDF
81 FR 28889 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Standard on 4,4′-Methylenedianiline in ConstructionPDF
81 FR 28819 - Notice of Public Meeting of the Wisconsin Advisory Committee To Discuss Preparations for a Hearing on Hate Crimes in the StatePDF
81 FR 28821 - Notice of Public Meeting of the Michigan Advisory Committee To Hear Testimony Regarding the Civil Rights Impact of Civil Forfeiture Practices in the StatePDF
81 FR 28820 - Notice of Public Meeting of the Missouri Advisory Committee To Discuss Approval of a Draft Report Resulting From Testimony Received Regarding Civil Rights and Police/Community Interactions in the StatePDF
81 FR 28910 - Triloma EIG Global Energy Fund, et al.; Notice of ApplicationPDF
81 FR 29107 - Statistical Policy Directive No. 2 Addendum: Standards and Guidelines for Cognitive InterviewsPDF
81 FR 28758 - Importation of Lemons From Northwest ArgentinaPDF
81 FR 28736 - Reducing Regulatory BurdenPDF
81 FR 28888 - Notice of Filing of Proposed Settlement Agreement Regarding Environmental Claims in Connection With Army Creek Landfill Site, Blosenski Landfill Site and Delaware Sand and Gravel SitePDF
81 FR 28887 - Notice of Lodging of Proposed First Amended Consent Decree Under the Clean Water ActPDF
81 FR 28878 - Agency Information Collection Activities; Submission to OMB for Review and Approval; Public Comment RequestPDF
81 FR 28848 - Agency Information Collection ExtensionPDF
81 FR 28905 - Issuance of Operating License and Record of Decision; Tennessee Valley Authority; Watts Bar Nuclear Plant, Unit 2PDF
81 FR 28891 - Applications and Amendments to Facility Operating Licenses and Combined Licenses Involving No Significant Hazards ConsiderationsPDF
81 FR 28867 - FDIC Advisory Committee on Economic Inclusion (ComE-IN); Notice of MeetingPDF
81 FR 28868 - Solicitation of Applications for Membership on the Community Advisory CouncilPDF
81 FR 28937 - Additional Designations, Foreign Narcotics Kingpin Designation ActPDF
81 FR 28872 - Submission for OMB Review; Indirect Cost RatesPDF
81 FR 28872 - Submission for OMB Review; Freight Classification DescriptionPDF
81 FR 28871 - Information Collection; Contractor Use of Interagency Fleet Management System VehiclesPDF
81 FR 28885 - Department of Defense; Proposed Gopher Tortoise Conservation and Crediting StrategyPDF
81 FR 28887 - United States Marshals Service; Agency Information Collection Activities; Proposed Collection Comments Requested; Extension With Change, of a Previously Approved Collection USMS Medical FormsPDF
81 FR 28818 - Board for International Food and Agricultural Development; Notice of MeetingPDF
81 FR 28818 - Submission for OMB Review; Comment RequestPDF
81 FR 28891 - Notice of Intent To Grant an Exclusive LicensePDF
81 FR 28822 - In the Matter of: Ali Khanaman Mohammadi, 7 Bascom Street, Irvine, CA 92612; Order Denying Export PrivilegesPDF
81 FR 28907 - Proposed Collection; Comment RequestPDF
81 FR 28837 - Application for New Awards; Charter Schools Program (CSP)--Grants for Replication and Expansion of High-Quality Charter SchoolsPDF
81 FR 28876 - Technical Considerations for Additive Manufactured Devices; Draft Guidance for Industry and Food and Drug Administration Staff; AvailabilityPDF
81 FR 28738 - Supplemental Nutrition Assistance Program (SNAP): Disaster Supplemental Nutrition Assistance Program (D-SNAP)PDF
81 FR 28716 - Drawbridge Operation Regulation; Snake Creek; Islamorada, FLPDF
81 FR 28795 - Drawbridge Operation Regulation; Atlantic Intracoastal Waterway and Indian Creek, Miami, FL.PDF
81 FR 28793 - Drawbridge Operation Regulation; Atlantic Intracoastal Waterway, Little River to Savannah RiverPDF
81 FR 28791 - Drawbridge Operation Regulation; Atlantic Intracoastal Waterway, New Smyrna Beach, FLPDF
81 FR 28918 - Bridge Builder Trust and Olive Street Investment Advisers, LLC; Notice of ApplicationPDF
81 FR 28935 - Volkswagen Group of America, Grant of Petition for Decision of Inconsequential NoncompliancePDF
81 FR 28876 - Clinical Trial Design Considerations for Malaria Drug Development Media; Public WorkshopPDF
81 FR 28830 - Permanent Advisory Committee to Advise the U.S. Commissioners to the Western and Central Pacific Fisheries Commission; Meeting AnnouncementPDF
81 FR 28829 - Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; Reef Fish Resources of the Gulf of Mexico; Amendment 42PDF
81 FR 28832 - 36(b)(1) Arms Sales NotificationPDF
81 FR 28861 - Total Gas & Power North America, Aaron Hall and Therese Tran f/k/a/Nguyen; Notice of Designation of Commission Staff as Non-DecisionalPDF
81 FR 28860 - New Wave Energy Corp; Supplemental Notice That Initial Market-Based Rate Filing Includes Request For Blanket Section 204 AuthorizationPDF
81 FR 28859 - Golden Spread Electric Cooperative, Inc.; Notice of Petition for Declaratory OrderPDF
81 FR 28856 - Vineland Municipal Electric Utility v. Atlantic City Electric Company; Notice of ComplaintPDF
81 FR 28861 - Consumer Energy Company; Notice of Institution of Section 206 Proceeding and Refund Effective DatePDF
81 FR 28853 - Combined Notice of FilingsPDF
81 FR 28863 - Combined Notice of Filings #2PDF
81 FR 28860 - Combined Notice of Filings #1PDF
81 FR 28797 - Air Plan Approval and Disapproval; North Carolina: New Source Review for Fine Particulate Matter (PM2.5PDF
81 FR 28807 - Approval and Promulgation of Air Quality Implementation Plans; Interstate Transport for UtahPDF
81 FR 28835 - 36(b)(1) Arms Sales NotificationPDF
81 FR 28924 - Capitala Finance Corp., et al.; Notice of ApplicationPDF
81 FR 28923 - Submission for OMB Review; Comment RequestPDF
81 FR 28928 - Submission for OMB Review; Comment RequestPDF
81 FR 28908 - Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, Relating to the Exchange's Offering of Remote ITCH to Trade Options Wave PortsPDF
81 FR 28879 - Office of the Director; Notice of MeetingPDF
81 FR 28882 - National Library of Medicine; Notice of Closed MeetingsPDF
81 FR 28879 - National Institute on Deafness and Other Communication Disorders; Notice of Closed MeetingsPDF
81 FR 28880 - Eunice Kennedy Shriver National Institute of Child Health & Human Development; Amended Notice of MeetingPDF
81 FR 28880 - National Heart, Lung, and Blood Institute; Notice of MeetingPDF
81 FR 28879 - National Human Genome Research Institute; Notice of Closed MeetingPDF
81 FR 28880 - National Human Genome Research Institute; Notice of Closed MeetingPDF
81 FR 28851 - Combined Notice of FilingsPDF
81 FR 28849 - Combined Notice of FilingsPDF
81 FR 28852 - Records Governing Off-the-Record Communications; Public NoticePDF
81 FR 28862 - North Star Gas Company LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 AuthorizationPDF
81 FR 28861 - Combined Notice Of Filings # 2PDF
81 FR 28853 - Combined Notice of Filings #1PDF
81 FR 28855 - Combined Notice of Filings #2PDF
81 FR 28864 - Combined Notice of Filings #1PDF
81 FR 28819 - U.S. Department of Agriculture Multi-Family Housing Program 2016 Industry Forums-Open Teleconference and/or Web Conference MeetingsPDF
81 FR 28766 - Airworthiness Directives; Bell Helicopter Textron HelicoptersPDF
81 FR 28832 - Information Collection; Submission for OMB Review, Comment RequestPDF
81 FR 28942 - Enhanced-Use Lease of the Department of Veterans Affairs Real Property for the Continued Management, Maintenance, and Operation of a Mixed-Use Development, Including an Office Building, on a Parcel of Land Totaling Approximately 15 Acres in Columbia, South CarolinaPDF
81 FR 28941 - Proposed Collection; Comment Request for Forms 14417 and 14417-APDF
81 FR 28941 - Proposed Collection; Comment Request for Regulation ProjectPDF
81 FR 28784 - Treatment of Certain Domestic Entities Disregarded as Separate From Their Owners as Corporations for Purposes of Section 6038APDF
81 FR 28884 - Agency Information Collection Activities: Report of Medical Examination and Vaccination Record, Form I-693; Revision of a Currently Approved CollectionPDF
81 FR 28788 - Port of Miami Anchorage Area; Atlantic Ocean, Miami Beach, FLPDF
81 FR 28831 - Agency Information Collection Activities Under OMB ReviewPDF
81 FR 28830 - Agency Information Collection Activities Under OMB ReviewPDF
81 FR 28890 - Applied Sciences Advisory Committee; MeetingPDF
81 FR 28729 - Defense Federal Acquisition Regulation Supplement; Technical AmendmentsPDF
81 FR 28816 - Defense Federal Acquisition Regulation Supplement: Display of Hotline Posters (DFARS Case 2016-D018)PDF
81 FR 28812 - Defense Federal Acquisition Regulation Supplement: Rights in Technical Data (DFARS Case 2016-D008)PDF
81 FR 28732 - Defense Federal Acquisition Regulation Supplement: Duty-Free Entry Threshold (DFARS 2015-D036)PDF
81 FR 28732 - Defense Federal Acquisition Regulation Supplement: Long-Haul Telecommunications (DFARS Case 2015-D023)PDF
81 FR 28733 - Defense Federal Acquisition Regulation Supplement: Contract Term Limit for Energy Savings Contracts (DFARS Case 2015-D018)PDF
81 FR 28730 - Defense Federal Acquisition Regulation Supplement: Multiyear Contract Requirements (DFARS Case 2015-D009)PDF
81 FR 28724 - Defense Federal Acquisition Regulation Supplement: Disclosure to Litigation Support Contractors (DFARS Case 2012-D029)PDF
81 FR 28777 - Airworthiness Directives; General Electric Company Turbofan EnginesPDF
81 FR 28689 - Changes to Exchange Act Registration Requirements To Implement Title V and Title VI of the JOBS ActPDF
81 FR 28770 - Airworthiness Directives; The Boeing Company AirplanesPDF
81 FR 28768 - Airworthiness Directives; Bombardier, Inc. AirplanesPDF
81 FR 28764 - Airworthiness Directives; Bombardier, Inc. AirplanesPDF
81 FR 28778 - Tobacco Product Master Files; Guidance for Industry; AvailabilityPDF
81 FR 28783 - Requirements for the Submission of Data Needed To Calculate User Fees for Domestic Manufacturers and Importers of Tobacco Products; Small Entity Compliance Guide; AvailabilityPDF
81 FR 28707 - Requirements for the Submission of Data Needed To Calculate User Fees for Domestic Manufacturers and Importers of Cigars and Pipe TobaccoPDF
81 FR 28781 - Premarket Tobacco Product Applications for Electronic Nicotine Delivery Systems; Draft Guidance for Industry; Availability; Agency Information Collection Activities; Proposed Collection; Comment RequestPDF
81 FR 28973 - Deeming Tobacco Products To Be Subject to the Federal Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Restrictions on the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco ProductsPDF
81 FR 28780 - The Food and Drug Administration Deems Certain Tobacco Products Subject to FDA Authority, Sales and Distribution Restrictions, and Health Warning Requirements for Packages and Advertisements; Small Entity Compliance Guide; AvailabilityPDF
81 FR 28943 - Title I-Improving the Academic Achievement of the Disadvantaged (Migrant Education Program)PDF
81 FR 28774 - Airworthiness Directives; The Boeing Company AirplanesPDF
81 FR 28718 - Designation of Areas for Air Quality Planning Purposes; Redesignation Request and Associated Maintenance Plan for Billings, MT 2010 SO2PDF
81 FR 28886 - Colorado River Basin Salinity Control Advisory Council Notice of Public MeetingPDF
81 FR 28930 - Waivers of Ship Protection Probability of Impact RequirementPDF

Issue

81 90 Tuesday, May 10, 2016 Contents Agency Agency for International Development NOTICES Meetings: Board for International Food and Agricultural Development, 28818 2016-10934 Agriculture Agriculture Department See

Animal and Plant Health Inspection Service

See

Food and Nutrition Service

See

Food Safety and Inspection Service

See

Rural Housing Service

Animal Animal and Plant Health Inspection Service PROPOSED RULES Imports: Lemons from Northwest Argentina, 28758-28764 2016-10957 Centers Medicare Centers for Medicare & Medicaid Services NOTICES Announcement of Requirements and Registration for A Bill You Can Understand Design and Innovation Challenge: Help Patients Understand Their Medical Bills and the Financial Aspect of Health, 28873-28875 2016-10980 Civil Rights Civil Rights Commission NOTICES Meetings: Michigan Advisory Committee, 28821-28822 2016-10963 2016-10964 Missouri Advisory Committee, 28820 2016-10962 Wisconsin Advisory Committee, 28819-28820 2016-10965 Coast Guard Coast Guard RULES Drawbridge Operations: Snake Creek; Islamorada, FL, 28716-28718 2016-10922 PROPOSED RULES Anchorages: Port of Miami Anchorage Area; Atlantic Ocean, Miami Beach, FL, 28788-28791 2016-10850 Drawbridge Operations: Atlantic Intracoastal Waterway and Indian Creek, Miami, FL, 28795-28797 2016-10921 Atlantic Intracoastal Waterway, Little River to Savannah River, 28793-28795 2016-10920 Atlantic Intracoastal Waterway, New Smyrna Beach, FL, 28791-28793 2016-10919 Commerce Commerce Department See

Industry and Security Bureau

See

International Trade Administration

See

National Oceanic and Atmospheric Administration

Commodity Futures Commodity Futures Trading Commission NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 28830-28832 2016-10847 2016-10848 Corporation Corporation for National and Community Service NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 28832 2016-10859 Defense Acquisition Defense Acquisition Regulations System RULES Defense Federal Acquisition Regulation Supplement: Contract Term Limit for Energy Savings Contracts, 28733-28735 2016-10824 Disclosure to Litigation Support Contractors, 28724-28729 2016-10822 Duty-Free Entry Threshold, 28732 2016-10826 Long-Haul Telecommunications, 28732-28733 2016-10825 Multiyear Contract Requirements, 28730-28731 2016-10823 Technical Amendments, 28729-28730 2016-10830 PROPOSED RULES Defense Federal Acquisition Regulation Supplement: Display of Hotline Posters, 28816-28817 2016-10829 Rights in Technical Data, 28812-28816 2016-10827 Defense Department Defense Department See

Defense Acquisition Regulations System

NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Contractor Use of Interagency Fleet Management System Vehicles, 28871-28872 2016-10941 Freight Classification Description, 28872 2016-10942 Indirect Cost Rates, 28872-28873 2016-10943 Arms Sales, 28832-28837 2016-10890 2016-10910
Education Department Education Department RULES Migrant Education Program: Improving the Academic Achievement of the Disadvantaged, 28944-28972 2016-10658 NOTICES Application for New Awards: Charter Schools Program; Grants for Replication and Expansion of High-Quality Charter Schools, 28837-28847 2016-10925 Energy Department Energy Department See

Energy Information Administration

See

Federal Energy Regulatory Commission

PROPOSED RULES Reducing Regulatory Burden, 28736-28738 2016-10956
Energy Information Energy Information Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 28848-28849 2016-10951 Environmental Protection Environmental Protection Agency RULES Air Quality State Implementation Plans; Approvals and Promulgations: Montana; Redesignation Request and Associated Maintenance Plan for Billings, MT 2010 SO2 Nonattainment Area, 28718-28720 2016-10451 Research, Development and Demonstration Permits Rule for Municipal Solid Waste Landfills, 28720-28724 2016-10993 PROPOSED RULES Air Quality State Implementation Plans; Approvals and Promulgations: Interstate Transport for Utah, 28807-28812 2016-10893 North Carolina: New Source Review for Fine Particulate Matter (PM2.5), 28797-28807 2016-10894 NOTICES Pesticide Product Registrations; Receipt of Applications for New Uses, 28866-28867 2016-10992 Proposed CERCLA Settlement Agreement and Order on Consent: Highland Plating Removal Site, Los Angeles, CA, 28867 2016-10986 Protection of Stratospheric Ozone: Revocation and Voluntary Withdrawals of Programs from EPA's Section 608 Technician Certifying Program, 28864-28865 2016-10987 Federal Aviation Federal Aviation Administration PROPOSED RULES Airworthiness Directives: Bell Helicopter Textron Helicopters, 28766-28768 2016-10860 Bombardier, Inc. Airplanes, 28764-28766, 28768-28770 2016-10732 2016-10734 General Electric Company Turbofan Engines, 28777-28778 2016-10781 The Boeing Company Airplanes, 28770-28777 2016-10634 2016-10735 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Application for Employment with the Federal Aviation Administration, 28930 2016-10976 Small Unmanned Aircraft Registration System, 28929-28930 2016-10978 Noise Exposure Map: Harrisburg International Airport, Middletown, PA, 28934-28935 2016-10979 Noise Compatibility Program and Request for Review Boise Air Terminal (Gowen Field), Boise, ID, 28933-28934 2016-10981 Passenger Facility Charge Program: Eligibility of Ground Access Projects Meeting Certain Criteria; Correction, 28934 2016-10975 Waivers of Ship Protection Probability of Impact Requirement, 28930-28933 2016-09685 Federal Deposit Federal Deposit Insurance Corporation NOTICES Meetings: Advisory Committee on Economic Inclusion, 28867-28868 2016-10947 Federal Energy Federal Energy Regulatory Commission NOTICES Combined Filings, 28849-28856, 28860-28864 2016-10864 2016-10865 2016-10866 2016-10867 2016-10870 2016-10871 2016-10902 2016-10903 2016-10904 Complaints: Vineland Municipal Electric Utility v. Atlantic City Electric Company, 28856 2016-10906 Designation of Commission Staff as Non-Decisional: Total Gas and Power North America, Aaron Hall and Therese Tran f/k/a/ Nguyen, 28861 2016-10909 Initial Market-Based Rate Filings Including Requests for Blanket Section 204 Authorizations: New Wave Energy Corp, 28860 2016-10908 North Star Gas Company LLC, 28862-28863 2016-10868 Institution of Section 206 Proceeding and Refund Effective Date: Consumer Energy Company, 28861 2016-10905 Meetings: Alabama Power Co., et al.; Technical Conferences, 28862 2016-10968 Review of Generator Interconnection Agreements and Procedures; American Wind Energy Association; Technical Conferences, 28857-28859 2016-10967 Petitions for Declaratory Order: Golden Spread Electric Cooperative, Inc., 28859-28860 2016-10907 Records Governing Off-the-Record Communications, 28852-28853 2016-10869 Staff Attendances, 28856-28857 2016-10969 Federal Reserve Federal Reserve System NOTICES Formations of, Acquisitions by, and Mergers of Bank Holding Companies, 28869 2016-10982 Requests for Nominations: Community Advisory Council, 28868-28869 2016-10945 Federal Trade Federal Trade Commission NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 28869-28871 2016-11035 Fish Fish and Wildlife Service NOTICES Department of Defense Proposed Gopher Tortoise Conservation and Crediting Strategy, 28885-28886 2016-10939 Food and Drug Food and Drug Administration RULES Deeming Tobacco Products to be Subject to the Federal Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Restrictions on the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco Products, 28974-29106 2016-10685 Requirements for the Submission of Data Needed to Calculate User Fees for Domestic Manufacturers and Importers of Cigars and Pipe Tobacco, 28707-28716 2016-10688 PROPOSED RULES Guidance: Certain Tobacco Products Subject to FDA Authority, Sales and Distribution Restrictions, and Health Warning Requirements for Packages and Advertisements; Small Entity Compliance Guide, 28780-28781 2016-10684 Premarket Tobacco Product Applications for Electronic Nicotine Delivery Systems, 28781-28783 2016-10687 Requirements for the Submission of Data Needed to Calculate User Fees for Domestic Manufacturers and Importers of Tobacco Products; Small Entity Compliance Guide, 28783-28784 2016-10689 Tobacco Product Master Files, 28778-28780 2016-10690 NOTICES Guidance: Technical Considerations for Additive Manufactured Devices, 28876-28878 2016-10924 Meetings: Clinical Trial Design Considerations for Malaria Drug Development Media; Public Workshop, 28876 2016-10913 Food and Nutrition Food and Nutrition Service PROPOSED RULES Supplemental Nutrition Assistance Program: Disaster Supplemental Nutrition Assistance Program, 28738-28758 2016-10923 Food Safety Food Safety and Inspection Service NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 28818-28819 2016-10933 Foreign Assets Foreign Assets Control Office NOTICES Blocking or Unblocking of Persons and Properties, 28937-28941 2016-10944 General Services General Services Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Contractor Use of Interagency Fleet Management System Vehicles, 28871-28872 2016-10941 Freight Classification Description, 28872 2016-10942 Indirect Cost Rates, 28872-28873 2016-10943 Health and Human Health and Human Services Department See

Centers for Medicare & Medicaid Services

See

Food and Drug Administration

See

National Institutes of Health

NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 28878 2016-10953
Homeland Homeland Security Department See

Coast Guard

See

U.S. Citizenship and Immigration Services

See

U.S. Customs and Border Protection

Industry Industry and Security Bureau NOTICES Denial of Export Privileges: Ali Khanaman Mohammadi, 28822-28823 2016-10927 Interior Interior Department See

Fish and Wildlife Service

See

Reclamation Bureau

Internal Revenue Internal Revenue Service PROPOSED RULES Treatment of Certain Domestic Entities Disregarded as Separate from Their Owners as Corporations as Corporations for Purposes of Section 6038A, 28784-28788 2016-10852 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 28941-28942 2016-10854 2016-10856 International Trade Adm International Trade Administration NOTICES Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Citric Acid and Certain Citrate Salts from Canada, 28827-28828 2016-11033 Light-Walled Rectangular Pipe and Tube from Turkey, 28823-28824 2016-11032 Silicomanganese from India, 28826-28827 2016-11031 Preliminary Determinations of Sales at Less Than Fair Value: Welded Stainless Pressure Pipe from India; Postponement of Final Determination, 28824-28826 2016-11034 Justice Department Justice Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: USMS Medical Forms, 28887-28888 2016-10936 Consent Decrees under the Clean Water Act, 28887 2016-10954 Proposed Settlement Agreement Regarding Environmental Claims: Army Creek Landfill Site, Blosenski Landfill Site and Delaware Sand and Gravel Site, 28888-28889 2016-10955 Labor Department Labor Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Standard on 4,4′-Methylenedianiline in Construction, 28889-28890 2016-10966 Legal Legal Services Corporation NOTICES Meetings; Sunshine Act, 28890 2016-11066 Management Management and Budget Office NOTICES Statistical Policy Directive No. 2 Addendum: Standards and Guidelines for Cognitive Interviews, 29108-29109 2016-10958 NASA National Aeronautics and Space Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Contractor Use of Interagency Fleet Management System Vehicles, 28871-28872 2016-10941 Freight Classification Description, 28872 2016-10942 Indirect Cost Rates, 28872-28873 2016-10943 Intent to Grant an Exclusive License, 28891 2016-10929 Meetings: Applied Sciences Advisory Committee, 28890-28891 2016-10842 National Highway National Highway Traffic Safety Administration NOTICES Petitions for Decision of Inconsequential Noncompliance: Volkswagen Group of America, 28935-28937 2016-10916 National Institute National Institutes of Health NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Office of Intramural Training and Education Application, 28880-28881 2016-10994 Meetings: Deputy Director for Intramural Research, 28879 2016-10884 Eunice Kennedy Shriver National Institute of Child Health and Human Development, 28880 2016-10881 National Heart, Lung, and Blood Institute, 28880 2016-10880 National Human Genome Research Institute, 28879-28880 2016-10878 2016-10879 National Institute on Deafness and Other Communication Disorders, 28879 2016-10882 National Library of Medicine, 28882 2016-10883 National Oceanic National Oceanic and Atmospheric Administration NOTICES Environmental Impact Statements; Availability, etc.: Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; Reef Fish Resources of the Gulf of Mexico; Amendment 42, 28829-28830 2016-10911 Meetings: Permanent Advisory Committee to Advise the U.S. Commissioners to the Western and Central Pacific Fisheries Commission, 28830 2016-10912 Taking and Importing of Marine Mammals, 28828-28829 2016-10970 Nuclear Regulatory Nuclear Regulatory Commission NOTICES Facility Operating Licenses and Combined Licenses Involving No Significant Hazards Considerations; Applications and Amendments, 28891-28905 2016-10949 Meetings; Sunshine Act, 28906 2016-11020 Operating Licenses and Records of Decision: Tennessee Valley Authority; Watts Bar Nuclear Plant, Unit 2, 28905-28906 2016-10950 Overseas Overseas Private Investment Corporation NOTICES Meetings; Sunshine Act, 28906-28907 2016-11058 Presidential Documents Presidential Documents PROCLAMATIONS Special Observances: Military Spouse Appreciation Day (Proc. 9442), 28687-28688 2016-11077 Railroad Retirement Railroad Retirement Board NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 28907 2016-10926 Reclamation Reclamation Bureau NOTICES Meetings: Colorado River Basin Salinity Control Advisory Council, 28886-28887 2016-10202 Rural Housing Service Rural Housing Service NOTICES Meetings: Multi-Family Housing Program 2016 Industry Forums; Teleconferences, 28819 2016-10861 Securities Securities and Exchange Commission RULES Changes to Exchange Act Registration Requirements to Implement Title V and Title VI of the JOBS Act, 28689-28706 2016-10746 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 28923-28924, 28928-28929 2016-10886 2016-10887 2016-10888 Applications: Bridge Builder Trust and Olive Street Investment Advisers, LLC, 28918-28923 2016-10917 Capitala Finance Corp., et al., 28924-28928 2016-10889 Columbia ETF Trust I, et al., 28915-28917 2016-10984 Franklin Templeton ETF Trust, et al., 28917-28918 2016-10983 Triloma EIG Global Energy Fund, et al., 28910-28915 2016-10960 Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market LLC, 28908-28909 2016-10885 Trading Suspension Orders: Code Rebel Corp., 28907 2016-11067 Striper Energy, Inc., 28929 2016-11065 Transportation Department Transportation Department See

Federal Aviation Administration

See

National Highway Traffic Safety Administration

Treasury Treasury Department See

Foreign Assets Control Office

See

Internal Revenue Service

U.S. Citizenship U.S. Citizenship and Immigration Services NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Report of Medical Examination and Vaccination Record, 28884-28885 2016-10851 Customs U.S. Customs and Border Protection NOTICES Commercial Gaugers and Laboratories; Accreditation and Approval: Intertek USA, Inc., 28883 2016-10972 Quality Custom Inspections and Laboratories, LLC, 28882-28883 2016-10971 R. Markey and Sons, Inc., Markan Laboratories, 28883 2016-10974 SGS North America, Inc., 28884 2016-10973 Veteran Affairs Veterans Affairs Department NOTICES Enhanced-Use Lease Amendment: Columbia, SC, 28942 2016-10858 Separate Parts In This Issue Part II Education Department, 28944-28972 2016-10658 Part III Health and Human Services Department, Food and Drug Administration, 28974-29106 2016-10685 Part IV Management and Budget Office, 29108-29109 2016-10958 Reader Aids

Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.

To subscribe to the Federal Register Table of Contents LISTSERV electronic mailing list, go to http://listserv.access.thefederalregister.org and select Online mailing list archives, FEDREGTOC-L, Join or leave the list (or change settings); then follow the instructions.

81 90 Tuesday, May 10, 2016 Rules and Regulations SECURITIES AND EXCHANGE COMMISSION 17 CFR Parts 230 and 240 [Release No. 33-10075; 34-77757; File No. S7-12-14] RIN 3235-AL40 Changes to Exchange Act Registration Requirements To Implement Title V and Title VI of the JOBS Act AGENCY:

Securities and Exchange Commission.

ACTION:

Final rule.

SUMMARY:

We are amending our rules in light of the statutory changes made by Title V and Title VI of the Jumpstart Our Business Startups Act (the “JOBS Act”) and Title LXXXV of the Fixing America's Surface Transportation Act (the “FAST Act”). The amendments revise our rules to reflect the new, higher thresholds for registration, termination of registration and suspension of reporting that were set forth in the JOBS Act and the FAST Act. In addition, the amendments revise the definition of “held of record” in Rule 12g5-1 under the Securities Exchange Act of 1934 (the “Exchange Act”), in accordance with the JOBS Act, to exclude certain securities held by persons who received them pursuant to employee compensation plans and establish a non-exclusive safe harbor for determining whether securities are “held of record” for purposes of registration under Exchange Act Section 12(g).

DATES:

Effective June 9, 2016.

FOR FURTHER INFORMATION CONTACT:

Steven G. Hearne, Senior Special Counsel, at (202) 551-3430, or Anne Krauskopf, Senior Special Counsel, at (202) 551-3500, Division of Corporation Finance, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549.

SUPPLEMENTARY INFORMATION:

We are adopting amendments to Rules 3b-4,1 12g-1,2 12g-2,3 12g-3,4 12g-4,5 12g5-1,6 and 12h-3 7 under the Exchange Act 8 and amendments to Rule 405 9 under the Securities Act of 1933 (the “Securities Act”).10

1 17 CFR 240.3b-4.

2 17 CFR 240.12g-1.

3 17 CFR 240.12g-2.

4 17 CFR 240.12g-3.

5 17 CFR 240.12g-4.

6 17 CFR 240.12g5-1.

7 17 CFR 240.12h-3.

8 15 U.S.C. 78a et seq.

9 17 CFR 230.405.

10 15 U.S.C. 77a et seq.

Table of Contents I. Introduction II. Amendments Relating To Exchange Act Reporting Thresholds A. Application of the Increased Thresholds for Registration and Reporting Obligations B. Application of the Increased Threshold for Accredited Investors III. Amendments to Exchange Act Rule 12g5-1 A. Statutory Requirement and Definition of “Employee Compensation Plan” B. Definition of “Held of Record” C. Non-exclusive Safe Harbor for Determining Holders of Record D. Foreign Private Issuers IV. Economic Analysis A. Baseline B. Analysis of the Rules V. Paperwork Reduction Act VI. Final Regulatory Flexibility Act Analysis A. Need for, and Objectives of, the Action B. Significant Issues Raised by Public Comment C. Small Entities Subject to the Rule Amendments D. Reporting, Recordkeeping and Other Compliance Requirements E. Agency Action To Minimize Effect on Small Entities VII. Statutory Authority and Text of Rule Amendments I. Introduction

On December 17, 2014, we proposed amendments 11 to implement Title V and Title VI of the JOBS Act.12 The JOBS Act amended Sections 12(g) 13 and 15(d) 14 of the Exchange Act to adjust the thresholds for registration, termination of registration and suspension of reporting.15 Specifically, Section 501 of the JOBS Act 16 amended Section 12(g)(1) of the Exchange Act 17 to require an issuer to register a class of equity securities (other than exempted securities) within 120 days after its fiscal year-end if, on the last day of its fiscal year, the issuer has total assets of more than $10 million and the class of equity securities is “held of record” by either (i) 2,000 persons, or (ii) 500 persons who are not accredited investors. Section 601 of the JOBS Act 18 further amended Exchange Act Section 12(g)(1) to require an issuer that is a bank or a bank holding company, as defined in Section 2 of the Bank Holding Company Act of 1956,19 to register a class of equity securities (other than exempted securities) within 120 days after the last day of its first fiscal year ended after the effective date of the JOBS Act, on which the issuer has total assets of more than $10 million and the class of equity securities is “held of record” by 2,000 or more persons. Section 601 of the JOBS Act also amended Exchange Act Section 12(g)(4) 20 and Exchange Act Section 15(d)(1) 21 to enable an issuer that is a bank or a bank holding company to terminate the registration of a class of securities under Section 12(g) or suspend reporting under Section 15(d)(1) if that class is held of record by less than 1,200 persons.22 For other issuers, the threshold in Section 12(g)(4) for termination of registration and in Section 15(d)(1) for suspension of reporting remained at 300.23 In addition, Section 502 of the JOBS Act 24 amended Exchange Act Section 12(g)(5) 25 to exclude from the definition of “held of record,” for the purposes of determining whether an issuer is required to register a class of equity securities, securities that are held by persons who received them pursuant to an “employee compensation plan” in transactions exempted from the registration requirements of Section 5 of the Securities Act.26 Section 503 of the JOBS Act 27 directed the Commission to revise the definition of “held of record” pursuant to Exchange Act Section 12(g)(5) to implement the amendment made by Section 502 of the JOBS Act, and to create a safe harbor for issuers when determining whether holders received their securities pursuant to an “employee compensation plan” in a transaction exempted from the registration requirements of Section 5 of the Securities Act.

11Changes to Exchange Act Registration Requirements to Implement Title V and Title VI of the JOBS Act, Release No. 33-9693 (Dec. 17, 2014) [79 FR 78343 (Dec. 30, 2014)] (the “Proposing Release”).

12 Public Law 112-106, 126 Stat. 306 (Apr. 5, 2012).

13 15 U.S.C. 78l(g).

14 15 U.S.C. 78o(d).

15 The changes to Exchange Act Sections 12(g)(1), 12(g)(4) and 15(d)(1) were effective upon enactment of the JOBS Act and do not require any Commission action.

16 Sec. 501, 126 Stat. at 325.

17 15 U.S.C. 78l(g)(1).

18 Sec. 601, 126 Stat. at 326.

19 12 U.S.C. 1841.

20 15 U.S.C. 78l(g)(4).

21 15 U.S.C. 78o(d)(1).

22See supra note 18.

23See 15 U.S.C. 78l(g)(4) and 15 U.S.C. 78o(d)(1).

24 Sec. 502, 126 Stat. at 326.

25 15 U.S.C. 78l(g)(5).

26 15 U.S.C. 77e.

27 Sec. 503, 126 Stat. at 326.

Subsequent to our proposal, Section 85001 of the FAST Act 28 adjusted the Exchange Act thresholds for registration, termination of registration and suspension of reporting for savings and loan holding companies, as defined in Section 10 of the Home Owners' Loan Act,29 so that they would be the same as the thresholds for banks and bank holding companies. This change also was effective upon enactment.

28 Public Law 114-94 (Dec. 4, 2015).

29 12 U.S.C. 1461.

In connection with the amendments made by Title V and Title VI of the JOBS Act and Title LXXXV of the FAST Act, we are amending our rules to reflect the new, higher registration, termination of registration and suspension of reporting thresholds under amended Exchange Act Sections 12(g)(1), 12(g)(4) and 15(d)(1). We are also amending Exchange Act Rule 12g5-1 to reflect the amendment to Exchange Act Section 12(g)(5) and to establish a non-exclusive safe harbor that issuers may follow when determining if securities held by persons who received them pursuant to an employee compensation plan in transactions exempted from the registration requirements of Section 5 of the Securities Act may be excluded when determining whether they are required to register under Exchange Act Section 12(g)(1).

The comment period for the proposed amendments closed on March 2, 2015. We received 11 comment letters on the Proposing Release, which generally supported the proposals.30 We have reviewed and considered all of these comments. We are adopting the amendments substantially as proposed, and discuss these amendments and any modifications or clarifications in detail below.

30 We also considered pre-proposal comment letters when formulating the proposed amendments. Pre-proposal comment letters received on Title V of the JOBS Act are available at http://www.sec.gov/comments/jobs-title-v/jobs-title-v.shtml and on Title VI of the JOBS Act at http://www.sec.gov/comments/jobs-title-vi/jobs-title-vi.shtml.

II. Amendments Relating to Exchange Act Reporting Thresholds A. Application of the Increased Thresholds for Registration and Reporting Obligations

Sections 501 and 601 of the JOBS Act amended the Exchange Act to raise the total assets and held of record thresholds under which issuers are required to register or permitted to terminate registration or suspend reporting pursuant to Section 12(g) and 15(d) of the Exchange Act. Section 85001 of the FAST Act further amended these provisions to apply the new statutory thresholds for banks and bank holding companies to savings and loan holding companies.

1. Proposed Rule Amendments

To harmonize our rules with the statutory changes made to Exchange Act Sections 12(g)(1), 12(g)(4) and 15(d), we proposed amendments to Exchange Act Rules 12g-1, 12g-2, 12g-3, 12g-4 and 12h-3, the rules that govern the mechanics relating to registration, termination of registration under Section 12(g) and suspension of reporting obligations under Section 15(d). These rules generally reflected the holder of record statutory thresholds in Sections 12(g) and 15(d) prior to the enactment of the JOBS Act.31

31 Prior to adoption of the JOBS Act, the Commission used its general exemptive authority to provide for a $10 million asset threshold by rule. JOBS Act Section 501 amended Exchange Act Section 12(g)(1) to raise the statutory threshold from $1 million to $10 million to match the threshold previously provided in Exchange Act Rule 12g-1.

We proposed to revise Rule 12g-1 to reflect the asset and holder of record thresholds established by Titles V and VI of the JOBS Act relating to the requirement to register a class of equity securities under the Exchange Act.32 Similarly, we proposed to revise Exchange Act Rules 12g-2 33 and 12g-3 34 to reflect the holders of record thresholds in the Exchange Act, as amended by the JOBS Act, for terminating registration and suspending reporting for banks and bank holding companies. In addition, we proposed to amend Exchange Act Rules 12g-4 and 12h-3, the rules which permit issuers to immediately suspend their duty to file periodic and current reports, to reflect the new thresholds in Sections 12(g) and 15(d) enacted by the JOBS Act for banks and bank holding companies.

32 We also proposed to remove the reference to an automated inter-dealer quotation system since the NASDAQ Stock Market is now registered as a securities exchange with the Commission. See In the Matter of the Application of the Nasdaq Stock Market LLC for Registration as a National Securities Exchange; Findings, Opinion and Order of the Commission, Release No. 34-53128 (Jan. 13, 2006) [71 FR 3550 (Jan. 23, 2006)].

33 Rule 12g-2 addresses securities deemed to be registered pursuant to Section 12(g)(1) upon termination of certain exemptions.

34 Rule 12g-3 addresses the threshold for the registration of securities of successor issuers under Section 12(b) or Section 12(g).

In light of the fact that savings and loan holding companies provide similar services to banks and bank holding companies and are generally subject to similar bank regulatory and supervision requirements, we also proposed to use our general exemptive authority to apply the same registration thresholds applicable to banks and bank holding companies to savings and loan holding companies and to revise our rules accordingly. As noted above, subsequent to this proposal, the FAST Act amended the Exchange Act to apply the new statutory thresholds for banks and bank holding companies to savings and loan holding companies.35

35 Because of the FAST Act amendment to the Exchange Act, the Commission no longer needs to adopt changes relating to those thresholds using its general exemptive authority.

Because the new statutory threshold for banks, savings and loan holding companies and bank holding companies is not reflected in our existing rules, such institutions seeking to rely on the new 1,200 holder of record threshold to terminate registration and suspend reporting are not able to rely on the existing procedural accommodations in our rules to do so immediately. Without the proposed amendments, a bank, savings and loan holding company or bank holding company is required to wait 90 days after filing a certification with the Commission that the number of its holders of record is less than 1,200 persons to terminate its Section 12(g) registration and cease filing reports required by Exchange Act Section 13(a),36 rather than being able to suspend its Section 13(a) reporting obligations immediately upon the filing of a Form 15 37 in reliance on the rule. Similarly, without the proposed amendments, banks, savings and loan holding companies or bank holding companies may not rely on Rule 12h-3 to immediately suspend their Section 15(d) reporting obligations using the new higher statutory threshold during a fiscal year. Rather, Section 15(d)(1) provides for suspending a Section 15(d) obligation only at the beginning of a fiscal year.

36 15 U.S.C. 78m(a).

37 17 CFR 249.323.

2. Comments on Proposed Rule Amendments

We received comments on the proposed amendments from two commenters.38 These commenters supported the amendments as proposed. One commenter further agreed with our determination not to propose amendments to our rules relating to Exchange Act registration that extend substantially beyond the changes contemplated by the JOBS Act.39 Several commenters also expressed support for our proposal to treat savings and loan holding companies similar to banks and bank holding companies for purposes of Exchange Act registration.40

38See letters from American Bankers Association (Feb. 27, 2015) (“American Bankers”) and American Bar Association (Apr. 10, 2015) (“ABA”).

39See letter from ABA.

40See letters from American Bankers, ABA and Independent Community Bankers Association (Feb. 27, 2015) (“ICBA”).

3. Final Rule Amendments

After considering the comments, we are adopting the proposed amendments to Exchange Act Rules 12g-1, 12g-2, 12g-3, 12g-4 and 12h-3 to reflect the statutory changes made by the JOBS Act and the FAST Act. As amended, Rule 12g-1 provides that an issuer is not required to register a class of equity securities pursuant to Section 12(g)(1) if on the last day of its most recent fiscal year:

• The issuer had total assets not exceeding $10 million; or

• The class of equity securities was held of record by fewer than 2,000 persons or 500 persons who are not accredited investors (as such term is defined in Securities Act Rule 501(a)),41 determined as of such day rather than at the time of the sale of the securities; or

41 17 CFR 230.501(a).

• in the case of a bank; a savings and loan holding company, as such term is defined in section 10 of the Home Owners' Loan Act; or a bank holding company, as such term is defined in Section 2 of the Bank Holding Company Act of 1956, the class of equity securities was held of record by fewer than 2,000 persons.42

42 As observed by one commenter, Section 501 of the JOBS Act amended Section 12(g)(1) of the Exchange Act to require an issuer to register a class of equity securities (other than exempted securities) if, on the last day of its fiscal year, the issuer has total assets of more than $10 million and the class of equity securities is “held of record by either 2,000 persons, or 500 persons who are not accredited investors.” See letter from Keith P. Bishop (Mar. 1, 2016). We read this language to provide that an issuer is not required to register under Section 12(g) if the issuer has fewer than 2,000 persons, or 500 persons who are not accredited investors that hold of record. An issuer with more than 2,000 persons, or 500 persons who are not accredited investors, that hold of record has necessarily met the threshold and would be required to register pursuant to Section 12(g)(1)(A).

As revised, Rule 12g-2, which addresses securities deemed to be registered pursuant to Section 12(g)(1) upon termination of the exemption pursuant to Section 12(g)(2)(A) or (B) 43 and establishes a 300-person threshold for such a class of securities to be registered under Section 12(g), provides a 1,200-person registration threshold for a bank, a savings and loan holding company, as such term is defined in section 10 of the Home Owners' Loan Act, or bank holding company, as defined in Section 2 of the Bank Holding Company Act of 1956.

43 Section 12(g)(2)(A) [15 U.S.C. 78l(g)(2)(A)] provides an exemption from Section 12(g) registration while the class of securities is listed and registered on a national securities exchange under Exchange Act Section 12(b) [15 U.S.C. 78l(b)]. Section 12(g)(2)(B) [15 U.S.C. 78l(g)(2)(B)] provides an exemption for securities issued by registered investment companies.

Revised Rule 12g-3, which addresses the 300-person threshold for the registration of securities of successor issuers under Section 12(b) or Section 12(g), similarly provides a 1,200-person registration threshold for a bank, a savings and loan holding company, as such term is defined in Section 10 of the Home Owners' Loan Act, or bank holding company, as defined in Section 2 of the Bank Holding Company Act of 1956.

Revised Rule 12g-4(a) provides that termination of registration under Section 12(g) shall take effect in 90 days, or such shorter period as the Commission determines, after the issuer certifies on Form 15 that the class of securities is held of record by fewer than 300 persons, 1,200 persons in the case of a bank, a savings and loan holding company, as such term is defined in section 10 of the Home Owners' Loan Act, or a bank holding company, as defined in Section 2 of the Bank Holding Company Act of 1956, or 500 persons where the total assets of the issuer have not exceeded $10 million on the last day of each of the preceding three years. As a result of the changes to Rule 12g-4(a), banks, savings and loan holding companies and bank holding companies will be able to terminate registration of a class of securities and suspend immediately their duty to file current and periodic reports upon filing a certification on Form 15 at the 1,200 person threshold.

Finally, revised Rule 12h-3 provides that the duty to file current and periodic reports under Section 13(a) pursuant to Section 15(d) for that class of securities is suspended immediately upon the filing of a certification on Form 15, provided that the issuer has fewer than 300 holders of record, 500 holders of record where the issuer's total assets have not exceeded $10 million on the last day of each of the preceding three years, or in the case of a bank, a savings and loan holding company, as such term is defined in Section 10 of the Home Owners' Loan Act, or bank holding company, as defined in Section 2 of the Bank Holding Company Act of 1956, 1,200 holders of record; the issuer has filed its Section 13(a) reports for the most recent three completed fiscal years, and for the portion of the year immediately preceding the date of filing the Form 15 or the period since the issuer became subject to the reporting obligation; and a registration statement has not become effective or was required to be updated pursuant to Exchange Act Section 10(a)(3) 44 during the fiscal year.45

44 15 U.S.C. 78j(a)(3).

45 The automatic statutory suspension of an issuer's Section 15(d) reporting obligation also is not available as to any fiscal year in which the issuer's Securities Act registration statement becomes effective or is required to be updated pursuant to Section 10(a)(3) of the Securities Act.

B. Application of the Increased Threshold for Accredited Investors

Section 501 of the JOBS Act amended Exchange Act Section 12(g)(1) to increase the threshold that triggers registration by an issuer other than a bank or bank holding company to total assets exceeding $10 million and a class of equity securities (other than an exempted security) held of record by either 2,000 persons or 500 persons who are not accredited investors (as such term is defined by the Commission).46 To rely on the new, higher threshold established by the JOBS Act, an issuer will need to be able to determine which of its record holders are accredited investors. A number of pre-proposal commenters pointed to potential compliance concerns with respect to identifying accredited investors and recommended ways to facilitate issuers' use of the increased threshold for holders of record that are accredited investors.47

46 The statutory amendment was effective upon enactment of the JOBS Act and does not require any Commission action. While this change primarily affects issuers that have never had a reporting obligation under the Exchange Act, issuers that have terminated registration will need to monitor the accredited investor status of their holders of record as of the last day of each fiscal year.

47See, e.g., letters from New York City Bar Association (June 6, 2012) (“NYCBA”), the Business Law Section of the American Bar Association (June 26, 2013) (“ABA Pre-Proposal”) and Foley & Lardner (May 24, 2012) (“Foley”).

1. Proposed Rule Amendment

We proposed to amend Rule 12g-1 to make clear that the definition of “accredited investor” in Securities Act Rule 501(a) applies in making determinations under Exchange Act Section 12(g)(1) and that the “accredited investor” determination must be made as of the last day of the fiscal year rather than at the time of the sale of the securities.48 In proposing to use the Rule 501(a) definition, we stated our belief that applying the familiar concepts of the accredited investor definition in Rule 501(a) to the registration threshold in Section 12(g)(1) would facilitate compliance for issuers.49 We also noted our concern that reliance on information previously provided by security holders in connection with the purchase or transfer of securities for an indefinite period into the future could result in the use of outdated information that may no longer be reliable.50

48 Securities Act Rule 501(a) otherwise defines “accredited investor” as being determined at the time of the sale of the securities.

49See Proposing Release at Section II.C.

50Id.

2. Comments on Proposed Rule Amendment

We received comments on the proposed approach from five commenters.51 Four commenters supported the use of the Securities Act Rule 501(a) definition.52 Two of these commenters requested that the Commission provide guidance on how to establish a reasonable belief of accredited investor status.53 A number of commenters supported establishing a safe harbor for the accredited investor determination that permits an issuer to rely on previously obtained information relating to accredited investor status.54 These commenters recommended various safe harbors that permit issuers to rely on: information obtained at the time securities were initially or most recently sold to that person; 55 an annual self-certification or affirmation; 56 and determinations made by certain third parties.57 Another commenter provided a more limited recommendation that the Commission permit reliance on accredited investor status determinations made in offerings during the three months prior to fiscal year-end or on self-certification by investors if the offering occurred more than three months but less than twelve months prior to fiscal year-end.58

51See letters from ABA, Alternative & Direct Investment Securities Association (Mar. 2, 2015) (“ADISA”), Investment Program Association (Mar. 2, 2015) (“IPA”), Securities Arbitration Clinic, Cardozo Law School (Mar. 2, 2015) (“Cardozo”) and Managed Funds Association (Mar. 2, 2015) (“MFA”).

52See letters from ABA, ADISA, Cardozo and MFA.

53See letters from ABA and ADISA. ABA recommended that the Commission provide guidance by rule or in the text of the release.

54See letters from ADISA, Milken Institute Center for Financial Markets (Mar. 2, 2015) (“CFM”), Cleary, Gottlieb, Steen & Hamilton LLP (Feb. 27, 2015) (“Cleary”) and IPA. CFM suggested that a safe harbor would create certainty and predictability for issuers and investors. IPA recommended a safe harbor as an alternative to determination at time of the last sale and proposed that securities sold prior to the effective date of any rule should not be subject to reaffirmation of accredited investor status.

55See letters from ADISA and CFM.

56See letters from ADISA and IPA. CFM further recommended allowing an issuer to assume that an investor's status has not changed and to query investors “as needed” via a written communication.

57See letters from ADISA, Cleary and IPA. These commenters recommended permitting reliance on information from registered broker-dealers, registered investment advisers, licensed attorneys, or certified public accountants.

58See letter from Cleary.

One commenter opposed a formal safe harbor out of concern it would become a de facto minimum standard and recommended instead that the Commission provide additional guidance.59 Specifically, this commenter recommended that:

59See letter from ABA.

• an issuer should be able to rely on information previously provided by investors as indicative of their current accredited investor status, when there is a reasonable basis for doing so;

• an annual confirmation should only be necessary if there was reason to believe that an investor's status had changed;

• an issuer should be able to rely on certification from certain third parties; and

• an issuer should not be subject to enforcement if the basis was reasonable at the time the conclusion was reached.60

60See letter from ABA. See also letter from IPA advocating against annual recertification, which noted that any future adjustments to the definition of accredited investor could affect an issuer's number of accredited investors. This could cause issuers to be required to register despite an issuer's efforts to sell only to an appropriately limited number of accredited and non-accredited investors at the time of the offer and sale. ABA recommended a presumption that a person continues to be an accredited investor under the revised definition to address concerns relating to future adjustments to the definition of accredited investor.

One commenter recommended that the Commission issue a separate rule or safe harbor with respect to private investment funds.61 The commenter noted that private investment funds that rely on the exemption in Investment Company Act Section 3(c)(7) 62 (“3(c)(7) Funds”) may have an unlimited number of investors that are “qualified purchasers,” a significantly higher standard than “accredited investors.” The commenter recommended a rule that permits 3(c)(7) Funds to continue to rely on their initial determination of a record holder's qualified purchaser and accredited investor status on a going forward basis without requiring additional annual diligence. In the alternative, the commenter recommended that the Commission provide a non-exclusive safe harbor that permits 3(c)(7) Funds to send an annual negative consent letter to record holders asking them to inform the issuer if their accredited investor status has changed and permits treatment of a non-response as confirmation of status.

61See letter from MFA.

62 15 U.S.C. 80a-3(c)(7).

Two commenters expressed concern about the timing of the determination and opposed requiring determination as of the last day of the fiscal year.63 One of these commenters claimed that annual reconfirmation will be costly, will provide little investor protection and may cause issuers to sell to fewer investors.64 This commenter recommended only requiring yearly recertification if there is a ready market for the securities and the securities are freely tradable.65

63See letters from ADISA and IPA. ADISA recommended permitting issuers to rely on information available at the time they made a judgment, rather than requiring issuers to update information as of the end of the fiscal year. IPA recommended that accredited investor status be determined at the time of last sale, not annually, and expressed concern regarding the administrative and reporting costs of determinations required as of the last day of the fiscal year.

64See letter from IPA. IPA cited an estimate of ongoing reporting costs under the Exchange Act of $650,000 annually. This commenter additionally noted that becoming an Exchange Act reporting company may be contrary to an issuer's business plan and against investors' economic interests.

65See letter from IPA. IPA suggested that most affected investors will not hold freely tradable securities, muting the benefits of public company reporting for those investors.

3. Final Rule Amendment

After considering the comments, we are adopting an amendment to Rule 12g-1 as proposed, providing that the term “accredited investor” for purposes of Section 12(g)(1) is as defined in Securities Act Rule 501(a).66 Consistent with the proposal, the “accredited investor” determination for these purposes must be made as of the last day of the issuer's most recent fiscal year rather than at the time of the sale of the securities. Commenters supported use of the Securities Act Rule 501(a) definition.67 Rule 501(a) provides that an accredited investor is any person who comes within one or more of the categories of investors specified therein, or whom the issuer reasonably believes comes within any such category. Whether the issuer has a reasonable belief depends on the particular facts and circumstances surrounding the determination. Under amended Rule 12g-1, an issuer will need to determine, based on facts and circumstances, whether prior information provides a basis for a reasonable belief that the security holder continues to be an accredited investor as of the last day of the fiscal year.68

66 Consideration of the use of the “accredited investor” definition in this context is distinct from other efforts to consider the definition. In December 2015, the staff issued a report addressing the “accredited investor” definition and providing certain recommendations for our consideration. See Report on the Review of the Definition of Accredited Investor (Dec. 18, 2015), available at https://www.sec.gov/corpfin/reportspubs/special-studies/review-definition-of-accredited-investor-12-18-2015.pdf.

67See letters from ABA, ADISA, Cardozo and MFA.

68 If after the issuer has made its determination as of the end of the fiscal year, it is subsequently determined that an investor did not, in fact, come within one of the accredited investor categories, the issuer may rely on that determination for that fiscal year if it had a reasonable belief at the time the determination was made.

Although some commenters requested that the Commission provide guidance on making the accredited investor determination in the Section 12(g) context or establish a safe harbor relating to the determination,69 we have decided against doing so. Our rules do not currently provide a safe harbor for the reasonable belief determination made under Rule 501(a) for exempt offerings and we do not believe that the determinations required for Section 12(g) present a more compelling case for having such a safe harbor. Additionally, as one commenter noted, a safe harbor could become a de facto minimum standard.70 We believe that requiring issuers to consider their particular facts and circumstances in establishing a reasonable basis for their determination provides issuers with appropriate flexibility for making the determination.71

69See letters from ABA, ADISA, CFM, Cleary and MFA.

70See letter from ABA.

71 One commenter requested that the Commission establish a separate safe harbor or rule with respect to private investment funds. See letter from MFA. We are declining to provide specific relief to private investment funds for reasons similar to those discussed for issuers generally. We believe that a standard where issuers, including private investment funds, consider their particular facts and circumstances in establishing a reasonable basis for believing that a security holder is an accredited investor is the most appropriate standard to apply at this time.

As adopted, the accredited investor determination under Rule 12g-1 must be made as of the last day of the issuer's most recent fiscal year rather than at the time of the sale of the securities. Several commenters recommended that the Commission adopt rules providing that the determination need not be made at year-end.72 We believe that a fiscal year-end determination date is appropriate because the Section 12(g)(1) requirement to register is triggered if the issuer meets the specified asset and held of record thresholds at the end of its fiscal year.

72See letters from ADISA and IPA.

Other commenters recommended permitting an issuer to rely on previously obtained information relating to accredited investor status.73 We continue to be concerned that permitting issuers to rely solely on previously obtained information, which in some cases could be years or decades old, could result in the use of outdated and unreliable information when making the determination. One commenter suggested that we permit issuers to rely on accredited investor determinations made in offerings during the three months prior to fiscal year-end or on self-certification by investors if the offering occurred more than three months but less than twelve months prior to fiscal year-end.74 While such information could provide a reasonable basis for making a determination about accredited investor status as of the end of the fiscal year, for the reasons set forth above, we believe that issuers should consider their particular facts and circumstances before reaching such a conclusion and that the “reasonable belief” standard under Rule 501(a) provides issuers with a familiar context and appropriate flexibility in making such a determination.

73See letters from ABA, CFM, Cleary and MFA.

74See letter from Cleary.

III. Amendments to Exchange Act Rule 12g5-1 A. Statutory Requirement and Definition of “Employee Compensation Plan”

Exchange Act Section 12(g)(5), as amended by Section 502 of the JOBS Act, provides that the definition of “held of record” shall not include securities held by persons who received them pursuant to an “employee compensation plan” in transactions exempted from the registration requirements of Section 5 of the Securities Act. By its express terms, this new statutory exclusion applies solely for purposes of determining whether an issuer is required to register a class of equity securities under the Exchange Act and does not apply to a determination of whether such registration may be terminated or suspended.75 The provision, which is substantially broader than the Commission's existing rules exempting compensatory employee stock options from Section 12(g) registration,76 does not define the term “employee compensation plan.”

75 The statutory exclusion in Section 12(g)(5) specifically refers to Exchange Act Section 12(g)(1), which relates to when an issuer must register its securities with the Commission.

76 Exchange Act Rule 12h-1(f) [17 CFR 240.12h-1(f)] provides non-reporting issuers with an exemption from Section 12(g) registration for stock options issued under written compensatory stock option plans under certain conditions. Exchange Act Rule 12h-1(g) [17 CFR 240.12h-1(g)] provides reporting issuers a similar exemption for such stock options. The exemptions provide specific eligibility requirements and are limited to options issued pursuant to a written compensatory stock option plan. See Exemption of Compensatory Stock Options from Registration Under Section 12(g) of the Securities Exchange Act of 1934, Release No. 34-56887 (Dec. 3, 2007) [72 FR 69554 (Dec. 7, 2007)].

Section 503 of the JOBS Act instructs the Commission to amend the definition of “held of record” to implement the amendment in Section 502 and to adopt a safe harbor that issuers can use when determining whether holders of their securities received them pursuant to an employee compensation plan in transactions exempted from the registration requirements of Section 5 of the Securities Act.

1. Proposed Rule Amendment

We did not propose to define the term “employee compensation plan.” Instead, we proposed to revise the definition of “held of record” and to additionally establish a non-exclusive safe harbor that relies on the current definition of “compensatory benefit plan” in Rule 701 and the conditions in Rule 701(c).

2. Comments on Proposed Rule Amendment

We received comments from two commenters generally supportive of the proposed amendment.77 One of those commenters specifically supported our determination not to create a new definition of the term “employee compensation plan.” 78 This commenter suggested that application in a Section 12(g) context of the familiar concepts applied by an issuer in connection with its exempt issuances of compensatory equity securities under Securities Act Rule 701 would facilitate compliance by streamlining the issuer's learning curve and simplifying recordkeeping.

77See letters from ABA and ADISA.

78See letter from ABA.

3. Final Rule Amendment

After considering the comments, we are adopting an amendment to Rule 12g5-1 to revise the definition of “held of record,” and establish a non-exclusive safe harbor. By not defining the term “employee compensation plan,” and providing for a non-exclusive safe harbor, we believe issuers will have appropriate flexibility to make a principles-based determination about securities received as employee compensation when determining their holders of record under Section 12(g)(5), as well as the added certainty of a safe harbor. We further believe that developing a new definition for “employee compensation plan” could result in needless complexity and create potential conflicts with the current definitions of “compensatory benefit plan” and “employee benefit plan.” 79 Finally, we note that by conditioning the new exclusion from “held of record” upon the securities being received pursuant to an employee compensation plan in transactions exempted from the registration requirements of Section 5 of the Securities Act, Section 502 of the JOBS Act uses Securities Act concepts to identify persons that an issuer may exclude from its determination of the number of holders of record under Section 12(g)(1) of the Exchange Act. Because this provision of the JOBS Act includes concepts from both the Securities Act and Exchange Act,80 we believe that it will facilitate compliance if the terminology used in the new safe harbor in Exchange Act Rule 12g5-1(a)(8)(ii) is consistent with the terminology used in our Securities Act rules.

79See Rule 701—Exempt Offerings Pursuant to Compensatory Arrangements, Release No. 33-7645 (Feb. 25, 1999) [64 FR 11095 (Mar. 8, 1999)] (the “1999 Rule 701 Release”), and Registration of Securities on Form S-8, Release No. 33-7646 (Feb. 25, 1999) [64 FR 11103 (Mar. 8, 1999)] (the “1999 Form S-8 Release”).

80 This provision of the JOBS Act relies on concepts from both the Securities Act and the Exchange Act by establishing that certain securities received pursuant to an employee compensation plan in transactions exempted from the registration requirements of Section 5 of the Securities Act may be excluded when determining whether an issuer is required to register under Section 12(g) of the Exchange Act.

B. Definition of “Held of Record”

Section 503 of the JOBS Act directed the Commission to revise the definition of “held of record” pursuant to Section 12(g)(5) to provide that securities held by persons who received them pursuant to an employee compensation plan in transactions exempted from the registration requirements of Section 5 of the Securities Act may be excluded when calculating the number of holders of record of a class of equity securities for purposes of determining the issuer's registration obligation under Section 12(g)(1). We received pre-proposal comments addressing issues about the scope of the definition. One commenter recommended that securities issued in a subsequent transaction (including a business combination) that is exempt from, or otherwise is not subject to, the registration requirements of Section 5 to eligible employees, former employees and other covered persons in exchange for securities covered by the Section 12(g)(5) compensatory plan securities carve-out also should be excluded.81 The same commenter further recommended that securities issued in unregistered transactions based on the “no sale” theory 82 should be included within the definition of “transactions exempt from Section 5.”

81See letter from ABA Pre-Proposal.

82 The “no sale” theory relates to the issuance of compensatory grants made by employers to broad groups of employees pursuant to broad-based stock bonus plans without Securities Act registration under the theory that the awards are not an offer or sale of securities under Section 2(a)(3) of the Securities Act [15 U.S.C. 77b(a)(3)]. See Employee Benefit Plans; Interpretations of Statute, Release No. 33-6188 (Feb. 1, 1980) [45 FR 8960 (Feb. 11, 1980)] at Section II.A.5.d; Employee Benefit Plans, Release No. 33-6281 (Jan. 15, 1981) [46 FR 8446 (Jan. 27, 1981)] at Section III. Many issuers rely on the “no sale” theory when making such awards to employees where no consideration—and hence no “value”—is received by the issuer in return. The staff has not objected to these issuances in a series of no-action letters. See, e.g., no-action letter to Verint Systems Inc. (May 24, 2007).

1. Proposed Rule Amendment

We proposed to amend the definition of “held of record” to provide that when determining whether an issuer is required to register a class of equity securities with the Commission pursuant to Exchange Act Section 12(g)(1) an issuer may exclude securities that are either:

• held by persons who received the securities pursuant to an employee compensation plan in transactions exempt from the registration requirements of Section 5 of the Securities Act;

• held by persons who received the securities pursuant to an employee compensation plan in transactions that did not involve a sale within the meaning of Section 2(a)(3) of the Securities Act; or

• held by persons eligible to receive securities from the issuer pursuant to Securities Act Rule 701(c) who received the securities in a transaction exempt from the registration requirements of Section 5 of the Securities Act in exchange for securities excludable under proposed Rule 12g5-1(a)(7).

Section 502 of the JOBS Act refers specifically to “transactions exempted” from the Securities Act Section 5 registration requirements. A number of issuers, however, issue securities to employees without Securities Act registration on the basis that the issuance is not a sale under Section 2(a)(3) of the Securities Act and therefore does not trigger the registration requirement of Securities Act Section 5, which applies only to the offer and sale of securities.83 While securities issued to employees in transactions that do not involve a sale under Section 2(a)(3) are not technically “transactions exempted from the registration requirements of section 5,” they are similar to other compensatory issuances to employees in exempt transactions in that the issuer provides the awards to employees for a compensatory purpose. We therefore proposed to exclude such “no sale” issuances from the definition of “held of record” in Rule 12g5-1 for purposes of determining an issuer's obligation to register a class of securities under the Exchange Act.

83See id.

Additionally, we proposed to permit an issuer to exclude securities of holders who are persons eligible to receive securities from the issuer pursuant to Rule 701(c) and who acquired the securities in exchange for securities excludable under the proposed definition. The proposed exclusion was intended to facilitate the ability of an issuer to conduct restructurings, business combinations and similar transactions that are exempt from Securities Act registration so that if the securities being surrendered in such a transaction would not have been counted under the proposed definition of “held of record,” the securities issued in the exchange also would not be counted under this definition.84 The securities issued in the exchange would be deemed to have a compensatory purpose because they would replace other securities previously issued pursuant to an employee compensation plan. We believed such an approach would be consistent with the intent of Section 502 of the JOBS Act and would provide issuers with appropriate flexibility to conduct certain business combinations and similar transactions.

84 As proposed and consistent with Rule 701(c), securities held of record by former employees would be excluded when determining the securities held of record only if the employees were employed by or providing services to the surviving issuer at the time the exchange securities were offered.

2. Comments on Proposed Rule Amendment

We received comments on the proposed amendment from two commenters, both generally supporting the amendment.85 One commenter supported the proposed amendment to the definition of “held of record” to implement JOBS Act Section 503, but recommended that the Commission clarify and extend the scope of the proposed exclusion for securities received in exchange for excludable securities.86 The commenter recommended that the Commission revise the exclusion for employee compensation plan securities acquired through a business combination to encompass securities that are “exempt from, or not subject to, the registration requirements of Section 5 of the Securities Act.” The commenter noted that the proposed language, if construed literally, may not apply to exempt securities under Section 3 of the Securities Act, such as securities issued under Section 3(a)(9) (in connection with exchange offers), Regulation A or Rule 504 or 505 of Regulation D, because those exemptions are securities-based rather than transaction-based. Finally, the commenter noted that business combinations do not always involve an exchange and suggested additional clarification that the rule would apply to securities received “in exchange for, in substitution for or upon conversion or exercise of” the original securities.

85See letters from ABA and ADISA.

86See letter from ABA.

This commenter additionally recommended that the Commission expand the exclusion for securities issued in business combinations and similar transactions that replace securities previously issued pursuant to an employee compensation plan to include former employees, directors, general partners, trustees, officers, or consultants and advisors who were employed by, or providing services to, a predecessor of the issuer or a company acquired in a business combination. The commenter expressed concern that denying the exclusion to former employees could inhibit issuers from entering into business combination transactions.

3. Final Rule Amendment

After considering the comments, we are adopting Exchange Act Rule 12g5-1(a)(8)(i) with the clarifications and changes detailed below.87 We are amending the definition of “held of record” to provide that when determining whether an issuer is required to register a class of equity securities with the Commission pursuant to Exchange Act Section 12(g)(1) an issuer may exclude securities that are:

87 As part of the amendments to Regulation A, we adopted a new Exchange Act Rule 12g5-1(a)(7) providing a conditional exemption to the definition of “held of record” for securities issued in Tier 2 Regulation A offerings. Amendments to Regulation A, Rel. No. 33-9741 (Mar. 25, 2015) [80 FR 21805 (Apr. 20, 2015)]. We proposed to use Rule 12g5-1(a)(7) for the exemption and safe harbor under the definition of “held of record” for certain employee compensation plan securities in the Proposing Release. Because Rule 12g5-1(a)(7) has been adopted in relation to Regulation A, we are adopting the proposed exemption and safe harbor as Exchange Act Rule 12g5-1(a)(8).

• Held by persons who received the securities pursuant to an employee compensation plan in transactions exempt from, or not subject to, the registration requirements of Section 5 of the Securities Act; or

• held by persons who received the securities in a transaction exempt from, or not subject to, the registration requirements of Section 5 of the Securities Act from this issuer, a predecessor of the issuer or an acquired company in substitution or exchange for excludable securities under Exchange Act Rule 12g5-1(a)(8)(i)(A), as long as the persons were eligible to receive securities pursuant to Rule 701(c) at the time the excludable securities were originally issued to them.

Consistent with one commenter's suggestion,88 we are revising the language in new Exchange Act Rule 12g5-1(a)(8)(i)(A) to encompass securities received in transactions exempt from, or not subject to, the registration requirements of Section 5. Such transactions include transactions that did not involve a sale of securities within the meaning of Section 2(a)(3) of the Securities Act, as well as transactions involving exempt securities, such as sales of securities made pursuant to Section 3 of the Securities Act. As we indicated in the Proposing Release, while securities issued to employees in transactions that do not involve a sale under Section 2(a)(3) are not technically “transactions exempted from the registration requirements of Section 5,” they are similar to other compensatory issuances to employees in exempt transactions in that the issuer provides the awards to employees for a compensatory purpose. We believe it is consistent with the statutory relief to also exclude from the definition of “held of record” in Rule 12g5-1 exempt securities issued to employees pursuant to an employee compensation plan. These exempt securities are similarly issued to employees for compensatory purposes and their issuance does not require registration under the Securities Act.

88See letter from ABA.

We are adopting new Exchange Act Rule 12g5-1(a)(8)(i)(B) to provide relief in the context of business combinations. We are clarifying and expanding the proposed relief to encompass securities held by former employees of the issuer or its predecessors. In response to a commenter's concern that the term “in exchange for” is not broad enough to capture all of the ways in which a person may receive new securities in place of existing securities held prior to a business combination, we have revised the language by using the phrase “in substitution or exchange for” to cover various methods of how those securities may be received in place of the existing securities, such as upon conversion or exercise of such securities. In response to a commenter's concerns,89 we are revising proposed Rule 12g5-1(a)(8)(i)(B) to also permit securities to be excluded if they were received by former employees in an exempt transaction in substitution or exchange for excludable securities, where the former employees were eligible under Rule 701(c) to receive the original securities at the time of issuance. Under the exemption as proposed, securities received in such an exchange by former employees of an issuer and employees of an acquired issuer or the target company in a business combination would not have been excludable. Requiring issuers to count those securities for Exchange Act registration purposes could, as the commenter noted, inhibit issuers from entering into economically beneficial business combinations. Such former employees of the issuer, and employees of a predecessor of the issuer or an acquired company, will have received the original securities pursuant to an employee compensation plan in a transaction exempt from, or not subject to, the registration requirements of Section 5 of the Securities Act. We therefore believe it is appropriate to exclude the securities received by these former employees 90 in such an exchange when determining whether an issuer is required to register under Section 12(g)(1).

89Id.

90 Rule 701(c) provides appropriate limitations on who may qualify as an employee, former employee, or permitted family member transferee. See discussion in Section III.C.3.a.

C. Non-Exclusive Safe Harbor for Determining Holders of Record

Section 503 of the JOBS Act directed the Commission to establish a safe harbor in Rule 12g5-1 that issuers can rely on when determining if securities held by persons who received them pursuant to an employee compensation plan in transactions exempted from the registration requirements of Section 5 of the Securities Act may be excluded when calculating the number of holders of record of a class of equity securities for purposes of determining the issuer's registration obligation under Section 12(g)(1). One pre-proposal commenter recommended that the Commission expressly provide a non-exclusive safe harbor akin to the Securities Act Rule 506 safe harbor under Securities Act Section 4(a)(2).91 This commenter recommended that the safe harbor provide that an issuer may treat an issuance of securities as exempt from Securities Act registration for purposes of Section 12(g)(5) if that issuer had a reasonable belief that the exemption was available at the time the securities were issued.92

91See letter from ABA Pre-Proposal recommending that the Commission provide “that the safe harbor(s) is not the exclusive means by which an issuer may comply with the `compensatory plan carve-out' provisions of Section 12(g)(5).” This commenter suggested that “failure to satisfy all conditions to reliance on the safe harbor(s) should not preclude reliance on the statutory carve-out itself.”

92See letter from ABA Pre-Proposal.

1. Proposed Rule Amendment

We proposed a non-exclusive safe harbor that would provide that a person will be deemed to have received the securities pursuant to an employee compensation plan if such person received them pursuant to a compensatory benefit plan in transactions that met the conditions of Securities Act Rule 701(c).

2. Comments on Proposed Rule Amendment

We received comments on the proposed amendment from two commenters, both generally supporting the amendment.93 One commenter, while generally supportive of the rule and safe harbor, expressed concern that an issuer's ability to rely on the safe harbor was conditioned on the issuer's ability to demonstrate compliance with all of the express requirements of an exemption, placing undue emphasis on technical aspects of the exemption that should not serve as the basis for determining whether an issuer should be required to register under Section 12(g).94 This commenter suggested that Section 503 of the JOBS Act should be read to mandate that the safe harbor provide certainty with respect to the exempt offering condition of JOBS Act Section 502 and that if the safe harbor requires an issuer to establish annually that each issuance of exempt equity securities satisfied an available Securities Act exemption, then the safe harbor would impose a significant ongoing burden on the issuer. The commenter recommended revising the safe harbor so that, solely for purposes of Exchange Act Section 12(g), the original issuance would be deemed to have satisfied the Securities Act exemption condition if the conditions of Securities Act Rule 701(c) are satisfied at the end of the fiscal year.95

93See letters from ABA and ADISA.

94See letter from ABA.

95Id.

Two commenters made recommendations that the Commission provide more guidance on the application of Securities Act Rule 701(c), or modify the application of Rule 701(c) in the Section 12(g) context.96 One commenter recommended that there be no limit on the categories of persons who may receive securities pursuant to an employee compensation plan for purposes of the safe harbor.97 Another commenter recommended expanding the provisions of Securities Act Rule 701(c) to exempt any consultants and advisors, instead of maintaining the limitation in Rule 701(c) to consultants and advisors who are natural persons.98 This commenter also recommended that the Commission explicitly provide that Rule 701(c) extends to family members who acquire equity securities initially issued pursuant to a compensatory benefit plan from an employee (or former employee) by gift or domestic relations order, or upon an employee's death or disability, as well as to the executor or guardian of the employee, former employee, or family member who acquires the securities upon such person's death or disability.

96See letters from ABA and ADISA.

97See letter from ADISA.

98See letter from ABA.

3. Final Rule Amendment and Interpretation

After considering the comments, we are adopting the proposed amendment to Exchange Act Rule 12g5-1(a)(8) with the additions and clarifications detailed below. We are adopting a non-exclusive safe harbor.99 The safe harbor provides that:

99 Failure to satisfy all of the conditions of the non-exclusive safe harbor would not preclude reliance on Section 12(g)(5) or other provisions of the rule.

• an issuer may deem a person to have received the securities pursuant to an employee compensation plan if such plan and the person who received the securities pursuant to the plan met the plan and participant conditions of Securities Act Rule 701(c); and

• an issuer may, solely for the purposes of Section 12(g), deem the securities to have been issued in a transaction exempt from, or not subject to, the registration requirements of Section 5 of the Securities Act if the issuer had a reasonable belief at the time of the issuance that the securities were issued in such a transaction.

a. Employee Compensation Plan

We believe that using the conditions of Rule 701(c) to structure the employee compensation plan safe harbor for the determination that a person received the securities pursuant to an employee compensation plan allows issuers to apply well understood principles of an existing Securities Act exemption to the new Exchange Act registration determination created by the JOBS Act. We believe application in a Section 12(g) context of the familiar concepts applied in connection with the issuance of compensatory equity securities under Securities Act Rule 701 will facilitate compliance and simplify recordkeeping.

Rule 701 exempts from Securities Act registration offers and sales of securities pursuant to certain compensatory benefit plans and contracts relating to compensation. Rule 701(c) limits this exemption to offers and sales of securities under a written compensatory benefit plan established by the issuer, its parents, its majority-owned subsidiaries or majority-owned subsidiaries of the issuer's parent, for the participation of their employees, directors, general partners, trustees, officers, or consultants and advisors.100 Rule 701(c)(1) sets forth special requirements for consultants and advisors 101 and Rule 701(c)(3) defines eligible family members.102

100 Securities Act Rule 701(c) exempts offers and sales of securities (including plan interests and guarantees pursuant to Rule 701(d)(2)(ii)) under a written compensatory benefit plan (or written compensation contract) established by the issuer, its parents, its majority-owned subsidiaries or majority-owned subsidiaries of the issuer's parent, for the participation of their employees, directors, general partners, trustees (where the issuer is a business trust), officers, or consultants and advisors, and their family members who acquire such securities from such persons through gifts or domestic relations orders. This section exempts offers and sales to former employees, directors, general partners, trustees, officers, consultants and advisors only if such persons were employed by or providing services to the issuer at the time the securities were offered. In addition, the term “employee” includes insurance agents who are exclusive agents of the issuer, its subsidiaries or parents, or who derive more than 50% of their annual income from those entities. As explained in the 1999 Rule 701 Release at Section II.D, Rule 701 is also available to persons with a de facto employment relationship with the issuer. Such a relationship would exist where a person not employed by the issuer provides the issuer services that traditionally are performed by an employee and the compensation paid for those services is the primary source of the person's earned income.

101 The Commission adopted amendments to Form S-8 and the Rule 405 definition of “employee benefit plan” that made Form S-8 available for the issuance of securities to consultants or advisors only if: They are natural persons; they provide bona fide services to the registrant; and the services are not in connection with the offer or sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for the registrant's securities. See 1999 Form S-8 Release and 1999 Rule 701 Release. Rule 701(c)(1) applies the same limitations regarding consultants and advisors as those provided in Form S-8 and the Rule 405 definition of “employee benefit plan.”

102 Rule 701 is available for the exercise of employee benefit plan options by an employee's family member who has acquired the options from the employee through a gift or a domestic relations order. As defined in Exchange Act Rule 701(c)(3) [17 CFR 230.701(c)(3)], for this purpose, “family member” includes any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the employee's household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or the employee) control the management of assets, and any other entity in which these persons (or the employee) own more than 50% of the voting interests.

The safe harbor we are adopting today is available for the plan participants enumerated in Rule 701(c), including employees, directors, general partners, trustees, officers and certain consultants and advisors.103 The safe harbor also is available for permitted family member transferees with respect to securities issued pursuant to a plan that are acquired by gift or domestic relations order from plan participants, or such securities acquired by permitted family member transferees in connection with options transferred to them by the plan participant through gifts or domestic relations orders.104 Because the safe harbor is limited to holders who are persons specified in Rule 701(c), once these persons subsequently transfer the securities to holders not specified in Rule 701(c), whether or not for value, the securities must be counted as held of record by the transferee for purposes of determining whether the issuer is subject to the registration and reporting requirements of Exchange Act Section 12(g)(1).

103 Unlike traditional employees, consultants and advisors typically provide their services to multiple clients rather than to the same issuer on a dedicated basis. This distinction may cause them to be less likely to hold the securities they receive as compensation and more likely to sell them. As a result the Commission limited the consultants and advisors eligible to rely on the exemption. See 1999 Rule 701 Release at Section II.D. We believe that in light of the Rule 701 restrictions applicable to consultants and advisors, the compensatory nature of the transactions justifies treating consultants and advisors who are eligible to receive securities in compensatory transactions that satisfy the conditions of Rule 701(c) as persons who receive securities pursuant to an employee compensation plan for purposes of the Rule 12g5-1 safe harbor. Furthermore, since the securities would no longer be eligible for the exclusion under the safe harbor following their transfer, we believe the potential for abuse would be limited. However, in spite of one commenter's recommendation (see letter from ABA), we see no reason to expand the scope of eligible consultants and advisors under Section 12(g) or Rule 701, which the Commission narrowed in 1999 in order to address abuses in the use of Form S-8 and Rule 701. See Registration of Securities on Form S-8, Release No. 33-7646 (Feb. 25, 1999) [64 FR 11103 (Mar. 8, 1999)]; Rule 701—Exempt Offerings Pursuant to Compensatory Arrangements, Release No. 33-7645 (Feb 25, 1999) [64 FR 11095 (Mar. 8, 1999)].

104See Rule 701—Exempt Offerings Pursuant to Compensatory Arrangements, Release No. 33-7511 (Feb. 27, 1998) [63 FR 10785 (Mar. 5, 1998)] at Section III.E.4. Including family member transferees in the safe harbor is consistent with the approach in Rule 701(c), which provides an exemption to family member transferees in connection with stock options because of their common economic interest and the non-capital raising nature of the transactions.

An issuer may rely on the safe harbor when determining the holders of securities issued in reliance on Securities Act Rule 701, as well as holders of securities issued in transactions otherwise exempted from, or not subject to, the registration requirements of the Securities Act that satisfy the conditions of Rule 701(c), even if all the other conditions of Rule 701, such as issuer eligibility in Rule 701(b)(1), the volume limitations in Rule 701(d) or the disclosure delivery provisions in Rule 701(e), are not met. Thus, the safe harbor is available for holders of securities received in other employee compensation plan transactions exempted from, or not subject to, the registration requirements of Section 5 of the Securities Act, such as securities issued in reliance on Securities Act Section 4(a)(2), Regulation A, Regulation D, or Regulation S under the Securities Act, that also meet the conditions of Rule 701(c).

b. Securities Issued in Exempt Transactions

In response to comments, we are adding a provision to the safe harbor relating to the determination that the securities were issued in a transaction exempt from, or not subject to, the registration requirements of Section 5 of the Securities Act. The addition to the safe harbor provides that, solely for purposes of Section 12(g) of the Exchange Act, an issuer may deem securities to have been exempt from, or not subject to, the registration requirements of Section 5 of the Securities Act if the issuer had a reasonable belief at the time of issuance that the securities were issued in a transaction that was exempt from, or not subject to, the registration requirements of Section 5.

While one commenter recommended that the safe harbor should deem the securities qualified for the Securities Act exemption if the conditions of Securities Act Rule 701(c) were met as of the end of the fiscal year,105 we believe that such a safe harbor would go too far and negate the requirement that the securities have been issued in a transaction exempt from, or not subject to, the registration requirements of Section 5 of the Securities Act at the time of issuance. Instead, the safe harbor provides issuers with relief from the burden of establishing that earlier issuances of securities satisfied an appropriate exemption on an annual basis provided it had a reasonable belief that it had complied with the appropriate registration requirements or the conditions of an applicable exemption at the time of issuance.

105See letter from ABA.

c. Interpretative Guidance Relating to Acquisitions by Family Members

One commenter recommended that the Commission provide guidance regarding the application of Rule 701 to certain equity securities initially issued pursuant to a compensatory benefit plan acquired from an employee (or former employee) by gift or domestic relations order, or upon an employee's (or former employee's) death or disability.106 In light of the nature of such transactions, family members (as defined in Rule 701(c)) who receive the equity securities as a result of the employee's (or former employee's) gift, domestic relations order, or death are also considered as persons who received “the securities pursuant to an employee compensation plan” for purposes of Rule 12g5-1(a)(8).107

106See letter from ABA.

107 In general we understand that guardians or members of a committee for incompetent former employees, or similar persons duly authorized by law to administer the assets of former employees would administer the assets for the benefit of the former employee and title would not have transferred to these agents. In such circumstances, the securities would meet the conditions of Rule 701(c) for purposes of determining the holders of record.

D. Foreign Private Issuers 1. Proposed Rule Amendments

While “foreign private issuers” 108 would be able to rely on Exchange Act Rule 12g5-1(a)(8) when making their determination of the number of U.S. resident holders under Exchange Act Rule 12g3-2(a), we proposed to amend Exchange Act Rule 3b-4 to clarify that securities held by employees must continue to be counted for the purpose of determining the percentage of the issuer's outstanding securities held by U.S. residents, and thus for determining whether an issuer qualifies as a foreign private issuer. We also proposed to amend the definition of “foreign private issuer” under Securities Act Rule 405 to reinsert an omitted instruction but with a proposed revision, identical to that proposed under Exchange Act Rule 3b-4, clarifying that securities held by employees must continue to be counted for the purposes of determining the percentage of the issuer's outstanding securities held by U.S. residents and foreign private issuer status under the Securities Act.109

108See Exchange Act Rule 3b-4(c) [17 CFR 240.3b-4(c)]. A foreign private issuer is any foreign issuer other than a foreign government, except for an issuer that (1) has more than 50% of its outstanding voting securities held of record by U.S. residents and (2) any of the following: (i) A majority of its officers and directors are citizens or residents of the United States; (ii) more than 50% of its assets are located in the United States; or (iii) its business is principally administered in the United States.

109 17 CFR 230.405. The definition of “foreign private issuer” under the Securities Act is intended to be the same as the definition under Exchange Act Rule 3b-4.

2. Comments on Proposed Rule Amendments

We received comments on the proposed amendments from one commenter, who supported the proposed amendments relating to foreign private issuers.110

110See letter from ABA.

3. Final Rule Amendments

After considering the comments, we are adopting the amendments substantially as proposed. Under the rules we are adopting, foreign private issuers may rely on Rule 12g5-1(a)(8) when making their determination of the number of U.S. resident holders under Exchange Act Rule 12g3-2(a).111 Under Rule 12g3-2(a), foreign private issuers that meet the asset and shareholder threshold for registration under Section 12(g) are exempt from registering any class of securities under that section if the class of securities is held by fewer than 300 holders resident in the United States.112 For purposes of determining whether this threshold is met, Rule 12g3-2(a)(1) specifies that the method shall be as provided in Exchange Act Rule 12g5-1, except that securities held of record by brokers, dealers, banks and nominees for the accounts of customers resident in the United States shall be counted as held by the number of separate accounts for which the securities are held.113 Because the rule directs issuers to the definition of “held of record” in Rule 12g5-1, the statutory changes to Section 12(g)(5) as well as the amendment to Rule 12g5-1 adopted today also apply to the determination of a foreign private issuer's U.S. resident holders for the purposes of the Rule 12g3-2(a) analysis.114

111 17 CFR 240.12g3-2(a).

112Id.

113 The amendment to Rule 12g5-1 is limited to determinations under Section 12(g). The definition of “foreign private issuer” in Exchange Act Rule 3b-4 contains a cross-reference to Rule 12g3-2(a) for purposes of calculating record ownership in determining whether more than 50% of an issuer's outstanding voting securities are directly or indirectly held by residents of the United States. In contrast to the approach in Rule 12g3-2(a), Rule 3b-4 clarifies that securities held by employees must continue to be counted for the purpose of determining the percentage of the issuer's outstanding securities held by U.S. residents, and thus for determining whether an issuer qualifies as a foreign private issuer. See Instruction to paragraph (c)(1) of Rule 3b-4. We are revising the Instruction to paragraph (c)(1)A.2. from the proposal to clarify that all of Rule 12g5-1(a)(8) does not apply for purposes of making a determination under Rule 405 as to foreign private issuer status.

114 The definition of “foreign private issuer” under the Securities Act, which is found in Securities Act Rule 405, is the same as the definition under Exchange Act Rule 3b-4. We are similarly amending the foreign private issuer definition under Rule 405 to reinsert an omitted instruction with an identical revision to that in Rule 3b-4, clarifying that securities held by employees must continue to be counted for the purposes of determining the percentage of the issuer's outstanding securities held by U.S. residents and foreign private issuer status under the Securities Act.

IV. Economic Analysis

Title V and Title VI of the JOBS Act increased the registration thresholds for issuers, amended the definition of “held of record” to exclude securities issued pursuant to employee compensation plans and increased the thresholds for termination of registration and suspension of reporting under the Exchange Act for banks and bank holding companies. The FAST Act similarly increased the thresholds for registration, termination of registration and suspension of reporting under the Exchange Act for savings and loan holding companies. The Commission is adopting amendments to implement Title V and Title VI of the JOBS Act and Title LXXXV of the FAST Act.

In adopting rules or amendments, we are mindful of the costs imposed by and the benefits obtained from our rules. The discussion below attempts to address the economic effects of the amendments, including the likely costs and benefits of the amendments as well as the effect of the amendments on efficiency, competition and capital formation.115 Some of the costs and benefits stem from the statutory mandates of Title V and Title VI of the JOBS Act and Title LXXXV of the FAST Act, while others are affected by the discretion we exercise in revising our rules to reflect this mandate. For purposes of this economic analysis, we address the benefits and costs resulting from the mandatory statutory provisions and our exercise of discretion together because the two types of costs and benefits are not readily separable. We also analyze the benefits and costs of significant alternatives to the amendments that were suggested by commenters and that we considered on our own accord.

115 Section 23(a)(2) of the Exchange Act [17 U.S.C. 78w(a)(2)] requires the Commission, when making rules under the Exchange Act, to consider the impact that the rules would have on competition, and prohibits the Commission from adopting any rule that would impose a burden on competition not necessary or appropriate in furtherance of the Exchange Act. 15 U.S.C. 78w(a). Further, Section 2(b) of the Securities Act [15 U.S.C. 77b(b)] and Section 3(f) of the Exchange Act [17 U.S.C. 78c(f)] require the Commission, when engaging in rulemaking where it is required to consider or determine whether an action is necessary or appropriate in the public interest, to consider, in addition to the protection of investors, whether the action will promote efficiency, competition and capital formation.

A. Baseline

The baseline for our economic analysis of the amendments, including the baseline for our consideration of the effects on efficiency, competition and capital formation, is the state of the market as well as market practices prior to enactment of the JOBS Act and the FAST Act. Prior to the JOBS Act, issuers were required to register a class of their equity securities with the Commission upon reaching 500 holders of record and total assets of $10 million 116 and were allowed to terminate registration or suspend the duty to file periodic and current reports with the Commission when the number of holders of record had fallen below 300, or below 500 and total assets had not exceeded $10 million on the last day of each of the issuer's three most recent fiscal years. In addition, Exchange Act Rules 12h-1(f) and 12h-1(g) permitted issuers to exclude stock options issued under written compensatory benefit plans under certain conditions from the registration requirements of Section 12(g).

116See supra note 31.

The JOBS Act raised the thresholds at which an issuer is required to register a class of equity securities with the Commission pursuant to Section 12(g) and provided that persons holding certain employee compensation plan securities need not be counted when determining whether an issuer is required to register. The JOBS Act also raised the thresholds at which an issuer that is either a bank or a bank holding company is permitted to terminate registration or suspend reporting obligations with the Commission. These statutory changes were effective immediately upon signing of the JOBS Act. As a result, some banks and bank holding companies were newly eligible to terminate registration or suspend reporting. As of December 31, 2015, we estimate that approximately 103 such institutions have elected to do so.117 We estimate that there are approximately 486 banks and bank holding companies that currently report to the Commission,118 of which some may be eligible to terminate registration under the JOBS Act but have elected to continue reporting.

117 The Commission staff derived this estimate of the number of banks and bank holding companies that have elected to terminate registration or suspend reporting by analyzing Form 15 filings on EDGAR.

118 The Commission staff derived this estimate by analyzing annual filings submitted to the Commission as of December 31, 2015 for the most recently completed fiscal year.

Subsequent to the JOBS Act, the FAST Act raised the thresholds at which savings and loan holding companies are required to register and permitted to terminate registration or suspend reporting obligations to the same thresholds as apply to banks and bank holding companies. These statutory changes were effective immediately upon signing of the FAST Act. We estimate that, as of December 31, 2015, there are approximately 64 savings and loan holding companies that currently report to the Commission, approximately 28 of which are eligible to terminate registration or suspend reporting under the amendments.119

119Id. We note, however, that 25 of these 28 savings and loan holding companies are listed on a national securities exchange and required to report under Section 12(b) of the Exchange Act. In order to cease reporting, these issuers would be required to delist from the exchange.

We are amending specified Exchange Act rules to reflect the new, higher threshold for banks, savings and loan holding companies and bank holding companies under Section 12(g)(4) and Section 15(d)(1). For those banks, savings and loan holding companies and bank holding companies that are eligible to terminate registration under Section 12(g), the amendments will provide the same procedural accommodations available to other issuers under current rules by permitting these institutions to suspend their reporting obligations immediately upon the filing of a certification on Form 15 with the Commission.

In addition, the amendments apply the definition of “accredited investor” in Securities Act Rule 501(a) in making determinations under Exchange Act Section 12(g)(1), revise the definition of “held of record” in Rule 12g5-1, and establish a non-exclusive safe harbor for issuers to rely on when determining whether securities were received pursuant to an employee compensation plan in transactions exempt from, or not subject to, the registration requirements of Section 5 of the Securities Act. The non-exclusive safe harbor, as adopted, permits an issuer to rely on the definition of “compensatory benefit plan” in Securities Act Rule 701 and the conditions in Securities Act Rule 701(c) in determining whether a person has received securities pursuant to an employee compensation plan. It also permits an issuer to rely on a reasonable belief at the time of issuance that the securities were issued in a transaction exempt from, or not subject to, the registration requirements of Section 5.

We considered alternative definitions of “employee compensation plan.” We also considered whether to provide additional guidance with respect to the determination of accredited investor status when establishing the number of holders of record. These decisions may affect how a non-reporting issuer counts its holders of record for the purpose of the registration thresholds under the Exchange Act; hence, they could affect whether an issuer becomes subject to Exchange Act reporting. However, due to limited availability of shareholder information on these non-reporting issuers, we are unable to quantify the number of non-reporting issuers that might be affected by these decisions.

B. Analysis of the Amendments

The amendments will affect reporting issuers generally, and banks, bank holding companies and savings and loan holding companies specifically, as well as non-reporting issuers, employees and other investors. We analyze the costs and benefits associated with the amendments below.

1. Increased Regulatory Thresholds for Banks, Savings and Loan Holding Companies and Bank Holding Companies

As discussed above, the JOBS Act and the FAST Act amended Sections 12(g) and 15(d) of the Exchange Act to raise the thresholds at which banks, savings and loan holding companies and bank holding companies may terminate registration or suspend their obligations to file reports with the Commission from 300 to 1,200 holders of record.120 However, without the amendments being adopted today, banks, savings and loan holding companies and bank holding companies that want to use the higher thresholds must wait 90 days after filing a certification with the Commission that the number of holders of record is less than 1,200 persons to terminate their Section 12(g) registration and cease filing reports required by Section 13(a) and must wait until the first day of the fiscal year to suspend any Section 15(d) reporting obligations. For other issuers, our existing rules afford procedural accommodations that allow them to suspend their reporting obligations immediately upon the filing of a certification on Form 15.

120 For other issuers, the threshold in Section 12(g)(4) for termination of registration and in Section 15(d)(1) for suspension of reporting remains at 300 holders of record.

To make these procedural accommodations applicable to banks, savings and loan holding companies and bank holding companies, as proposed, the amendments revise Exchange Act Rules 12g-2, 12g-3, 12g-4 and 12h-3 to reflect the 1,200 holders of record threshold for banks, savings and loan holding companies and bank holding companies. This will permit banks, savings and loan holding companies and bank holding companies to rely on these rules to cease reporting during a fiscal year, rather than wait the 90 days or until the end of the reporting year prescribed under the Exchange Act. This will reduce issuer compliance and reporting costs during the fiscal year the issuer ceases reporting 121 and may lessen potential confusion that could arise from the differences in the thresholds contained in the statute and our existing rules. At the same time, extending these procedural accommodations could accelerate the loss of investor access to current information about the issuer. We note, however that this effect is likely mitigated by the non-SEC regulatory disclosure requirements that will continue to apply to regulated banks, savings and loan holding companies and bank holding companies after adoption of today's amendments.

121See letter from ABA indicating that these costs could be especially onerous for financially distressed firms and from ICBA.

We believe that the amendments adopted under this rule will not have a significant impact on competition. To the extent that savings pursuant to lower compliance and reporting costs could possibly be used to increase institutions' lending activities, the amendments may lead to higher levels of investment and capital formation in the economy.

As stated above, we estimate that there are approximately 550 banks, savings and loan holding companies and bank holding companies that currently report with the Commission. Many of these reporting issuers have more than 1,200 holders of record and are not eligible to cease reporting under the new higher thresholds. However, approximately 192 of these reporting banks, savings and loan holding companies and bank holding companies have between 300 and 1,199 holders of record and may be eligible to cease reporting. Many of these banks and bank holding companies have likely been eligible to deregister or suspend reporting since the adoption of the JOBS Act, but have chosen to continue as reporting issuers. One explanation for why many of these issuers have chosen not to deregister is that most (143) are also listed on national securities exchanges and if they chose to deregister or suspend reporting under the Exchange Act, they would have to give up their national exchange listing.122 While a higher percentage of savings and loan holding companies have become eligible to terminate their registration or suspend reporting under the FAST Act, approximately 50 of 64 reporting savings and loan holding companies are registered pursuant to Section 12(b). Based on staff research, most of the newly eligible savings and loan holding companies (approximately 25 of the 28) would have to delist from a national securities exchange to cease reporting under the Exchange Act.

122 Listing on a national securities exchange triggers current and periodic Exchange Act reporting requirements under Section 12(b).

We believe that the likelihood of large numbers of eligible banks, savings and loan holding companies and bank holding companies terminating registration or suspending reporting based on the new higher thresholds in future years is low. While a relatively larger number of banks and bank holding companies (69) relied on the new thresholds to exit Exchange Act reporting immediately after the adoption of the JOBS Act in 2012, the numbers of such issuers relying on the new thresholds to exit substantially decreased over the subsequent three years (18 in 2013, 7 in 2014 and 6 in 2015).123 As banks and bank holding companies remain subject to other regulatory reporting requirements,124 many have chosen to continue reporting, and bear ongoing reporting costs, even though they are eligible to cease reporting under Section 12(g) of the Exchange Act. We expect to see a similar trend with respect to the deregistrations of savings and loan holding companies.

123 The Commission staff derived this estimate by analyzing Form 15 filings submitted to the Commission. These numbers indicate that approximately 4%, 1% and 1% of the reporting bank and bank holding companies deregistered during 2013, 2014 and 2015, respectively.

124 The Board of Governors of the Federal Reserve System is responsible for the consolidated supervision of bank holding companies and savings and loan holding companies and requires those entities to provide data relating to capitalization, liquidity, and risk management as well as periodic financial reports in order for the Board of Governors to analyze the overall financial condition of those entities to ensure safe and sound operations.

In deciding whether to terminate registration or suspend their reporting obligations, we anticipate that banks, savings and loan holding companies and bank holding companies will weigh the benefits of being a public company against the burden of additional disclosure costs. Commonly cited benefits of being a public company include the ability to obtain a lower cost of capital for investment and growth, increased liquidity through a broader shareholder base, and greater ability to finance acquisitions and offer equity-based incentive contracts.125 Commonly cited costs of being a public company include the need to comply with increased regulations and regulatory supervision, including requirements for independent audits,126 disclosure of information to competitors, loss of control and ownership dilution.127

125See J. Brau, Why Do Firms Go Public?, Oxford Handbook of Entrepreneurial Finance (2010) (providing a general discussion of the different rationales for firms to go public); U. Celikyurt, M. Sevilir, and A. Shivdasani, Going Public to Acquire? The Acquisition Motive in IPOs, J. FIN. ECON. (2010) (arguing that firms go public so as to facilitate acquisitions); M. Pagano, F. Panetta, and L. Zingales, Why Do Companies Go Public? An Empirical Analysis, J. FIN. (1998) (showing that initial public offerings are generally followed by lower cost of credit and increased turnover in control); T. Chemmanur and P. Fulghieri, A Theory of the Going Public Decision, REV. FIN.STUD. (1999) (arguing that going public broadens the ownership base of the firm); R. Rosen, S. Smart and C. Zutter, Why Do Firms Go Public? Evidence From the Banking Industry, Working Paper (2005) (finding that banks that go public are more likely to grow faster, earn higher profits, employ more leverage and become acquirers when compared to their non-reporting counterparts), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=686473.

126See letter from IPA. IPA cited an estimate of ongoing reporting costs under the Exchange Act of $650,000 annually. This commenter additionally noted that becoming an Exchange Act reporting company may be contrary to an issuer's business plan and against investors' economic interests. See also letter from ABA positing that once the initial cost of implementing reporting procedures are undertaken, the ongoing costs of reporting are not a significant burden on capital formation and job creation.

127See J. Brau and S. Fawcett, Initial Public Offerings: An Analysis of Theory and Practice, J. FIN. (2006) (reporting based on a survey of CFOs that “desire to maintain decision-making control,” “disclosing information to competitors,” “SEC reporting requirements” and “to avoid ownership dilution” are among the top five reasons why firms choose to stay private); J. Farre-Mensa, Why Are Most Firms Privately Held?, Working paper, Harvard University (2011) (documenting that firms in industries with high disclosure costs (i.e., where it is easier for competitors to appropriate a firm's intellectual property) tend to remain private), available at http://www.cemfi.es/ftp/pdf/papers/wshop/Farre-Mensa_JobMarketPaper.pdf.

2. Use of the Term “Accredited Investor” in Exchange Act Section 12(g)

Section 501 of the JOBS Act raises the number of holders of record at which an issuer is required to register a class of equity securities under the Exchange Act from 500 persons to 2,000 persons or 500 persons who are not accredited investors. In order for an issuer to rely on the new, higher threshold established by the JOBS Act, the issuer must make accredited investor determinations if it has more than 500 holders of record.

We are amending Exchange Act Rule 12g-1 to clarify that the definition of “accredited investor” in Securities Act Rule 501(a) applies when making determinations under Exchange Act Section 12(g)(1) and that such determination must be made as of the last day of the fiscal year rather than at the time of sale of the securities. Under Rule 501(a), an accredited investor is any person who comes within one or more of the categories of investors specified therein, or who the issuer reasonably believes comes within any such category. Many issuers and investors are familiar with the Rule 501(a) definition as it is a central component for private offerings conducted under Securities Act Rule 506 of Regulation D.128 Consequently, the amendment should facilitate compliance.129 Developing an alternative definition for purposes of Section 12(g)(1) could impose costs on issuers and investors by requiring them to familiarize themselves with, and apply, a new and different standard.130 Due to limitations in available data, we are unable to estimate how many issuers will be impacted by using the Rule 501(a) definition of “accredited investor.”

128 The Rule 501(a) definition is also used in connection with other unregistered offerings, for example for offerings conducted pursuant to amended Regulation A or the recently adopted Regulation Crowdfunding.

129See letter from ABA.

130Id.

Requiring issuers to make the accredited investor determination at the end of the fiscal year rather than at the time of sale of securities will ensure that the information is timely and consistent with issuers' facts and circumstances at the end of each year. Permitting an issuer to rely on an ongoing basis on information previously obtained relating to accredited investors status, such as allowing reliance on information obtained by the issuer at the time the securities were initially issued to the investor or at the time the securities were most recently issued to the investor, would likely be less costly than requiring the issuer to establish a reasonable belief that the investor is an accredited investor. This, however, could also lead to reliance on outdated information, potentially causing issuers with more than 500 non-accredited investors to fail to register, thereby leaving investors in those issuers with less information and protection under the federal securities laws.

Not providing specific guidance or rules on how to establish a reasonable belief of a security holder's status as an accredited investor for purposes of determining holders of record could result in some uncertainty and possibly higher costs for issuers. We believe, however, that the “reasonable belief” standard under Rule 501(a) provides issuers with appropriate flexibility to use the method that works best, given their individual circumstances, to determine the accredited investor status of their shareholders. We also believe that this standard may help to mitigate some of the concerns relating to higher costs under the adopted provision by allowing issuers to rely on previous/other determinations if they have a reasonable belief that the security holder continues to be or is an accredited investor. We also note that many issuers are familiar with and routinely use the “reasonable belief” standard without such guidance when making private offerings in reliance on Regulation D.

Some commenters recommended that the Commission address potential compliance issues related to the accredited investor threshold by providing a safe harbor for determining accredited investor status.131 A safe harbor could increase efficiency by providing issuers with a prescribed process to determine and update the accredited investor status of their investors. For example, a safe harbor that permits an issuer to rely on an annual affirmation of accredited investor status by the investor, other information obtained by the issuer or on a combination of a certification and other information may be less costly than requiring an issuer to establish a reasonable basis for its determination through other means. Similarly, a safe harbor with specified time limits on the permitted use of the information 132 or conditioned upon the issuer not having information that the previously obtained information was incorrect, unreliable or had changed could address some of the concerns related to higher costs or outdated information. Another alternative would be a safe harbor that permits an issuer to rely on a third-party certification for determining the accredited investor status of investors.133

131See letters from ABA, Foley and NYCBA. See also letters from ADISA, CFM, Cleary and IPA.

132See letter from Cleary suggesting a safe harbor permitting accredited investor status determinations made in offerings during the three months prior to fiscal year-end or on self-certifications by investors if the offering occurred more than three months but less than twelve months prior to fiscal year-end.

133See letter from IPA suggesting that relying upon third parties might allow issuers to reduce the cost of compliance for accredited investor determinations. We do not have adequate information about third-party certification providers and the characteristics of this industry to assess this alternative in terms of reliability and cost of the provided certification services. To the extent that reputational concerns would incentivize third-party certification providers to perform reliable and updated due diligence, third-party certification could potentially provide accurate information at a cost that economies of scale may lessen.

Despite the benefits described above, providing a specific method (or methods) under a safe harbor could become a de facto minimum standard which we believe would reduce the flexibility available to issuers for determining accredited investor status.134 Moreover, at-least for some issuers, a prescribed method may be less accurate and more burdensome than alternate non-prescribed methods in establishing the accredited status of investors. For example, a safe harbor providing for annual certification could be costly and have adverse impacts on small issuers and their investors,135 discouraging accredited investors from investing in their securities, and leading to lower levels of investment.136

134See letter from ABA.

135See letter from IPA.

136See letter from CFM.

3. Definition of “Held of Record” and Safe Harbor for Employee Compensation Plan Securities

Section 12(g)(5), as amended by Section 502 of the JOBS Act, excludes from the definition of “held of record” securities held by persons who received them pursuant to an employee compensation plan in transactions exempted from the registration requirements of Section 5 of the Securities Act for purposes of determining whether an issuer is required to register a class of security pursuant to Section 12(g)(1).137 Section 503 of the JOBS Act directs the Commission to adopt a safe harbor that issuers can use when making their holder of record determinations.

137 Prior to the JOBS Act, employees who obtained securities under an issuer's employee compensation plan were not excluded from the shareholders of record calculation.

We believe that, by making it easier for non-reporting companies that issue securities to their employees to remain below the registration and reporting thresholds in the Exchange Act, the statutory changes will benefit issuers by allowing them to better control how and when they become subject to reporting requirements, while continuing to use securities to compensate employees.138 These changes could be particularly beneficial for smaller or cash-constrained issuers that could more easily issue securities to their employees as a form of compensation without being subject to Exchange Act reporting requirements and the associated compliance costs.

138See letter from ABA.

However, investors in these issuers, including employees, may be adversely affected by a delay in the potential registration of a class of securities and the associated reporting because they otherwise might benefit from the information provided through such reporting. As a result, the amendments to the definition of “held of record” and the non-exclusive safe harbor being adopted today could have an impact on the potential costs and benefits of Exchange Act registration for affected issuers and their investors by affecting areas such as the ease of relying upon the statutory exemption under Section 12(g), the number of non-reporting companies able to forestall registration, and the amount of information available to investors in those issuers' securities, with effects, for example, on price efficiency and liquidity. We further discuss the economic impact of specific aspects of these amendments below.

Instead of establishing a new definition for the term “employee compensation plan,” we are amending the definition of “held of record” to permit an issuer to exclude securities held by persons who received them pursuant to an employee compensation plan in transactions exempted from, or not subject to, the registration requirements of Section 5 of the Securities Act and adopting a safe harbor providing that this condition will be satisfied if the securities were received pursuant to a compensatory benefit plan in transactions that meet the conditions of Rule 701(c). By not creating a new definition and relying on familiar concepts, the amendments should facilitate compliance and simplify recordkeeping by issuers.139

139See letter from ABA.

In a change from the proposal, we are revising the amendments to the definition of “held of record” to make clear that, in addition to securities issued to employees in transactions exempted from the registration requirements of Securities Act Section 5 (such as securities issued in a Rule 506 offering) or those issued to employees in transactions that did not involve a sale of securities within the meaning of Securities Act Section 2(a)(3), the amended definition also will permit issuers to exclude exempt securities issued to employees pursuant to Securities Act Section 3 (such as securities issued in a Regulation A or Rule 504 offering). The amendment will provide consistency in treatment of securities received pursuant to employee compensation plans in primary transactions that are exempt from Section 5 registration requirements or not subject to Section 5 registration requirements.140 This could lower issuer costs and facilitate compliance. At the same time, such an expanded definition of “held of record” could reduce the number of holders of record of an issuer and potentially allow the issuers to delay or avoid Exchange Act reporting.

140Id.

The amendments will permit issuers to exclude securities held by former employees who received the securities in a transaction exempt from, or not subject to, the registration requirements of Securities Act Section 5 in substitution or exchange for securities excludable under the proposed definition of held of record, as long as the former employees were eligible, at the time of issuance, to receive the original excludable securities. Relative to the proposal, the amended definition will also include such securities held by former employees who were employed by or providing services to a predecessor or an acquired company. By providing uniform treatment for all securities issued in exempt transactions, such provisions could lower issuer costs and facilitate compliance. Permitting exclusion of securities received by former employees and covered persons and securities exchanged or substituted for such original excludable securities also is likely to remove disincentives for issuers to engage in value-enhancing business combinations or other similar transactions,141 which will benefit issuers and their investors. In this way, the amendments may also lead to a more efficient allocation of resources amongst firms that could improve growth prospects over the longer run.

141Id.

As proposed, the amendments establish a non-exclusive safe harbor that issuers can rely on when determining whether holders of securities received pursuant to an employee compensation plan may be excluded. Consistent with the proposal, the safe harbor being adopted relies on the conditions in existing Rule 701(c). Relying on an existing standard that is already understood by market participants will make it easier for issuers to avail themselves of this safe harbor than if we proposed a new alternative standard. While generally broad in application, the conditions in Rule 701(c) impose certain limitations, such as requiring that securities be sold under a compensatory benefit plan, that the plan be written, that the plan be established by the issuer or certain specified related entities and that participation be limited to employees and certain other specified persons. Although we are unable to quantify the impact of adopting this safe harbor, as we cannot reliably predict the number of issuers that would rely on it, we can qualitatively assess its impact. A safe harbor that applies the familiar concepts of existing Rule 701(c) should create efficiencies in its application and avoid conflicts with existing rules, which could reduce costs, especially for smaller issuers.142

142See letter from ABA which states that Rule 701 is the primary exemption relied upon by smaller and other non-reporting issuers for such transactions.

In a change from the proposal, the safe harbor also includes a reasonable belief standard. The inclusion of such a standard will obviate the need for issuers to re-establish that earlier issuances satisfied an appropriate exemption at the time of issuance. This should provide greater regulatory certainty, leading to lower compliance burdens for issuers.143 Similarly, the interpretative guidance set forth in this release regarding transfers to family members of such exempt securities through the employee's death, disability or domestic relations order provides greater regulatory certainty with respect to specific circumstances that are unexpected or out of control of the issuer, which will benefit issuers intending to use equity compensation.144

143Id.

144Id.

Finally, as proposed, the amendments also provide that foreign private issuers will be able to rely on the adopted safe harbor when making their determination of the number of U.S. resident holders under Exchange Act Rule 12g3-2(a). While we are unable to quantify the number of foreign private issuers that will be impacted due to limitations in the available data, the amendments may allow some foreign private issuers to delay registering with and reporting to the Commission. The cost and benefit tradeoffs of Exchange Act registration for foreign private issuers will be analogous to the ones discussed above for domestic issuers. Additionally, the flexibility accorded by the amendments will benefit the U.S.-based employees of foreign private issuers by putting them on equal footing with employees in domestic private companies.145

145Id.

V. Paperwork Reduction Act

Certain provisions of our disclosure rules and forms applicable to issuers contain “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).146 The hours and costs associated with preparing and filing forms and retaining records constitute reporting and cost burdens imposed by the collection of information requirements. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information requirement unless it displays a currently valid Office of Management and Budget (“OMB”) control number. Compliance with the information collections is mandatory. Responses to the information collections are not kept confidential and there is no mandatory retention period for the collections of information.

146 44 U.S.C. 3501 et seq.

The amendments adopted today do not alter the disclosure requirements set forth in our rules and forms; however, the JOBS Act and FAST Act amendments to Exchange Act Sections 12(g) and 15(d) and the amendments to our rules to reflect those statutory amendments are expected to insubstantially decrease the number of filings made pursuant to these rules and forms. Exchange Act Rules 12g-1, 12g-2, 12g-3, 12g-4 and 12h-3 set forth when an issuer's securities are required to be registered and the procedures for a registrant to terminate its registration or suspend its duty to file reports. The amendments provide thresholds that issuers may rely on when determining their registration and reporting obligations.147 Exchange Act Section 12(g)(5) and the amendment to Exchange Act Rule 12g5-1 also exclude securities received pursuant to certain employee compensation plans from the determination of when an issuer is required to initially register with the Commission. These changes will reduce the number of registrants required to initially register a class of securities with the Commission as well as accelerate the ability of some registrants to cease filing after they have crossed below the statutory thresholds. For purposes of the PRA, as discussed below, we estimate that the amendments will not substantially reduce the number of filings received, nor will they affect the incremental burden or cost per filing.

147 We also are amending Rule 12g-1 to reflect the new higher thresholds in Section 12(g)(1).

The titles for the affected collections of information are:

(1) “Form 10” (OMB Control No. 3235-0064); 148

148 17 CFR 249.10.

(2) “Form 20-F” (OMB Control No. 3235-0288); 149

149 17 CFR 249.220f.

(3) “Form 40-F” (OMB Control No. 3235-0381); 150

150 17 CFR 249.240f.

(4) “Form 10-K” (OMB Control No. 3235-0063); 151

151 17 CFR 249.310.

(5) “Form 10-Q” (OMB Control No. 3235-0070); 152

152 17 CFR 249.308a.

(6) “Form 8-K” (OMB Control No. 3235-0060); 153

153 17 CFR 249.308.

(7) “Schedule 14A” (OMB Control No. 3235-0059); 154

154 17 CFR 240.14a-101.

(8) “Schedule 14C” (OMB Control No. 3235-0057); 155 and

155 17 CFR 240.14c-101.

(9) “Form 15” (OMB Control No. 3235-0167).

The forms were adopted under the Exchange Act and the Securities Act and set forth the disclosure requirements for periodic, current and other reports required to be filed by issuers registered with the Commission.

We estimate that there are approximately 579 Exchange Act registrants that are bank holding companies or savings and loan holding companies. We estimate that approximately 100 bank holding companies have filed Forms 15 to terminate or suspend their reporting obligations under the Exchange Act based on the statutory changes in the JOBS Act.156 To put these numbers in context, the current PRA estimate for the number of annual reports on Form 10-K filed annually is 8,137. Moreover, for certain changes, such as the amendments to the definition of “held of record” in Rule 12g5-1, we do not have access to data to support a reliable estimate of the number of issuers that will not be required to file reports based on the JOBS Act amendments and our implementation of those amendments.

156 After the JOBS Act became effective, there was an increase in the number of termination and suspension of registrations by bank holding companies. We do not anticipate a similar rate of deregistration for bank holding companies after revising our rules to reflect the new, higher deregistration threshold. As the FAST Act was only recently enacted, we do not have data on the number of savings and loan holding companies seeking to deregister. However, we do not expect the rate of deregistration for savings and loan holding companies to be as high as for bank holding companies, as many of the newly eligible savings and loan holding companies (20 of 26) would have to give up an exchange listing in order to terminate registration and suspend reporting.

As explained in the Proposing Release, because the rule amendments are not expected to substantially impact the overall burden estimates associated with our rules and forms and in light of the limitations on available data, we have not submitted revised burden estimates for these collections of information to OMB for review in accordance with the PRA and its implementing regulations.157 However, as we periodically update our PRA estimates in accordance with applicable regulations, we will make any necessary adjustments to reflect the actual number of filings received, including adjustments to reflect any reduction in filings arising from today's amendments.

157 44 U.S.C. 3507(d); 5 CFR 1320.11.

VI. Final Regulatory Flexibility Act Analysis

This Final Regulatory Flexibility Act Analysis has been prepared in accordance with 5 U.S.C. 604. This analysis relates to the amendments to Securities Act Rule 405 and Exchange Act Rules 3b-4, 12g-1, 12g-2, 12g-3, 12g-4, 12g5-1, and 12h-3.

A. Need for, and Objectives of, the Action

The primary reason for, and objective of, the proposed amendments is to implement Title V and Title VI of the JOBS Act and Title LXXXV of the FAST Act. The JOBS Act directs the Commission to issue rules to implement the statutory changes and specifically charges the Commission with amending the definition of “held of record” and establishing a safe harbor for the determination relating to “employee compensation plan” securities. The amendments adopted today revise existing rules to reflect the new, higher Exchange Act registration, termination of registration and suspension of reporting thresholds for banks, savings and loan holding companies and bank holding companies, apply the definition of “accredited investor” in Securities Act Rule 501(a) in making determinations under Exchange Act Section 12(g)(1), revise the definition of “held of record” to exclude certain securities held by persons who received them pursuant to employee compensation plans, and establish a non-exclusive safe harbor for issuers to follow when determining whether those securities are “held of record.” Additionally, revising the definition and providing a non-exclusive safe harbor to issuers relating to the determination of securities “held of record” will assist issuers in determining which holders of record they are required to count under the registration requirements of Exchange Act Section 12(g).

B. Significant Issues Raised by Public Comment

In the Proposing Release, we requested comment on all aspects of the Initial Regulatory Flexibility Act (“IRFA”), including the number of small entities that would be affected by the proposed amendments, the nature of the impact, how to quantify the number of small entities that would be affected and how to quantify the impact of the proposed amendments. We did not receive comments specifically addressing the IRFA. We did, however, receive comments from members of the public on matters that could potentially impact small entities. Several commenters recommended a safe harbor for the establishment of a reasonable belief of accredited investor status.158 In contrast, one commenter opposed such a safe harbor out of concern that it would become a de facto minimum standard.159 Commenters also sought additional guidance or revisions to the proposed amendment to Rule 12g5-1 and Securities Act Rule 701.160

158See letters from ADISA, CFM, Cleary, IPA. One commenter recommended a safe harbor for the determination specifically for private investment funds.

159See letter from ABA.

160See letters from ABA and ADISA.

C. Small Entities Subject to the Rule Amendments

Exchange Act Rule 0-10(a) 161 defines an entity, other than an investment company, to be a “small business” or “small organization” if it had total assets of $5 million or less on the last day of its most recent fiscal year. For purposes of the Regulatory Flexibility Act, an investment company is a small entity if it, together with other investment companies in the same group of related investment companies, has net assets of $50 million or less as of the end of its most recent fiscal year.162 We estimate that there are approximately 841 issuers that file with the Commission, other than investment companies, that may be considered small entities.163

161 17 CFR 240.0-10(a).

162 17 CFR 270.0-10(a).

163 The staff estimate is based on a review of Form 10-K, 20-F, 40-F filings (from EDGAR XBRL) with fiscal periods ending between January 31, 2015-January 31, 2016.

The rule amendments establishing the use of the Securities Act Rule 501(a) definition of “accredited investor” under Exchange Act Section 12(g)(1) and revising the definition of “held of record” to exclude certain securities and establish a non-exclusive safe harbor may affect small issuers relying on the revised rules and safe harbor to determine the number of holders of record. While an issuer is not required to register a class of equity securities pursuant to Section 12(g) of the Exchange Act until the issuer's total assets exceed $10 million, a small business or small organization may rely on the rules when determining to whom to issue securities and whether to compensate employees with securities. By providing guidance on the meaning of the term “accredited investor” in the Exchange Act context, the rule amendments may facilitate private offerings and the ability of an issuer to determine their registration and reporting obligations. By excluding certain employee compensation securities from the definition of “held of record,” the rule amendments may facilitate the use of equity compensation by small issuers, thereby helping them to preserve cash and giving them greater ability to determine when the Exchange Act Section 12(g) registration obligation would be triggered.

We cannot reliably estimate the number of small entities affected by these rule amendments. By definition, such entities are not yet subject to Section 12(g) registration and reporting requirements, which are triggered by the issuer having total assets exceeding $10 million as of the last day of its fiscal year. We do not otherwise have information about the number of shareholders at small entities, including those who have received securities as a result of employee compensation plans.

D. Reporting, Recordkeeping and Other Compliance Requirements

The amendments' use of the Securities Act Rule 501(a) definition of “accredited investor” and the definition of “held of record” will assist an issuer in determining the number of holders of record. In order for an issuer to rely on the safe harbor, the securities must be issued in a transaction exempt from, or not subject to, the registration requirements of Securities Act Section 5 and satisfy the requirements of Securities Act Rule 701(c), which includes the requirement that the securities be offered or sold under a written compensatory benefit plan or written compensation contract. In addition, issuers seeking to rely upon the safe harbor may need to maintain records to help establish their compliance with the conditions of the safe harbor.

The rule amendments affecting banks, bank holding companies and savings and loan holding companies do not create any new reporting, recordkeeping or other compliance requirements for those entities. The rule amendments raise the thresholds relating to registration for those entities and therefore reduce their compliance burdens.

E. Agency Action To Minimize Effect on Small Entities

The Regulatory Flexibility Act directs us to consider significant alternatives that would accomplish the stated objective of our proposals, while minimizing any significant adverse impact on small entities. In connection with the rule amendments, we considered the following alternatives: (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation or simplification of compliance and reporting requirements under the rule for small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rules, or any part of the rules, for small entities.

We are applying the current definition of “accredited investor” in Securities Act Rule 501(a) in making determinations under Exchange Act Rule 12g-1(b)(1). Alternatively, we could have developed a new definition of “accredited investor” for purposes of Section 12(g)(1); however, given the prevalence of the use of Regulation D for exempt offerings, many issuers are familiar with and rely upon the definition in Rule 501(a). The increased registration threshold established by the JOBS Act is intended to permit issuers, including small entities, to defer Exchange Act registration until issuers have a larger shareholder base. Because proposed Rule 12g-1(b)(1) is intended to facilitate an issuer's ability to make the determination of when it is required to register, we believe use of the familiar performance standard in Rule 501(a) definition of “accredited investor” will further this regulatory objective for all issuers, including small entities.

We determined not to propose or adopt a safe harbor for the determination of accredited investor status. Requiring issuers to consider their particular facts and circumstances to establish a reasonable basis for their determination will provide issuers with flexibility in making the determination and diminish concerns that the information relied upon could be unreliable. Additionally, some standards that might be included in a safe harbor could, as one commenter noted, result in establishing a de facto minimum standard for the determination.164 This could shift the standard from a performance standard to a design standard which would provide issuers with less flexibility when making the determination.

164See letter from ABA.

The revised definition of “held of record” and related safe harbor apply to all issuers, including small entities, that choose to exclude securities held by persons who received them pursuant to employee compensation plans in transactions exempt from, or not subject to, the registration requirements of Securities Act Section 5. The amendment and safe harbor help define the contours of an exemption from registration for issuers that might otherwise cross the Section 12(g) registration thresholds.

The amendments are intended to permit issuers, including small entities, to exclude certain securities from the “held of record” determination and to assist issuers in making that determination by clarifying and simplifying requirements for all entities. Establishing different compliance or reporting requirements relating to employee compensation plan securities or accredited investor determinations for small entities could complicate the rules and make them more difficult to apply as those issuers grow, cease to be small entities, and are required to determine whether they must register with the Commission. With respect to the use of performance standards rather than design standards, we note that the holder of record threshold is a statutorily created design standard, requiring issuers to register if their holders of record coupled with their total assets cross certain thresholds. As we are modifying the definition of “held of record” and clarifying the determination of “accredited investor” under this statutory design standard, we did not evaluate whether a performance standard would be more useful.

VII. Statutory Authority and Text of Rule Amendments

The amendments contained in this release are being adopted under the authority set forth in Section 19 of the Securities Act, as amended, Sections 3(b), 12(g), 12(h), 15(d) and 23(a) of the Exchange Act, as amended, and Section 503 and Section 602 of the JOBS Act.

List of Subjects in 17 CFR Parts 230 and 240

Reporting and recordkeeping requirements, Securities.

Text of the Amendments

For the reasons set out above, the Commission amends Title 17, chapter II of the Code of Federal Regulations as follows:

PART 230—GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933 1. The authority citation for part 230 continues to read, in part, as follows: Authority:

15 U.S.C. 77b, 77b note, 77c, 77d, 77d note, 77f, 77g, 77h, 77j, 77r, 77s, 77z-3, 77sss, 78c, 78d, 78j, 78l, 78m, 78n, 78o, 78o-7 note, 78t, 78w, 78ll(d), 78mm, 80a-8, 80a-24, 80a-28, 80a-29, 80a-30, and 80a-37, and Pub. L. 112-106, sec. 201(a), sec. 401, 126 Stat. 313 (2012), unless otherwise noted.

2. Amend § 230.405 by adding a Note to paragraph (1) of the definition of “Foreign private issuer” to read as follows:
§ 230.405 Definitions of terms. Foreign private issuer. (1) * * *

Note to paragraph (1) of the definition of Foreign private issuer: To determine the percentage of outstanding voting securities held by U.S. residents:

A. Use the method of calculating record ownership in § 240.12g3-2(a) of this chapter, except that:

(1) The inquiry as to the amount of shares represented by accounts of customers resident in the United States may be limited to brokers, dealers, banks and other nominees located in:

(i) The United States,

(ii) The issuer's jurisdiction of incorporation, and

(iii) The jurisdiction that is the primary trading market for the issuer's voting securities, if different than the issuer's jurisdiction of incorporation; and

(2) Notwithstanding § 240.12g5-1(a)(8) of this chapter, the issuer shall not exclude securities held by persons who received the securities pursuant to an employee compensation plan.

B. If, after reasonable inquiry, the issuer is unable to obtain information about the amount of shares represented by accounts of customers resident in the United States, the issuer may assume, for purposes of this definition, that the customers are residents of the jurisdiction in which the nominee has its principal place of business.

C. Count shares of voting securities beneficially owned by residents of the United States as reported on reports of beneficial ownership provided to the issuer or filed publicly and based on information otherwise provided to the issuer.

PART 240—GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934 3. The general authority citation for part 240 is revised to read as follows: Authority:

15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4, 78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 7201 et seq., and 8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350; Pub. L. 111-203, 939A, 124 Stat. 1376 (2010); and Pub. L. 112-106, sec. 503 and 602, 126 Stat. 326 (2012), unless otherwise noted.

4. Amend § 240.3b-4 by redesignating the Instruction to paragraph (c)(1) as Note to paragraph (c)(1), and revising newly redesignated Note to paragraph (c)(1) to read as follows:
§ 240.3b-4 Definition of “foreign government,” “foreign issuer” and “foreign private issuer”.

(c) * * *

Note to paragraph (c)(1): To determine the percentage of outstanding voting securities held by U.S. residents:

A. Use the method of calculating record ownership in § 240.12g3-2(a), except that:

(1) Your inquiry as to the amount of shares represented by accounts of customers resident in the United States may be limited to brokers, dealers, banks and other nominees located in:

(i) The United States,

(ii) Your jurisdiction of incorporation, and

(iii) The jurisdiction that is the primary trading market for your voting securities, if different than your jurisdiction of incorporation; and

(2) Notwithstanding § 240.12g5-1(a)(8) of this chapter, you shall not exclude securities held by persons who received the securities pursuant to an employee compensation plan.

B. If, after reasonable inquiry, you are unable to obtain information about the amount of shares represented by accounts of customers resident in the United States, you may assume, for purposes of this definition, that the customers are residents of the jurisdiction in which the nominee has its principal place of business.

C. Count shares of voting securities beneficially owned by residents of the United States as reported on reports of beneficial ownership provided to you or filed publicly and based on information otherwise provided to you.

5. Revise § 240.12g-1 to read as follows:
§ 240.12g-1 Registration of securities; exemption from section 12(g).

An issuer is not required to register a class of equity securities pursuant to section 12(g)(1) of the Act (15 U.S.C. 78l(g)(1)) if on the last day of its most recent fiscal year:

(a) The issuer had total assets not exceeding $10 million; or

(b) (1) The class of equity securities was held of record by fewer than 2,000 persons or 500 persons who are not accredited investors (as such term is defined in § 230.501(a) of this chapter, determined as of such day rather than at the time of the sale of the securities); or

(2) The class of equity securities was held of record by fewer than 2,000 persons in the case of a bank; a savings and loan holding company, as such term is defined in section 10 of the Home Owners' Loan Act (12 U.S.C. 1461); or a bank holding company, as such term is defined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841).

6. Revise § 240.12g-2 to read as follows:
§ 240.12g-2 Securities deemed to be registered pursuant to section 12(g)(1) upon termination of exemption pursuant to section 12(g)(2)(A) or (B).

Any class of securities that would have been required to be registered pursuant to section 12(g)(1) of the Act (15 U.S.C. 78l(g)(1)) except for the fact that it was exempt from such registration by section 12(g)(2)(A) of the Act (15 U.S.C. 78l(g)(2)(A)) because it was listed and registered on a national securities exchange, or by section 12(g)(2)(B) of the Act (15 U.S.C. 78l(g)(2)(B)) because it was issued by an investment company registered pursuant to section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8), shall upon the termination of the listing and registration of such class or the termination of the registration of such company and without the filing of an additional registration statement be deemed to be registered pursuant to section 12(g)(1) of the Act if at the time of such termination:

(a) The issuer of such class of securities has elected to be regulated as a business development company pursuant to sections 55 through 65 of the Investment Company Act of 1940 (15 U.S.C. 80a-54 through 64) and such election has not been withdrawn; or

(b) Securities of the class are not exempt from such registration pursuant to section 12 of the Act (15 U.S.C. 78l) or rules thereunder and all securities of such class are held of record by 300 or more persons, or 1,200 or more persons in the case of a bank; a savings and loan holding company, as such term is defined in section 10 of the Home Owners' Loan Act (12 U.S.C. 1461); or a bank holding company, as such term is defined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841).

7. Amend § 240.12g-3 by revising paragraphs (a)(2), (b)(2), and (c)(2) to read as follows:
§ 240.12g-3 Registration of securities of successor issuers under section 12(b) or 12(g).

(a) * * *

(2) All securities of such class are held of record by fewer than 300 persons, or 1,200 persons in the case of a bank; a savings and loan holding company, as such term is defined in section 10 of the Home Owners' Loan Act (12 U.S.C. 1461); or a bank holding company, as such term is defined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841).

(b) * * *

(2) All securities of such class are held of record by fewer than 300 persons, or 1,200 persons in the case of a bank; a savings and loan holding company, as such term is defined in section 10 of the Home Owners' Loan Act (12 U.S.C. 1461); or a bank holding company, as such term is defined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841).

(c) * * *

(2) All securities of such class are held of record by fewer than 300 persons, or 1,200 persons in the case of a bank; a savings and loan holding company, as such term is defined in section 10 of the Home Owners' Loan Act (12 U.S.C. 1461); or a bank holding company, as such term is defined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841).

8. Amend § 240.12g-4 by revising paragraph (a) to read as follows:
§ 240.12g-4 Certifications of termination of registration under section 12(g).

(a) Termination of registration of a class of securities under section 12(g) of the Act (15 U.S.C. 78l(g)) shall take effect 90 days, or such shorter period as the Commission may determine, after the issuer certifies to the Commission on Form 15 (§ 249.323 of this chapter) that the class of securities is held of record by:

(1) Fewer than 300 persons, or in the case of a bank; a savings and loan holding company, as such term is defined in section 10 of the Home Owners' Loan Act (12 U.S.C. 1461); or a bank holding company, as such term is defined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841), 1,200 persons; or

(2) Fewer than 500 persons, where the total assets of the issuer have not exceeded $10 million on the last day of each of the issuer's most recent three fiscal years.

9. Amend § 240.12g5-1 by adding paragraph (a)(8) to read as follows:
§ 240.12g5-1 Definition of securities “held of record”.

(a) * * *

(8)(i) For purposes of determining whether an issuer is required to register a class of equity securities with the Commission pursuant to section 12(g)(1) of the Act (15 U.S.C. 78l(g)(1)), an issuer may exclude securities:

(A) Held by persons who received the securities pursuant to an employee compensation plan in transactions exempt from, or not subject to, the registration requirements of section 5 of the Securities Act of 1933 (15 U.S.C. 77e); and

(B) Held by persons who received the securities in a transaction exempt from, or not subject to, the registration requirements of section 5 of the Securities Act (15 U.S.C. 77e) from the issuer, a predecessor of the issuer or an acquired company in substitution or exchange for excludable securities under paragraph (a)(8)(i)(A) of this section, as long as the persons were eligible to receive securities pursuant to § 230.701(c) of this chapter at the time the excludable securities were originally issued to them.

(ii) As a non-exclusive safe harbor under this paragraph (a)(8):

(A) An issuer may deem a person to have received the securities pursuant to an employee compensation plan if such plan and the person who received the securities pursuant to the plan met the plan and participant conditions of § 230.701(c) of this chapter; and

(B) An issuer may, solely for the purposes of Section 12(g) of the Act (15 U.S.C. 78l(g)(1)), deem the securities to have been issued in a transaction exempt from, or not subject to, the registration requirements of Section 5 of the Securities Act (15 U.S.C. 77e) if the issuer had a reasonable belief at the time of the issuance that the securities were issued in such a transaction.

10. Amend § 240.12h-3 by revising paragraph (b)(1) to read as follows:
§ 240.12h-3 Suspension of duty to file reports under section 15(d).

(b) * * *

(1) Any class of securities, other than any class of asset-backed securities, held of record by:

(i) Fewer than 300 persons, or in the case of a bank; a savings and loan holding company, as such term is defined in section 10 of the Home Owners' Loan Act (12 U.S.C. 1461); or a bank holding company, as such term is defined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841), 1,200 persons; or

(ii) Fewer than 500 persons, where the total assets of the issuer have not exceeded $10 million on the last day of each of the issuer's three most recent fiscal years; and

By the Commission.

May 3, 2016. Brent J. Fields, Secretary.
[FR Doc. 2016-10746 Filed 5-9-16; 8:45 am] BILLING CODE 8011-01-P
DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 1150 [Docket No. FDA-2012-N-0920] RIN 0910-AG81 Requirements for the Submission of Data Needed To Calculate User Fees for Domestic Manufacturers and Importers of Cigars and Pipe Tobacco AGENCY:

Food and Drug Administration, HHS.

ACTION:

Final rule.

SUMMARY:

The Food and Drug Administration (FDA or we) is issuing a final rule that requires domestic manufacturers and importers of cigars and pipe tobacco to submit information needed to calculate the amount of user fees assessed under the Federal Food, Drug, and Cosmetic Act (the FD&C Act). FDA recently expanded its authority by issuing a final rule, “Deeming Tobacco Products To Be Subject to the Federal Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Restrictions on the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco Products” (Deeming rule), deeming all products that meet the statutory definition of “tobacco product,” except accessories of the newly deemed tobacco products, to be subject to the FD&C Act. The Deeming rule, among other things, subjected domestic manufacturers and importers of cigars and pipe tobacco to the FD&C Act's user fee requirements. Consistent with the Deeming rule and the requirements of the FD&C Act, this final rule requires the submission of the information needed to calculate user fee assessments for each manufacturer and importer of cigars and pipe tobacco to FDA.

DATES:

This rule is effective August 8, 2016. Domestic manufacturers and importers of cigars and pipe tobacco must begin submitting data required by § 1150.5 (21 CFR 1150.5) to FDA no later than the 20th day of August, 2016.

Because FDA can perform class allocations only on a full fiscal year basis, domestic manufacturers and importers of cigars and pipe tobacco will become subject to user fee assessments on October 1 of the first full fiscal year following the effective date of this rule.

FOR FURTHER INFORMATION CONTACT:

Paul Hart, Food and Drug Administration, Center for Tobacco Products, Document Control Center, Bldg. 71, Rm. G335, 10903 New Hampshire Ave., Silver Spring, MD 20993-0002; 1-877-287-1373, [email protected]

SUPPLEMENTARY INFORMATION:

Table of Contents I. Background II. Overview of the Final Rule III. Comments on the Proposed Rule IV. Legal Authority V. Environmental Impact VI. Economic Analysis of Impacts VII. Paperwork Reduction Act of 1995 VIII. Federalism IX. References I. Background

The Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act) was enacted on June 22, 2009 (Pub. L. 111-31), amending the FD&C Act and providing FDA with the authority to regulate tobacco products. Section 101(b) of the Tobacco Control Act amends the FD&C Act by adding chapter IX (sections 900 through 920 (21 U.S.C. 387 through 387u)). Chapter IX provides FDA with tools and funds to regulate tobacco products and imposes certain obligations on domestic tobacco product manufacturers and importers. Included among FDA's authorities are the authorities to assess and collect user fees.

In enacting the Tobacco Control Act, Congress found that tobacco use is the single most preventable cause of disease, disability, and death in the United States. Each year, over 400,000 people die prematurely from smoking or exposure to secondhand smoke. Approximately 8.6 million people in the United States live with a serious illness caused by smoking. A consensus exists within the scientific and medical communities that tobacco products are inherently dangerous and cause cancer, heart disease, and other serious adverse health effects (sections 2(2), (3), and (13) of the Tobacco Control Act).

The Tobacco Control Act grants FDA the authority to regulate tobacco products and to protect the public from the harmful effects of tobacco use. Section 901(b) of the FD&C Act automatically provides that chapter IX applies to cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco. It also permits FDA to issue a regulation to deem other tobacco products subject to the FD&C Act, which FDA has done, by publishing elsewhere in this issue of the Federal Register, the Deeming rule to bring all products meeting the definition of tobacco product under its FD&C Act authority. More specifically, the Tobacco Control Act gives FDA the authority to, among other things:

• Restrict tobacco product retail sales to youth;

• require owners and operators of tobacco companies to register annually and be subject to biennial inspection by FDA (section 905 of the FD&C Act);

• require manufacturers and importers who wish to market a new tobacco product to obtain a marketing order from FDA prior to marketing that product (section 910 of the FD&C Act);

• require each manufacturer or importer to report all constituents, including smoke constituents as applicable, identified by FDA as harmful or potentially harmful to health in each tobacco product, and as applicable in the smoke of each tobacco product, by brand and by quantity in each brand and subbrand (section 904(a)(3) of the FD&C Act);

• establish tobacco product standards if FDA finds that it is appropriate for the protection of the public health (section 907(a)(3) of the FD&C Act);

• conduct compliance-check inspections of tobacco product retailers to determine a retailer's compliance with Federal laws and regulations;

• establish science and research programs to inform the development of tobacco product regulations and better understand the risks associated with tobacco use;

• educate the public about the harmful effects of tobacco use; and

• assess and collect user fees from each domestic manufacturer and importer of tobacco products subject to section 919 of the FD&C Act.

Section 919(c)(2) of the FD&C Act provides that tobacco product user fees are the sole source of funding for FDA's regulation of tobacco products. Therefore, FDA considers these fees to be critical to the Agency's ability to achieve its mission to protect and promote the public health. User fees provide FDA with a source of stable, consistent funding that has made possible our implementation of the Tobacco Control Act. The revenues from these fees fund the Agency's regulation of tobacco products and the tobacco industry, as described previously.

In the Federal Register of May 31, 2013 (78 FR 32581), FDA issued a notice of proposed rulemaking (User Fee proposed rule) to add 21 CFR part 1150 to require domestic tobacco product manufacturers and importers to submit information needed to calculate the amount of user fees assessed under the FD&C Act. FDA finalized portions of the User Fee proposed rule relating to tobacco products under FDA's jurisdiction at that time in the final rule “Requirements for the Submission of Data Needed to Calculate User Fees for Domestic Manufacturers and Importers of Tobacco Products,” which was published in the Federal Register of July 10, 2014 (79 FR 39302) (User Fee final rule). Elsewhere in this issue of the Federal Register, FDA is publishing the Deeming rule to deem all products meeting the statutory definition of “tobacco product,” except accessories of the newly deemed tobacco products, to be subject to the FD&C Act. This rule is being issued in response to FDA's user fee authority over cigars and pipe tobacco, and finalizes portions of the User Fee proposed rule that relate to domestic manufacturers and importers of cigars and pipe tobacco, requiring them to submit information needed to calculate user fee assessments to FDA.

The final rule, issued under section 919(a) of the FD&C Act, requires FDA to assess user fees on, and collect such fees from, each manufacturer and importer of tobacco products subject to chapter IX of the FD&C Act. The total amount of user fees for each fiscal year is specified in section 919(b)(1) of the FD&C Act, and under section 919(a) we are to assess and collect a proportionate amount each quarter of the fiscal year. The FD&C Act provides for the total assessment to be allocated among the classes of tobacco products identified in the statute: Cigarettes, cigars, snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco. The class allocation is based on each tobacco product class' volume of tobacco products removed 1 into commerce that is not exempt from certain taxes. Within each class of tobacco products, an individual domestic manufacturer or importer is assessed a user fee based on its statutorily defined “percentage share” for that tobacco product class.

1 Removal is defined at 26 U.S.C. 5702 as the removal of tobacco products or cigarette papers or tubes, or any processed tobacco, from the factory or from internal revenue bond under section 5704, as the Secretary of Treasury shall by regulation prescribe, or release from customs custody, and shall also include the smuggling or other unlawful importation of such articles into the United States.

In specifying how to determine each of these two allocations—to a class of tobacco products and then to a domestic manufacturer or importer within a particular class of tobacco products—section 919 of the FD&C Act references the Fair and Equitable Tobacco Reform Act of 2004 (FETRA, Pub. L. 108-357 (7 U.S.C. 518 et seq.)). In determining the user fees to be allocated to each class of tobacco products, section 919(b)(2)(B)(ii) of the FD&C Act provides that the applicable percentage for each tobacco product class shall be the percentage determined under section 625(c) of FETRA for each such class of product for such fiscal year. The classes of tobacco products identified in section 919 of the FD&C Act are the same classes subject to assessments under FETRA. In determining the user fee to be paid by each company within a given class, except the cigar class, section 919(b)(4) of the FD&C Act directs that we use percentage share information determined for purposes of allocations under paragraphs (e) through (h) of section 625 of FETRA. With regards to cigars, section 919(b)(5) of the FD&C Act directs that the percentage share for each domestic manufacturer and importer be based on the excise taxes paid during the prior fiscal year, rather than the prior quarter.

FETRA provided for a Tobacco Transition Payment Program (TTPP) through which eligible former tobacco quota holders and tobacco producers received payments in 10 equal installments in each fiscal year 2005 through 2014. FETRA provided for the establishment of quarterly assessments on each domestic manufacturer and importer of tobacco products to fund the 10-year TTPP. The last assessment under FETRA was in September 2014, which encompassed the 39th and 40th quarterly TTPP assessments. The issuance of the 40th, or last, quarterly assessment, was on September 1, 2014, rather than on December 1, 2014, in accordance with statutory requirements specified in section 625(d)(3)(A) of FETRA. We are issuing this final rule consistent with section 919(b)(7) of the FD&C Act, which requires we ensure that we are able to make the determinations necessary for assessing tobacco product user fees.

II. Overview of the Final Rule

We are finalizing portions of the proposed rule with only minor changes. We amended § 1150.7(a)(1) and (2) to include language from the proposed rule specifying the calculations that FDA will perform to determine the yearly class allocation for cigars. Moreover, we added § 1150.9(a)(2) to codify the method by which FDA will calculate the percentage share for each domestic manufacturer and importer of cigars. In the proposed rule, we specifically discussed this proposed methodology, requested comment, and reserved § 1150.9(a)(2) for the purpose of including the calculations for manufacturers and importers in the cigar class if they became subject to chapter IX of the FD&C Act. After reviewing comments on the proposed rule, FDA is adding this methodology for cigars to § 1150.9(a)(2) without changes.

We added paragraph (c) to § 1150.5 to require that domestic manufacturers and importers of cigars report data for each prior month in the fiscal year in their first submission under this rule. Once deemed, cigars and pipe tobacco will be subject to user fees under section 919 of the FD&C Act. However, domestic manufacturers and importers of cigars and pipe tobacco will start being assessed fees only at the start of the fiscal year following the effective date of this rule because we can only perform class allocations on a full fiscal year basis. As we discussed in section I.B. of the User Fee proposed rule (78 FR 32583), section 919(b)(5) of the FD&C Act requires FDA to allocate user fees within the cigar class to cigar firms based on the amount of excise taxes those firms paid in the prior fiscal year. This addition to § 1150.5 will ensure that FDA has data for the prior fiscal year necessary to calculate, assess, and collect user fees for domestic manufacturers and importers of cigars in the first fiscal year in which they are assessed fees. We do not need data for the full prior fiscal year from domestic manufacturers and importers of other tobacco products subject to user fees, including pipe tobacco, because percentage share calculations for those classes only requires prior fiscal quarter data.

We added paragraph (d) to § 1150.5 to require that domestic manufacturers and importers of pipe tobacco begin their monthly reporting of data in August 2016. As noted previously, FDA makes percentage share calculations for tobacco products other than cigars using prior fiscal quarter data. Because FDA will begin making percentage share calculations for domestic manufacturers and importers of pipe tobacco beginning in the first fiscal quarter of 2017, FDA does not need pipe tobacco firms to submit data for months prior to the fourth fiscal quarter of 2016. Requiring domestic manufacturers and importers of pipe tobacco to make their first submission of prior month data by August 20, 2016, ensures FDA will have data for each month of the fourth fiscal quarter in 2016 and will be able to complete percentage share calculations for pipe tobacco firms for the first fiscal quarter of 2017.

Further, in light of the Deeming rule subjecting cigars and pipe tobacco to user fee requirements, we added 21 U.S.C. 387a and 21 CFR 1100.1 to the authority section. Finally, we amended § 1150.5(a) by removing the phrases “that are part of a class of tobacco products that is subject to regulation under chapter IX of the Federal Food, Drug, and Cosmetic Act” and “beginning October 2014.” We made these changes because all classes of tobacco products that are included in the definition of “class of tobacco products” are subject to chapter IX of the FD&C Act and it is no longer necessary to make such a distinction, and because the October 2014 compliance date has passed.

III. Comments on the Proposed Rule

We received 12 comments on the proposed rule. We addressed a majority of the comments in the User Fee final rule. We declined to address comments relating to cigars, pipe tobacco, and other deemed products in that document because they were outside of FDA's jurisdiction at the time. Now that the Deeming rule has expanded FDA's authority to cover those products, we address the comments on assessing user fees on tobacco products that FDA deemed subject to chapter IX of the FD&C Act in this section.

Comments were received from tobacco product manufacturers, trade associations, and individuals. To make it easier to identify comments and our responses, the word “Comment,” in parentheses, will appear before each comment, and the word “Response,” in parentheses, will appear before each response. We have numbered the comments to make it easier to distinguish between comments; the numbers are for organizational purposes only and do not reflect the order in which we received the comments or any value associated with the comment. We have combined similar comments under one numbered comment.

(Comment 1) Multiple comments addressed FDA's authority to assess and collect user fees from domestic manufacturers and importers of products that have been deemed subject to FDA's jurisdiction, particularly e-cigarettes. Some comments stated that FDA must assess and collect fees because no “free riders” are allowed under section 919(a) of the FD&C Act. These comments relied on the language in section 919(a) of the FD&C Act that FDA shall assess user fees on, and collect such from, each manufacturer and importer of tobacco products subject to chapter IX. The comments asserted that, unless deemed products are subject to user fees, “some regulated manufacturers and importers would have to pay the cost of their regulation plus the cost of regulating the non-paying manufacturers and importers,” which would provide the non-paying manufacturers and importers a significant competitive advantage in terms of reduced costs and prices for their products. Several of the comments claimed that failure to assess user fees on deemed products would violate the Fifth Amendment. Some comments also contend that exempting some products from user fees is unfair to existing classes, arbitrary and capricious, and would violate the Administrative Procedure Act.

In contrast, other comments stated that FDA does not have the authority to assess user fees for any class other than the six classes named in section 919(b)(2)(B) of the FD&C Act and in FETRA. These comments noted that section 919(a) provides that fees must be assessed and collected “in accordance with this section” and, therefore, FDA can assess fees only on those classes identified in section 919 and FETRA. One of these comments also noted that the reallocation provision in section 919(b)(2)(B)(iv) permits reallocation only to regulated classes of the six FETRA classes. Similarly, another comment stated that FDA cannot deem electronic cigarette manufacturers to meet the definition of domestic manufacturer because FDA “is bound under the FD&C Act to follow the allocation procedures established under FETRA.”

(Response) Section 919(b)(2) of the FD&C Act lists six classes of tobacco products for the purpose of allocating among the classes—cigarettes, cigars, snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco. The comments raise the question of whether Congress intended FDA to assess fees for manufacturers and importers of tobacco products of only these six classes or intended that FDA create additional classes for other tobacco products and assess fees for them as well. In construing section 919 of the FD&C Act, FDA is confronted with two questions. First, has Congress directly spoken to the precise question presented? (“Chevron step one”); Chevron, U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837, 842 (1984). To find no ambiguity, Congress must have clearly manifested its intention with respect to the particular issue (Young v. Community Nutrition Institute, 476 U.S. 974, 980 (1986)). If Congress has spoken directly and plainly, the Agency must implement Congress' unambiguously expressed intent (Chevron, 467 U.S. at 842 to 843). If, however, section 919 is silent or ambiguous as to whether FDA must impose assessments on manufacturers and importers of only those classes of tobacco products listed in section 919(b)(2), FDA may determine whether section 919 should be interpreted to contain such a limitation, and FDA's interpretation must be upheld if it is reasonable (“Chevron step two”); Chevron, 467 U.S. at 842 to 843; FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132 (2000).

We have determined that, in enacting section 919 of the FD&C Act, Congress clearly manifested its intention that FDA only assess fees for manufacturers and importers of tobacco products in the six enumerated classes.

Section 919(a) of the FD&C Act states that FDA must assess fees “in accordance with this section,” and section 919 provides a clear two-step process for assessing fees. The first step requires FDA to allocate fees to each class of tobacco products, which it does by multiplying the total amount of fees per year by the “applicable percentage” for each class. Section 919(b)(2)(A) of the FD&C Act. Section 919(b)(2)(B) of the FD&C Act sets forth how to calculate these applicable percentages, but only for the six classes enumerated in section 919(b)(2). The applicable percentage is the percentage determined under section 625(c) of Pub. L. 108-357, which is FETRA. Section 919(b)(2)(B)(ii) of the FD&C Act. Section 625(c) of FETRA provides initial percentages for each of the six classes, totaling 100 percent, and mandates that subsequent allocations be made only among these same classes. See sections 625(c)(1) and (2) of FETRA. Because the percentage of the total user fee assessment for each class under section 919 of the FD&C Act is the FETRA percentage, the sum of the percentages for all six classes will always total 100 percent. Since the six classes must comprise 100 percent of the allocation of the total user fee assessment under section 919(b)(2) of the FD&C Act, adding a class of tobacco product beyond the six would increase the total to over 100 percent. This is a result that Congress could not have intended, because it would require FDA to assess and collect user fees beyond the total amount permitted by section 919(b)(1) of the FD&C Act. Moreover, even assuming that under section 919 of the FD&C Act the applicable percentage for a class could be something other than the FETRA percentage, nothing in section 919 sets forth how FDA must, or even could, determine that percentage. Thus, this first step shows that section 919 is limited to the six classes enumerated in section 919(b)(2) of the FD&C Act.

The second step in the process for assessing fees is to determine the share of fees for each manufacturer and importer within each class of tobacco products. Except for the cigar class, this percentage shall be the percentage determined for the purposes of allocations under subsections (e) through (h) of section 625 of FETRA. Section 919(b)(4) and (5) of the FD&C Act. This directive makes clear Congress' intent that all classes except cigars (as discussed in the next paragraph) look to FETRA when calculating the percentage share of manufacturers and importers within a class. However, FETRA only yields, and by its text and structure can only yield, percentages for firms within the six listed classes. First, sections 625(e)(1) and (f) of FETRA provide allocations for each manufacturer and importer of tobacco products in each class “specified in subsection (c)(1),” which are the same six classes from section 919(b)(2) of the FD&C Act. Second, the FETRA allocations are based on each firm's share of the gross domestic volume for the class. Gross domestic volume is the volume of tobacco products “removed” and not exempt for Federal excise tax purposes. Section 625(a)(2) of FETRA. Thus, section 625(h) of FETRA sets forth the information required to be submitted to calculate the domestic volume of each manufacturer and importer, which relates to the removal of tobacco products for Federal excise tax purposes and the payment of such taxes. However, tobacco products outside the six classes listed in section 919 are not subject to Federal excise taxes, nor can such products be “removed” for Federal excise tax purposes. See 26 U.S.C. 52 and 26 U.S.C. 5702. Third, section 625(g) of FETRA provides measurement parameters to determine the volume of products removed, but they are explicitly limited to the six listed classes. The volume of domestic sales within a class are measured for the cigarette and cigar classes based on the number of cigarettes or cigars; for the remaining four classes specified in section 625(c)(1) of FETRA, they are measured based on the number of pounds. Because FETRA does not, and cannot, have allocations in the second step for products outside the six enumerated classes, it is clear that Congress intended only manufacturers and importers of tobacco products within those classes to be subject to user fees under section 919 of the FD&C Act.

This is reinforced by section 919(b)(5) of the FD&C Act, which sets forth a somewhat different process for calculating allocations among firms in the cigar class that is based on excise taxes paid during the prior fiscal year rather than the prior quarter. That provision says that the allocation among firms in the cigar class is “notwithstanding” section 919(b)(4) of the FD&C Act, showing that Congress intended the modified process for cigars to be an exception to the rule of using the FETRA framework to determine each firm's share of the class assessment. Because section 919 of the FD&C Act does not provide any other exceptions, the FETRA percentages must be used for the allocations within all other classes.

Section 919(b)(7)(A) of the FD&C Act likewise limits the assessment of fees under section 919 to the six listed classes. This provision requires FDA to obtain, from the appropriate Federal Agency, all necessary information regarding all tobacco product manufacturers and importers required to pay user fees in order to make percentage calculations for each class (i.e., “applicable percentages of each class” under the statute, Section 919(b)(2)) and percentage share calculations within each class. As directed, FDA entered into a Memorandum of Understanding with the U.S. Department of Agriculture (USDA) to provide all the necessary information to FDA, and did so only for firms manufacturing or importing products in the six classes listed in section 919.2 USDA could not provide “all necessary information” to FDA to make percentage share calculations for tobacco products in any other classes, nor could any other Federal Agency.

2 USDA's authority to collect assessments under FETRA has sunset. Section 919(b)(7)(B) of the FD&C Act requires FDA to ensure that it is able to determine the applicable percentages described in section 919(b)(2) and the percentage shares described in section 919(b)(4). Thus, FDA issued a rule in July 2014, as well as this rule to require the submission of the necessary information to determine these percentages, which enables FDA to assess and collect the tobacco product user fees.

The reallocation provision in section 919 of the FD&C Act also shows that user fees cannot be imposed on products outside the six listed classes. This provision requires that the amount of user fees that would be otherwise be assessed to classes of tobacco products that are not subject to chapter IX of the FD&C Act must be reallocated to classes that are subject to chapter IX. Section 919(b)(2)(B)(iv) of the FD&C Act. This reallocation must be done in the same manner and based on the same relative percentages otherwise determined under section 919(b)(2)(B)(ii). By its terms, section 919(b)(2)(B)(ii) of the FD&C Act can provide the applicable percentages for only the six classes in section 919(b)(2)(B)(i) because those percentages are determined under section 625(c) of FETRA. Accordingly, FDA is unable to reallocate any user fees to a class outside of the six. Thus, the only way that FDA could reallocate fees to classes that are subject to chapter IX of the FD&C Act is for the tobacco product classes to be limited to those listed in section 919(b)(2)(B)(i) of the FD&C Act and in FETRA. Any other interpretation would render the reallocation provision's express linkage to FETRA superfluous and contravene the clear intent of Congress.

Generally, comments that asserted that FDA should assess fees on all deemed tobacco products, including those outside the six classes, point to section 919(a) of the FD&C Act, which says that FDA shall assess user fees on, and collect such from, each manufacturer and importer of tobacco products subject to chapter IX. They argue that if electronic nicotine delivery systems (ENDS) and other tobacco products are deemed to be subject to chapter IX, then each manufacturer and importer of such products is subject to these fees. These comments, however, fail to take into account section 919(a)'s mandate that the assessment shall be done “in accordance with this section.” As described previously, when the assessments are made in accordance with section 919's two-step process, they yield assessments only for tobacco products in the six classes.

Moreover, it is clear that, for the purposes of section 919 of the FD&C Act, including 919(a), the term “each manufacturer and importer of tobacco products” is limited to the tobacco products in the six classes. By its terms, Congress intended section 919 to work in accordance with the FETRA framework. Section 625 of FETRA, like section 919 of the FD&C Act, applies to each “tobacco product manufacturer” and “tobacco product importer” and to each class of tobacco products. The terms manufacturer, importer, and tobacco product in section 919 of the FD&C Act and FETRA flow from the Internal Revenue Code (IRC). 26 U.S.C. 5702. Just as section 919 requires FDA to make the allocations—both for each class and within each class—based on FETRA, the FETRA allocations are based on removals for the purposes of Federal excise taxes. Thus, section 919 of the FD&C Act and FETRA, and their respective implementing regulations, use the same terms used in the IRC relating to Federal excise taxes. The classes of tobacco products are likewise consistent among the IRC, FETRA, and section 919 of the FD&C Act. The IRC defines six classes of tobacco products for Federal excise tax purposes.3 The same six classes are enumerated in FETRA and section 919 of the FD&C Act for use in assessing the TTPP and tobacco user fees, respectively. Accordingly, in the IRC, FETRA, and section 919 of the FD&C Act, tobacco manufacturers are those who manufacture tobacco products in those six classes subject to Federal excise taxes. Any other approach to the term “each manufacturer and importer of tobacco products” in section 919 of the FD&C Act would lead to absurd results that Congress could not have intended. For example, section 900(20) of the FD&C Act defines “tobacco product manufacturer” as any person, including any repacker or relabeler, who manufactures, fabricates, assembles, processes, or labels a tobacco product. Relying on the section 900(20) definition would require FDA to assess user fees on each firm in the supply chain that, among other things, repacks, relabels, or distributes tobacco. However, doing so is impossible under the FETRA calculus mandated for the six classes under section 919 of the FD&C Act because FETRA calculates the relevant percentages based on the volume of product removed into domestic commerce (as defined by section 5702 of the IRC), and not tax exempt. Section 625(a)(2) and (3), (c)(2), (e) and (g) of FETRA. Some firms included in the section 900(20) of the FD&C Act definition of manufacturer, such as repackers and relabelers, do not “remove” products into domestic commerce as defined by the IRC because they are not removing products from a factory or bonded warehouse. Accordingly, these firms would not have a calculable volume of product removed into domestic commerce; as such, FDA could not calculate the user fees those firms would be assessed under section 919(b)(4) of the FD&C Act, nor could it determine how those firms affect class allocations under section 919(b)(2)(B) of the FD&C Act.

3 The IRC definition of tobacco product includes five classes, including `smokeless tobacco,' which is further defined to comprise two classes of tobacco products: Chewing tobacco and snuff. 21 U.S.C. 5702(c), (m).

In contrast, using the definitions for manufacturer and importer in the IRC, and as adopted in USDA's and FDA's implementing regulations, allows FDA to make the necessary user fee allocations. This approach limits the entities to be assessed fees to those that must obtain a permit from the Alcohol and Tobacco Tax and Trade Bureau (TTB) because they meet the definition of manufacturer of tobacco products or importer under the IRC and its implementing regulations (27 CFR 40.11 and 41.11). Only these entities are subject to Federal excise taxes under chapter 52 of the IRC and can “remove” tobacco products into domestic commerce. Thus, only these entities have a volume of domestic sales under FETRA and can be assessed user fees under section 919 of the FD&C Act.

Additionally, section 919 of the FD&C Act directly contradicts the section 900(20) definition in the manner it treats manufacturers and importers of tobacco products. Whereas the former treats manufacturers and importers as distinct entities for the purpose of assessments and collections, the section 900(20) definition includes importer as a subset of manufacturer, since the latter includes any person who imports a finished tobacco product for sale or distribution in the United States. Thus, Congress did not intend FDA to use the section 900(20) definition for the purposes of section 919.

Likewise, Congress could not have intended section 919 of the FD&C Act to incorporate the definition of “tobacco product” in section 201(rr) (21 U.S.C. 321(rr)) or the tobacco product definitions from section 900 of the FD&C Act. The former includes any “component, part, or accessory” of a tobacco product, which is significantly broader than the definitions for the different types of tobacco products in the IRC and FETRA. Similarly, the definition of “cigarette” in section 900(3) of the FD&C Act includes roll-your-own tobacco for cigarettes. If FDA calculated user fee assessments relying the definitions of “cigarette” and “roll-your-own” found in section 900(3) and 900(15) of the FD&C Act, respectively, manufacturers and importers of roll-your-own cigarettes would be required to pay fees both as part of the cigarette class and as part of the roll-your-own class. Such duplicative assessments would run contrary to section 919(b)(3)(B) of the FD&C Act, which expressly precludes manufacturers and importers from paying a user fee in excess of their percentage share. To prevent this, tobacco product classes must be distinct, and cannot overlap. Using the tobacco product definitions found in section 5702 of the IRC avoids double-billing firms because the classes are structured such that they are distinct and non-overlapping. Thus, for the term “each manufacturer and importer of tobacco products,” Congress intended FDA to use the term in the IRC and FETRA.

While the definitions in sections 201(rr) and 900 of the FD&C Act say they apply for the purposes of the FD&C Act and chapter IX of the FD&C Act, respectively, this cannot be the case when doing so would run counter to the statutory purpose of a particular provision. Although there may be “a natural presumption that identical words used in different parts of the same act are intended to have the same meaning [citation omitted] . . . the presumption is not rigid. . . .” (Atlantic Cleaners & Dryers, Inc. v. U.S., 286 U.S. 427, 433 (1932); (accord: Yates v. U.S., 135 S. Ct. 1074, 1082 (2015)). Thus, the same words may be given different meanings, even in the same statute, if Congress intended different interpretations (at Chevron step one) or if such different interpretations are reasonable (at Chevron step two) (Atlantic Cleaners & Dryers, Inc., supra). See also Lawson v. Suwannee S.S. Co., 336 U.S. 198, 201 (1949); Nw. Austin Mun. Util. Dist. No. One v. Holder, 557 U.S. 193, 205 to 206 (2009). For the reasons given, it is clear that Congress intended the terms in section 919 to be consistent with the counterpart terms in FETRA and the IRC.

Nothing in the legislative history of section 919 of the FD&C Act undermines this view that user fees are limited to the six enumerated classes. To the contrary, this interpretation is reinforced by the legislative history of the Tobacco Control Act, which states that the method of assessing fees shall be the same as that currently used by United States Department of Agriculture for all tobacco manufacturers and importers to fund the 2004 legislation providing transitional payments to tobacco grower quota holders. H. Rpt. 111-58, p. 47. Because products other than those in the six listed classes are not “removed” and are not subject to a Federal excise tax, a user fee methodology for them could not be the same as that used by USDA under FETRA.

Having concluded that the statutory scheme precludes FDA from assessing user fees on classes of tobacco products beyond the six listed in section 919 of the FD&C Act, the Chevron analysis need not proceed further. However, in the alternative, even if section 919 of the FD&C Act is ambiguous as to whether classes beyond the six may be subject to user fee assessments, FDA would adopt the same interpretation of the statute in an exercise of its discretion. In conducting this Chevron step two analysis, the Agency has based its conclusion on the same considerations discussed previously as well as the considerations discussed later in this document (Bell Atlantic Telephone Co. v. FCC, 131 F.3d 1044, 1049 (D.C. Cir. 1997); Chevron U.S.A., Inc. v. FERC, 193 F. Supp. 2d 54, 68 (D.D.C. 2002)). FDA's interpretation of section 919 of the FD&C Act as assessing user fees only on the six classes of tobacco products listed in section 919(b)(2)(B)(ii) of the FD&C Act is reasonable. (Chevron, USA, Inc. v. NRDC, Inc., supra at 843).

FDA's interpretation is consistent with the text and statutory structure of section 919. The statute requires FDA to use the FETRA percentages, and thus the FETRA formula, to determine the applicable percentages of the six classes listed in section 919(b)(2)(B)(i) of the FD&C Act, but it gives no indication of the manner under which FDA could or should determine user fee allocations for any additional classes. By using the FETRA framework, the applicable percentages for the six classes listed in section 919(b)(2)(B)(ii) are determined by a basic and predictable calculation. In addition, the user fee calculation is based on the share of gross domestic volume, which is inextricably linked to the volume of tobacco products removed that are subject to Federal excise taxes—information that was readily available to FDA at the time the Tobacco Control Act was enacted. For these six classes, Congress thus provided an easy-to-implement system that gives FDA relatively little discretion in determining the assessments.

As discussed previously, the class percentage for classes beyond the six cannot be determined pursuant to the FETRA framework since those classes do not have volumes as defined in section 625(a) of FETRA. Thus, in order to assess any user fees on any class of tobacco products beyond the six listed in section 919 of the FD&C Act, FDA would need to demarcate a new set of tobacco product classes among newly deemed tobacco products, and fashion an entirely novel framework for determining class percentage allocations and allocations within each class of tobacco product. It would have to do this against the backdrop of the range of tobacco products, including various types of ENDS (such as e-cigarettes, e-cigars, e-hookah, vape pens, personal vaporizers, and electronic pipes), as well as nicotine gels, nicotine toothpicks, etc.

Even if section 919 of the FD&C Act somehow allowed FDA to allocate percentages to and among additional classes, nothing in section 919 sets forth the methodology FDA must, or even could, use to calculate these percentages or how FDA would obtain the necessary information for doing so. Since 100 percent of the total amount of user fees to be assessed are allocated among the six classes listed in section 919(b)(2)(B)(ii) of the FD&C Act, FDA would need to devise a common metric for comparing each of these novel tobacco product classes to those six listed in order to adjust the relative class percentages (and find authority under section 919 to make such adjustments). FDA could not use the common metric adopted by USDA and, subsequently, by FDA in its 2014 final rule. This is based on the 2003 maximum Federal excise tax rates, which do not exist for tobacco products beyond the six classes. Further, because section 919(b)(2)(B)(ii) of the FD&C Act states that the applicable percentages for the six listed classes are the percentages from FETRA, for FDA to adjust those percentages based on a novel common metric external to FETRA would violate the statutory terms of that section.

Some commenters argued that FDA could and should abandon the tax-based methodology from FETRA altogether and create an entirely novel system unrelated to taxes or tax rates for determining the applicable percentages for both new and existing tobacco product classes. However, this suggestion also falters against the plain language of section 919(b)(2)(B)(ii) of the FD&C Act, which requires FDA to use the FETRA percentages for the six listed classes; deviating from FETRA's methodology for allocations would contradict the clear intent of Congress. Moreover, it is reasonable to conclude that Congress did not intend FDA to develop a new system that departs from the methodology mandated by FETRA. Any such system would necessarily be subjective, especially relative to the system Congress established for the enumerated six classes. As such, FDA's interpretation is a reasonable construction of the FD&C Act.

We disagree with commenters that a failure to assess fees on all deemed tobacco products is arbitrary and capricious. FDA is implementing the system established by Congress, which does not allow FDA to assess user fees for products outside the six classes. Even assuming section 919 of the FD&C Act is ambiguous regarding this point, for the reasons previously stated, FDA's interpretation here is reasonable. We also disagree with comments that argued that FDA's proposed scheme amounts to a tax because there is no tangible benefit to manufacturers and importers required to make user fee payments vis-à-vis those that are not, as required under the Independent Offices Appropriations Act (IOAA). Because Congress granted FDA independent statutory authority to assess user fees, the requirements of the IOAA do not apply. See American Medical Ass'n v. Reno, 857 F. Supp. 80, 84 (D.D.C. 1994); National Cable Television Ass'n, Inc. v. United States, 415 U.S. 336 (1974). Finally, we do not need to address commenters' Fifth Amendment arguments here because the FD&C Act itself differentiates between the six classes listed in section 919(b)(2)(B)(ii) and other tobacco product classes. As explained, FDA is merely following Congress' intent as expressed in section 919 of the FD&C Act.

(Comment 2) One comment stated that FDA should formulate a reasonable common metric to assess user fees on all regulated tobacco products, including those not subject to excise taxes. This comment said that a common metric was needed to compare new classes of tobacco products with existing classes and suggested that FDA “could base its calculations on total sales (in units) of each tobacco product, using traditional selling-sizes or weights of packages (e.g., 20 cigarettes = 1 e-cigarette cartridge = 1 standard container of moist snuff = 4 large cigars) to derive the conversion factor necessary for market share calculations.” Another comment stated that FDA should develop a method for calculating user fees for deemed products, not within the six classes, before any deeming regulation takes effect.

(Response) FDA disagrees with these comments. As discussed in the response to comment 1, section 919 of the FD&C Act prevents FDA from assessing and collecting user fees from manufacturers and importers of deemed products other than cigars and pipe tobacco. Creating a common metric among all product classes subject to FDA regulation would not change the requirements of section 919 of the FD&C Act that prevent FDA from assessing user fees for deemed products other than cigars and pipe tobacco.

(Comment 3) One comment stated that FDA should not adopt the USDA's retrospective calculation method for determining class percentage allocations at Step A because of concerns that a regulation deeming additional products subject to FDA regulation could dramatically alter class allocations from year to year, and that class allocation calculations using this method will not be an accurate reflection of each class' current percentage allocation. This comment stated that small businesses may no longer be able to sell deemed products withdrawn from the market due to premarket authorization requirements, but may still have to pay their share of their respective classes' user fees. Other companies that market grandfathered deemed products, the comment argued, would be forced to pay a disproportionate share based upon a class determination that was calculated before the deeming regulation. The comment requested that FDA include safeguards against inequitable retrospective user fee requirements or allow for the continued marketing of deemed products while their corresponding premarket applications are pending review.

(Response) FDA disagrees with this comment. FDA is unable to alter the user fee calculations required by section 919 of the FD&C Act. In determining the user fees to be assessed on each class of tobacco products, section 919(b)(2)(B)(ii) of the FD&C Act provides that the applicable percentage for each tobacco product class shall be the percentage determined under section 625(c) of FETRA for each such class of product for such fiscal year. Relying on the initial allocation percentages in section 625(c) of FETRA, USDA calculated the yearly class allocations for each fiscal year based on data about removals covering the most recent full calendar year (see 70 FR 7007). As such, FDA's class allocations are calculated in the same manner. Section 919 also requires FDA to calculate assessments on each manufacturer and importer within a class on a quarterly basis using the prior quarter's tax removal data for products other than cigars and the prior fiscal year's tax removal data for cigars. While it is true that class allocations between product classes and percentage shares between companies within product classes can fluctuate throughout the year, FDA cannot alter the required method of user fee calculations.

(Comment 4) One comment argued that premium cigars should be exempt from FDA regulation generally and user fees specifically because FDA regulation would be disproportionately burdensome for the product segment, as exemplified by the new product (or premarket) requirements that would be triggered by the often minor ingredient variations intended to alter the taste and aroma of a premium cigar.

(Response) FDA disagrees with this comment. In the Deeming rule, FDA concluded that all cigars should be deemed subject to chapter IX of the FD&C Act and, in doing so, took into account the concerns about premarket authorization requirements raised in this comment. All cigars have been deemed subject to FDA's regulation and, as such, are subject to user fees under section 919 of the FD&C Act. Furthermore, FDA lacks the authority to exempt any portion of a class that has been deemed subject to chapter IX of the FD&C Act from user fee requirements.

(Comment 5) FDA received comments addressing the calculation of user fee assessments for domestic manufacturers and importers of cigars. One commenter asserted that using the amount of excise tax paid to determine percentage share within the cigar class would favor importers over domestic manufacturers because importers “can typically sell cigars to distributors at a lower price” because they benefit from lower wages, taxes, and regulatory costs. The commenter stated that actual units (sticks) would better reflect true market share and using excise taxes paid to calculate percentage share would increase incentives to move production and jobs off-shore.

Another comment suggested that FDA consider the differences in taxation of cigars compared with other taxable classes of tobacco products and assess the rule's “potentially inequitable impact on cigar manufacturers and importers.” The comment asserted that the different excise tax rates applied within the cigar class would have the “unintended consequence” of causing manufacturers and importers of similar products to pay dramatically different amounts in user fees. The commenter further stated that large cigars have different first wholesale prices, and that some of these pricing differences are due to economies of scale or other efficiency factors. Companies with significant economies of scale would benefit by paying lower user fees due to their products being produced at lower cost, while small manufacturers and importers would be disadvantaged.

(Response) FDA disagrees with the suggestion that it can use something other than excise taxes to calculate the percentage share of manufacturers and importers in the cigar class. Section 919(b)(5) of the FD&C Act specifies that “if a user fee assessment is imposed on cigars, the percentage share of each manufacturer or importer of cigars shall be based on the excise taxes paid by such manufacturer or importer during the prior fiscal year.” We acknowledge that this method of calculating cigar manufacturers' and importers' percentage share depends on the excise tax rate and would result in manufacturers and importers of small cigars paying a lower dollar amount of user fees per stick than manufacturers and importers of large cigars because large cigars are taxed at a higher rate than small cigars. However, we disagree that this would favor importers over domestic manufacturers and that it would encourage manufacturers to move abroad. Low volume, higher priced cigars are both more expensive and largely manufactured abroad. Importers of the higher priced cigars would pay more in user fees under the FD&C Act methodology than under a system in which volume was determined based on sticks.

In addition, we disagree that differences in user fee assessments across cigar types would be an unintended consequence of the FD&C Act methodology and that it would be inequitable. Cigars are a heterogeneous group of products, differing in such attributes as size and quality. The market for cigars is sufficiently competitive that price differences primarily reflect these product differences. It is not inequitable for products that differ greatly, as measured by market price, to pay different amounts of user fees. Moreover, the statute expressly states that each cigar manufacturer's or importer's percentage share must be calculated based on excise taxes paid. Congress thus clearly intended that user fees for cigars would vary depending on the excise taxes imposed on cigars, which in turn vary depending on the price and size of cigars.

IV. Legal Authority

Section 901 of the FD&C Act provides that chapter IX of the FD&C Act applies to all cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco and to any other tobacco products that the Secretary of Health and Human Services by regulation deems to be subject to this chapter. In accordance with section 901, FDA is issuing the Deeming rule (published elsewhere in this issue of the Federal Register) to extend FDA's “tobacco product” authorities to products that meet the statutory definition of “tobacco product” in section 201(rr) of the FD&C Act, except the accessories of these tobacco products. Section 919(b)(7) of the FD&C Act requires that FDA ensure we are able to determine the applicable percentages described in section 919(b)(2) and the percentage shares described in section 919(b)(4). Section 909(a) of the FD&C Act authorizes FDA to issue regulations requiring tobacco product manufacturers or importers to make such reports and provide such information as may be reasonably required to assure that their tobacco products are not adulterated or misbranded and to otherwise protect public health. Under section 902(4), a tobacco product is deemed to be adulterated if the manufacturer or importer of the tobacco product fails to pay a user fee assessed to it under section 919 of the FD&C Act. In addition, section 701(a) of the FD&C Act (21 U.S.C. 371(a)) gives FDA general rulemaking authority to issue regulations for the efficient enforcement of the FD&C Act. Consistent with these authorities, FDA is issuing this rule, which is intended to ensure that we are able to make the determinations required by section 919 of the FD&C Act and assess and collect tobacco product user fees.

V. Environmental Impact

The Agency has determined under 21 CFR 25.30(h) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

VI. Economic Analysis of Impacts

FDA has examined the impacts of the final rule under Executive Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5 U.S.C. 601 to 612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Orders 12866 and 13563 direct Agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). FDA has determined that this final rule is a significant regulatory action under Executive Order 12866.

The Regulatory Flexibility Act requires Agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. The potential impact on small entities is uncertain, and FDA is unable to rule out the possibility that this final rule may have a significant economic impact on a substantial number of small entities.

Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that Agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $144 million, using the most current (2014) Implicit Price Deflator for the Gross Domestic Product. FDA does not expect this final rule to result in any 1-year expenditure that would meet or exceed this amount.

Under our baseline, FDA would obtain the information necessary for collecting cigar and pipe tobacco user fees directly from other Federal Agencies that collect such information. Compared with this baseline, this final rule would impose both initial transition costs and monthly information submission costs on industry. There would also be an approximately offsetting reduction in government information collection costs. The net effect of this may be a small social cost or benefit. This final rule would also allow FDA to have full access to the data needed for calculating and billing user fees and would resolve impediments that may otherwise exist concerning FDA's ability to use the data for its intended purpose. This final rule can be expected to eliminate the potential need for additional regulatory mechanisms to collect information and allow user fee assessment to proceed more smoothly than it could otherwise.

Compared to the baseline, the estimated one-time private sector transition cost is $159.36 per manufacturer or importer, including small manufacturers and importers, and the annual compliance cost is $2,549.76. One option for regulatory relief would be to exempt firms from reporting in a particular month if they did not introduce any units of any tobacco products for which user fees are assessed into domestic commerce. Another option for regulatory relief would be to require submission of either the FDA form or copies of forms submitted to other Agencies. The full analysis of economic impacts is available as Ref. 1 in Docket No. FDA-2012-N-0920 and at http://www.fda.gov/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/default.htm.

VII. Paperwork Reduction Act of 1995

This final rule contains information collection provisions that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (the PRA) (44 U.S.C. 3501-3520). The title, description, and respondent description of the information collection provisions are shown in the following paragraphs with an estimate of the annual reporting burden. Included in the estimate is the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing each collection of information.

Title: Tobacco Products, User Fees, Requirements for the Submission of Data Needed to Calculate User Fees for Domestic Manufacturers and Importers of Cigars and Pipe Tobacco.

Description: This final rule requires each domestic manufacturer and importer of cigars and pipe tobacco to submit to FDA information needed to calculate and assess user fees under the FD&C Act.

The USDA collected information to calculate percentage share for its purposes and provided FDA with the data FDA needs to determine user fee assessments under the FD&C Act. USDA ceased collecting this information at the end of fiscal year 2014. Consistent with the requirements of the FD&C Act, this rule continues the submission of this information, but to FDA rather than USDA, and thus ensures that FDA continues to have the information needed to calculate the amount of user fees assessed to each entity and collect those fees. Section 919 of the FD&C Act establishes the user fee allocation and collection process, which references the FETRA framework for determining tobacco product class allocations and individual domestic manufacturer or importer allocations. As was required by USDA under FETRA, the final rule requires domestic manufacturers and importers of tobacco products to submit to FDA each month a form with summary information and copies of the reports or forms that relate to the tobacco products removed into domestic commerce.

Description of Respondents: Domestic manufacturers and importers of newly deemed tobacco products.

The information collection provisions in this final rule have been submitted to OMB for review as required by section 3507(d) of the PRA. The requirements were approved and assigned OMB control number 0910-0749. This approval expires on July 31, 2017.

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 OMB control number.

Table 1—Estimated Annual Reporting Burden 1 21 CFR section No. of
  • respondents
  • No. of
  • responses per
  • respondent
  • Total annual responses Hours per
  • response
  • Total hours
    1150.5(a), (b)(1), (b)(2), and FDA Form 3852 (Ref. 2) General identifying information provided by manufacturers and importers of FDA regulated tobacco products and Identification and removal information (monthly) 135 12 1,620 3 4,860 1150.5(b)(3) Certified Copies (monthly) 135 12 1,620 1 1,620 1150.13 Submission of user fee information (Identifying information, fee amount, etc. (quarterly) 2 68 4 272 1 272 1150.15(a) Submission of user fee dispute (annually) 1 1 1 10 10 1150.15(d) Submission of request for further review of dispute of user fee (annually) 1 1 1 10 10 Total 6,772 1 There are no capital costs or operating and maintenance costs associated with this collection of information. 2 This figure was rounded to the nearest tenth.

    Table 1 describes the annual reporting burden of 6,772 hours as a result of the provisions set forth in this proposed rule. Our estimated number of 135 newly deemed respondents (335 total tobacco entities) is based on 2013 summary information obtained from the Alcohol and Tobacco Tax and Trade Bureau (TTB) regarding the number of permitted manufacturers and importers. As referenced previously, the PRA burden for currently regulated products was previously approved by OMB. The burden analysis for that collection assumed 200 respondents would submit user fees. Therefore given our updated estimate of 335 entities, the total number of new deemed tobacco entities is 135 (335 − 200 = 135). FDA estimates that there are 113 cigar manufacturers and 74 pipe tobacco manufacturers, as well as 216 importers of cigars and 43 importers of pipe tobacco. However, these estimates from TTB reflect that in 2013 there were 135 total permitted manufacturers and 200 permitted importers over all tobacco product types for which TTB collects excise taxes (including cigarettes, cigars, snuff, chewing tobacco, pipe tobacco, and roll-you-own tobacco, excluding electronic nicotine delivery systems). This total is less than the sum across all tobacco product types because some manufacturers and importers produce or import more than one type of tobacco product (we subsequently refer to these entities as polymanufacturers and polyimporters). As the number of cigar and pipe tobacco manufacturers cannot exceed the number of permitted entities, we use 335 as an upper bound estimate of the number of affected entities. The estimate of 135 respondents reflects both reports of no removal into domestic commerce and reports of removal of tobacco product into domestic commerce. The estimate of 68 respondents reflects an average number of domestic manufacturers and importers who may be subject to fees each fiscal quarter. FDA assumes half the number of respondents will submit quarterly payments to the Agency. Based on our experience with the assessment of user fees for other FDA-regulated products, we estimate that approximately one respondent might appeal an assessment, and one respondent will request for further review of their dispute.

    VIII. Federalism

    FDA has analyzed this final rule in accordance with the principles set forth in Executive Order 13132. FDA has determined that the rule does not contain policies that would have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, the Agency has concluded that the rule does not contain policies that have federalism implications as defined in the Executive order and, consequently, a federalism summary impact statement is not required.

    IX. References

    The following references have been placed on display in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, and may be seen by interested persons between 9 a.m. and 4 p.m., Monday through Friday, and are available electronically at http://www.regulations.gov. FDA has verified the Web site address, as of the date this document publishes in the Federal Register, but Web sites are subject to change over time.

    1. Regulatory Impact Analysis. Available at: http://www.fda.gov/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/default.htm.

    2. Form FDA 3852.

    List of Subjects in 21 CFR Part 1150

    Tobacco products, User fees.

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 1150 is amended to read as follows:

    PART 1150—USER FEES 1. The authority citation for part 1150 is revised to read as follows: Authority:

    21 U.S.C. 371, 387a, 387b, 387i, 387s, 21 CFR 1100.1.

    2. In § 1150.3, revise the definition for “Units of product” to read as follows:
    § 1150.3 Definitions.

    Units of product means:

    (1) The number of sticks for cigarettes and cigars, or

    (2) The weight (measured in pounds) for snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco.

    § 1150.5 [Amended]
    3. Amend § 1150.5 by: a. Removing from the first sentence of paragraph (a) the phrases “that is subject to regulation under chapter IX of the Federal Food, Drug, and Cosmetic Act” and “beginning October 2014”. b. Adding paragraphs (c) and (d) to read as follows:
    § 1150.5 Required Information.

    (c) First report for cigars. Domestic manufacturers and importers of cigars must submit the information described in this section beginning no later than the 20th day of August, 2016. Domestic manufacturers and importers of cigars must submit the information described in this section for each of the prior months of fiscal year 2016 as their first monthly submission. The previous sentence only applies for the first report in fiscal year 2016.

    (d) First report for pipe tobacco. Domestic manufacturers and importers of pipe tobacco must submit the information described in this section beginning no later than the 20th day of August, 2016.

    4. In § 1150.7, revise paragraph (a)(1) and add paragraph (a)(2) to read as follows:
    § 1150.7 Yearly class allocation.

    (a) * * *

    (1) Except for cigars, FDA will multiply the units of product removed and not tax exempt for the most recent full calendar year by the 2003 maximum Federal excise tax rate for that class (class dollar figure).

    (2) For cigars, FDA will:

    (i) Multiply the units of small cigars removed and not tax exempt for the most recent full calendar year by the 2003 maximum Federal excise tax rate for small cigars (small cigar subclass dollar figure).

    (ii) Multiply the units of large cigars removed and not tax exempt for the most recent full calendar year by the 2003 maximum Federal excise tax rate for large cigars (large cigar subclass dollar figure).

    (iii) Add the small cigar subclass dollar figure and the large cigar subclass dollar figure (cigar class dollar figure).

    5. In § 1150.9, revise paragraph (a)(1) and add paragraph (a)(2) to read as follows:
    § 1150.9 Domestic manufacturer or importer assessment.

    (a) * * *

    (1) For each class of tobacco products except cigars, FDA will calculate the percentage share for each domestic manufacturer and importer by dividing the Federal excise taxes that it paid for the class for the prior quarter by the total excise taxes that all domestic manufacturers and importers paid for the class for that same quarter.

    (2) For the cigar class, FDA will calculate the percentage share for each domestic manufacturer and importer by dividing the Federal excise taxes that it paid for the class for the prior fiscal year by the total excise taxes that all domestic manufacturers and importers paid for the class for the prior fiscal year.

    Dated: May 3, 2016. Leslie Kux, Associate Commissioner for Policy.
    [FR Doc. 2016-10688 Filed 5-5-16; 8:45 am] BILLING CODE 4164-01-P
    DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 117 Docket No. USCG-2015-0046 RIN 1625-AA09 Drawbridge Operation Regulation; Snake Creek; Islamorada, FL AGENCY:

    Coast Guard, DHS.

    ACTION:

    Final rule.

    SUMMARY:

    The Coast Guard is modifying the operating schedule that governs the Snake Creek Bridge across Snake Creek, at Islamorada, FL. This final rule changes the drawbridge operating schedule for the Snake Creek Bridge by requiring it to open once an hour between 7 a.m. and 6 p.m. The Bridge Owner, Florida Department of Transportation and Local officials requested this action to assist in reducing vehicle traffic backups caused by bridge openings.

    DATES:

    This rule is effective June 9, 2016.

    ADDRESSES:

    To view documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov, type “USCG-2015-0046” in the “SEARCH” box and click “SEARCH.” Click on Open Docket Folder on the line associated with this rulemaking.

    FOR FURTHER INFORMATION CONTACT:

    If you have questions on this rule, call or email Coast Guard Sector Key West Waterways Management Division; telephone 305-292-8772, email [email protected]

    SUPPLEMENTARY INFORMATION:

    I. Table of Abbreviations CFR Code of Federal Regulations DHS Department of Homeland Security E.O. Executive order FR Federal Register NPRM Notice of proposed rulemaking Pub. L. Public Law §  Section U.S.C. United States Code II. Background Information and Regulatory History

    The Snake Creek Bridge in Islamorada, Florida, has a vertical clearance of 27 feet in the closed position. The normal operating schedule as published in 33 CFR 117.331 is on demand except that from 8 a.m. to 4 p.m., the draw need open only on the hour and half-hour. This schedule has been in effect since 2001.

    On March 27, 2015, we published a test deviation entitled Drawbridge Operation Regulations; Snake Creek; Islamorada, FL, in the Federal Register (80 FR 16280). We received 63 comments on the test deviation. No public meeting was requested, and none was held.

    On September 18, 2015, we published a temporary interim rule and request for comments entitled Drawbridge Operation Regulations; Snake Creek; Islamorada, FL, in the Federal Register (80 FR 56381). We received 98 comments on the temporary interim rule. No public meeting was requested, and none was held.

    III. Legal Authority and Need for Rule

    The Coast Guard is issuing this rule under authority 33 U.S.C. 499.

    Based on the following input, the Coast Guard initiated a test of a new schedule for the Snake Creek Bridge on May 27, 2015:

    1. As reported by village and city councils, vehicle traffic caused by frequent openings of the Snake Creek Bridge negatively impacted Islamorada and surrounding communities. The temporary deviation successfully tested a new bridge operation schedule that reduced vehicle traffic caused by bridge openings.

    2. On January 8-10, 2013, the Florida Department of Transportation conducted a traffic monitoring study 1400 feet south of the Snake Creek Bridge on US-1. The study found peak traffic volumes occurring around 08:45 a.m. and between 12:15 p.m. and 3:15 p.m. These peak traffic times were used to determine when the Snake Creek Bridge opening schedule could be limited to reduce traffic.

    3. The Coast Guard's review found that the types of vessels navigating Snake Creek include sport fishing vessels and catamaran sailboats. Many of these vessels are able to safely transit under the Bridge in the closed position.

    IV. Discussion of Comments, Changes and the Final Rule

    During the comment periods for the temporary deviation and the temporary interim rule 161 comments were submitted to the docket. Sixty-three of those comment were received in response to the temporary deviation published on March 27, 2015 (80 FR 16280) and ninety-eight comments were received in response to the temporary interim rule published on September 18, 2015 (80 FR 56381).

    One hundred and forty-four comments supported the amended operating schedule applied during the test deviation and the interim rule which allowed the Snake Creek Bridge to remain on a once an hour schedule between 8 a.m. and 6 p.m. seven days a week and on demand at all other times.

    Six comments received opposed the amended operating schedule or suggested a different schedule that was more restrictive than necessary to accommodate vehicular traffic and did not accommodate the reasonable needs of maritime navigation.

    Two commenters requested that the start time be moved to 7 a.m. to accommodate the school bus schedule. We agree that a schedule requiring the Snake Creek Bridge to open once an hour starting at 7 a.m. would assist with alleviating vehicular traffic and would not interfere with the reasonable needs of maritime traffic. Therefore, this final rule has been modified to begin the limited opening schedule at 7 a.m. instead of 8 a.m.

    One comment suggested that these regulations were not needed after Labor Day. A review of the traffic logs shows that vehicle traffic does not diminish significantly after Labor Day.

    One comment suggested the bridge remain on a twice an hour schedule except for weekends and Federal holidays. Based on a review of vehicle traffic patterns, vehicle traffic is heavy throughout the daylight hours and increases during weekends and Federal holidays. Reverting to a 30 minute schedule on weekends and Federal Holidays would cause excessive vehicle traffic which was the purpose of this change in operating schedule. Therefore, this rule does not make an exception for weekends and Federal Holidays.

    Two comments suggested placing morning and afternoon curfew hours on this bridge. Placing morning and afternoon navigation closure periods on this bridge would have an overly restrictive impact on commercial waterway users and would not meet the reasonable needs of maritime traffic.

    One comment suggested just three bridge openings a day. Allowing this bridge to open just three times during daylight hours would also have an overly restrictive impact on maritime traffic.

    Four comments in the docket file were empty and provided no input.

    These comments received during the interim rule comment period have been used to adjust this schedule.

    V. Regulatory Analyses

    We developed this rule after considering numerous statutes and executive orders (E.O.s) related to rulemaking. Below we summarize our analyses based on a number of these statutes and E.O.s, and we discuss First Amendment rights of protesters.

    A. Regulatory Planning and Review

    E.O.s 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives, and, if regulation is necessary, to select regulatory approaches that maximize net benefits. E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has not been designated a “significant regulatory action,” under E.O. 12866. Accordingly, it has not been reviewed by the Office of Management and Budget.

    This regulatory action determination is made because vessels may navigate the Snake Creek Bridge during the scheduled opening times or use alternate passages including Channel Five above Long Key, Florida, which is approximately 5.7 nautical miles southwest of Snake Creek Bridge. Channel Five above Long Key, Florida is a fixed US-1 Bridge that has a vertical clearance of 65 feet. Also, vessels with adequate clearance may also pass under Snake Creek Bridge while it is in the closed position.

    B. Impact on Small Entities

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

    While some owners or operators of vessels intending to transit the bridge may be small entities, for the reasons stated above and in V.A., this rule will not have a significant economic impact on any vessel owner or operator.

    Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section above.

    Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

    C. Collection of Information

    This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

    D. Federalism and Indian Tribal Government

    A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in E.O. 13132.

    Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

    E. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

    F. Environment

    We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have made a determination that this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule involves the operating regulations or procedures for drawbridges. Normally such actions are categorically excluded from further review, under figure 2-1, paragraph (32)(e), of the Instruction. This rule simply promulgates the operating regulations or procedures for drawbridges. This action is categorically excluded from further review, under figure 2-1, paragraph (32)(e), of the Instruction.

    Under figure 2-1, paragraph (32)(e), of the Instruction, an environmental analysis checklist and a categorical exclusion determination are not required for this rule.

    G. Protest Activities

    The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

    List of Subjects in 33 CFR Part 117

    Bridges.

    For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 117 as follows:

    PART 117—DRAWBRIDGE OPERATION REGULATIONS 1. The authority citation for part 117 continues to read as follows: Authority:

    33 U.S.C. 499; 33 CFR 1.05-1; Department of Homeland Security Delegation No. 0170.1.

    2. Revise § 117.331 to read as follows:
    § 117.331 Snake Creek.

    The draw of the Snake Creek Bridge, at Islamorada, Florida, will open on signal, except that from 7 a.m. to 6 p.m., the draw need open only on the hour.

    Dated: May 4, 2016. S. A. Buschman, Rear Admiral, U.S. Coast Guard, Commander, Seventh Coast Guard District.
    [FR Doc. 2016-10922 Filed 5-9-16; 8:45 am] BILLING CODE 9110-04-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 52 and 81 [EPA-R08-OAR-2015-0205; FRL-9945-64-Region 8] Designation of Areas for Air Quality Planning Purposes; Redesignation Request and Associated Maintenance Plan for Billings, MT 2010 SO2 Nonattainment Area AGENCY:

    Environmental Protection Agency.

    ACTION:

    Final rule.

    SUMMARY:

    The Environmental Protection Agency (EPA) is approving the State of Montana's request to redesignate the Billings sulfur dioxide (SO2) nonattainment area to attainment for the 2010 SO2 primary national ambient air quality standards (NAAQS). The EPA has determined that the Billings SO2 nonattainment area is attaining the 2010 SO2 primary NAAQS. In addition, the EPA is approving Montana's maintenance plan which provides for continued attainment of the 2010 SO2 primary NAAQS in the area. These actions are being taken under the Clean Air Act (CAA).

    DATES:

    This final rule is effective on June 9, 2016.

    ADDRESSES:

    EPA has established a docket for this action under Docket Identification Number EPA-R08-OAR-2015-0205. All documents in the docket are listed on the http://www.regulations.gov index. Although listed in the index, some information may not be publicly available, e.g., Confidential Business Information or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically through http://www.regulations.gov or in hard copy at the Air Program, Environmental Protection Agency (EPA), Region 8, 1595 Wynkoop Street, Denver, Colorado, 80202-1129. EPA requests that you contact the individual listed in the FOR FURTHER INFORMATION CONTACT section to view the hard copy of the docket. You may view the hard copy of the docket Monday through Friday, 8:00 a.m. to 4:00 p.m., excluding federal holidays.

    FOR FURTHER INFORMATION CONTACT:

    Adam Clark, Air Program, U.S. Environmental Protection Agency, Region 8, Mailcode 8P-AR, 1595 Wynkoop, Denver, Colorado 80202-1129, (303) 312-7104, [email protected]

    SUPPLEMENTARY INFORMATION:

    I. Background

    The EPA designated a portion of Billings, Montana, as nonattainment for the 2010 SO2 NAAQS on August 5, 2013, (effective October 4, 2013) using 2009-2011 ambient air quality data, leaving the remaining portion of Billings and Yellowstone County undesignated and subject to future analysis and designation. See 78 FR 47191 (August 5, 2013).

    On January 16, 2015, the State submitted a request for the EPA to determine that the Billings SO2 nonattainment area has attained the 2010 SO2 NAAQS per the EPA's “clean data policy.” On December 14, 2015, the State submitted to the EPA a request for redesignation of the Billings 2010 SO2 nonattainment area to attainment and a SIP revision containing a maintenance plan for the area.

    On March 7, 2016, the EPA published a notice of proposed rulemaking (NPR) which proposed to approve the State's requests. See 81 FR 11733. Specifically, the EPA proposed to take the following four separate but related actions: (1) Determine that the Billings SO2 nonattainment area is attaining the 2010 1-hour SO2 NAAQS; (2) approve Montana's plan for maintaining the 2010 1-hour SO2 NAAQS (maintenance plan); (3) redesignate the Billings SO2 nonattainment area to attainment for the 2010 1-hour SO2 NAAQS; and (4) determine that the Billings SO2 nonattainment area has clean monitoring data. The details of Montana's submittal and the rationale for EPA's proposed actions are explained in the NPR and will not be restated here. The EPA received two public comments on the NPR, both of which supported the proposed redesignation. We acknowledge these supportive comments.

    II. Final Action

    The EPA is taking final actions on the redesignation request and maintenance plan submitted by the State of Montana on December 14, 2015 for the Billings 2010 SO2 nonattainment area. The EPA is approving Montana's redesignation request because we have determined that the request meets the redesignation criteria set forth in section 107(d)(3)(E) of the CAA for this standard. The EPA finds that the monitoring data demonstrate that the area has attained the 2010 SO2 NAAQS, and continues to attain the NAAQS as a result of the permanent and enforceable shutdown of the PPL Corette facility, whose emissions in 2009-2011 had been responsible for the area not previously meeting the NAAQS. The EPA is also approving the associated maintenance plan for the Billings 2010 SO2 nonattainment area as a revision to the Montana SIP for the 2010 SO2 NAAQS because it meets the requirements of section 175A of the CAA. Approval of this redesignation request will change the official designation of the Billings 2010 SO2 nonattainment area to attainment for the 2010 SO2 NAAQS.

    III. Statutory and Executive Order Reviews A. General Requirements

    Under the CAA, redesignation of an area to attainment and the accompanying approval of a maintenance plan under section 107(d)(3)(E) are actions that affect the status of a geographical area and do not impose any additional regulatory requirements on sources beyond those imposed by state law. A redesignation to attainment does not in and of itself create any new requirements, but rather results in the applicability of requirements contained in the CAA for areas that have been redesignated to attainment. Moreover, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. See 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, these actions merely approve state law as meeting federal requirements and do not impose additional requirements beyond those imposed by state law. For this reason, these actions:

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

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

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

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

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

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

    • Are not significant regulatory actions subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

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

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

    In addition, the SIP does not apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the final rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

    B. Congressional Review Act

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

    C. Petitions for Judicial Review

    Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by July 11, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. See section 307(b)(2).

    List of Subjects 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Reporting and recordkeeping requirements, Sulfur dioxide.

    40 CFR Part 81

    Environmental protection, Air pollution control, Sulfur dioxide.

    Authority:

    42 U.S.C. 7401 et seq.

    Dated: April 18, 2016. Shaun L. McGrath, Regional Administrator, Region 8.

    40 CFR parts 52 and 81 are amended as follows:

    PART 52—APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS 1. The authority citation for part 52 continues to read as follows: Authority:

    42 U.S.C. 7401 et seq.

    Subpart BB—Montana 2. Section 52.1370, paragraph (e), under “(9) Yellowstone County” is amended by adding the entry “Billings 2010 SO2 Maintenance Plan” at the end of the table to read as follows:
    § 52.1370 Identification of plan.

    (e) * * *

    Title/subject State effective date Notice of final rule date NFR citation *         *         *         *         *         *         * (9) Yellowstone County *         *         *         *         *         *         * Billings 2010 SO2 Maintenance Plan 12/14/2015 5/10/2016 [Insert Federal Register citation].
    3. Section 52.1398 is added to read as follows:
    § 52.1398 Control strategy: Sulfur dioxide.

    (a) Redesignation to attainment. The EPA has determined that the Billings 2010 sulfur dioxide (SO2) nonattainment area has met the criteria under CAA section 107(d)(3)(E) for redesignation from nonattainment to attainment for the 2010 1-hour SO2 NAAQS. The EPA is therefore redesignating the Billings 2010 SO2 nonattainment area to attainment.

    (b) The EPA is approving the maintenance plan for the Billings nonattainment area for the 2010 SO2 NAAQS submitted by the State of Montana on December 14, 2015.

    PART 81—DESIGNATION OF AREAS FOR AIR QUALITY PLANNING PURPOSES 4. The authority citation for part 81 continues to read as follows: Authority:

    42 U.S.C. 7401, et seq.

    Subpart C—Section 107 Attainment Status Designations 5. Section 81.327, table “Montana—2010 Sulfur Dioxide NAAQS (Primary)” is amended by revising the entry for “Yellowstone County (part)” to read as follows:
    § 81.327 Montana. Designated area Designation Date Type *         *         *         *         *         *         * Yellowstone County (part) 5/10/2016 Attainment. The area originates at the point defined as the southwest corner of Section 11, Township 1S, Range 26E. From that point the boundary proceeds north along the western section line of Section 11 to the point of intersection with the midline of Interstate Highway 90. From that point the boundary follows the midline of Interstate Highway 90, across the Yellowstone River, to the point where the highway midline intersects the northern boundary of Section 35, Township 1N, Range 26E. From that point the boundary proceeds east along the northern section line of Sections 35 and 36 to the point where Old US 87/Hardin Road leaves the section line and turns southeast. The boundary follows the midline of Old US 87/Hardin Road southeast to the point where the road intersects the western boundary of the SE 1/4 of the SE 1/4 of Section 31, Township 1N, Range 27E. From that point the boundary proceeds south along the 1/4 section line to the southern boundary of Township 1N, then east to the northeast corner of Section 5, Township 1S, Range 27E. The boundary then proceeds south along the eastern section line of sections 5 and 8 to the southeast corner of Section 8, Township 1S, Range 27E, where it turns west and follows the south section line of Sections 8 and 7, Township 1S, Range 27E; and Sections 12 and 11, Township 1S, Range 26E, back to the point of origin
    [FR Doc. 2016-10451 Filed 5-9-16; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 258 [EPA-HQ-RCRA-2015-0126; FRL-9943-87-OLEM] RIN 2050-AG75 Revision to the Research, Development and Demonstration Permits Rule for Municipal Solid Waste Landfills AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Final rule.

    SUMMARY:

    The Environmental Protection Agency (EPA) is publishing a final rule to revise the maximum permit term for Municipal Solid Waste Landfill (MSWLF) units operating under Research, Development and Demonstration (RD&D) permits. The RD&D permit program, which began in 2004, allows landfill facilities to utilize innovative methods that vary from the run-on control systems, liquids restrictions, and final cover criteria prescribed in 40 CFR part 258 if these systems are determined by the Director of an approved State to be at least as protective as those criteria. The current rule limits permits for these units to three years, and they are renewable three times for a total permit term of 12 years. This revision allows the Director of an approved State to increase the number of permit renewals to six, for a total permit term of up to 21 years.

    DATES:

    This final rule is effective on November 10, 2016.

    ADDRESSES:

    The EPA has established a docket for this action under Docket ID No. EPA-HQ-RCRA-2015-0126. All documents in the docket are listed on the http://www.regulations.gov Web site. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available electronically through http://www.regulations.gov.

    FOR FURTHER INFORMATION CONTACT:

    Craig Dufficy, Materials Recovery and Waste Management Division of the Office of Land and Emergency Management (mail code 5304P), U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue NW., Washington, DC 20460; telephone: 703-308-9037; email: [email protected]

    SUPPLEMENTARY INFORMATION:

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

    Entities potentially affected by this rule are public or private owners or operators of MSWLFs. These entities include:

    Category Example of affected entities State Governments Regulatory agencies and agencies operating landfills. Industry Owners or operators of municipal solid waste landfills. Municipalities, including Tribal Governments Owners or operators of municipal solid waste landfills.

    The affected entities may also fall under the North American Industry Classification System (NAICS) code 924110, Sanitation engineering agencies, government; or 562212, Solid Waste Landfill. This list of sectors is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this action. This table lists the types of entities that the EPA believes could potentially be regulated by this action. Other types of entities not listed in the table could also be regulated. To determine whether your entity is regulated by this action, you should carefully examine the applicability criteria found in 40 CFR part 258 and the Research, Development and Demonstration Permits for Municipal Solid Waste Landfills final rule, referred to as the “2004 RD&D rule” (69 FR 13242, March 22, 2004). If you have questions regarding the applicability of this action to a particular entity, consult the person listed in the FOR FURTHER INFORMATION CONTACT section.

    B. What action is the agency taking?

    The EPA is revising the maximum permit term for MSWLF units operating under RD&D permits. The rule allows the Director of an approved State to issue up to six, 3-year permit renewals, for a total permit term of 21 years. The RD&D rule previously limited the total permit term to 12 years.

    The primary basis for this extension of the permit period to up to 21 years is to provide the EPA more time to characterize the performance of RD&D projects without making the permit period so long as to be open-ended. The EPA believes that the period of 21 years strikes an appropriate balance between providing more time for projects to continue operations as research facilities, while providing enough time for the EPA to consider making additional changes to the part 258 MSWLF regulations.

    C. What is the agency's authority for taking this action?

    The authority for this rulemaking is sections 1008, 2002(a), 4004, 4005(c), 4010 and 8001(a) of the Resource Conservation and Recovery Act of 1976 (RCRA), as amended, 42 U.S.C. 6907, 6912(a), 6944, 6945(c), 6949a, 6981(a).

    D. What are the anticipated effects and benefits of this action?

    The anticipated effect of this action is to provide the Director of an approved State the ability to issue renewals to existing RD&D permits, as well as new RD&D permits, for up to 21 years instead of 12 years. During this time, the EPA will continue to evaluate data from these facilities. There are approximately 30 facilities currently operating with RD&D permits. It is also relevant to one facility operating on tribal lands under a site-specific action. Additional facilities may also seek an RD&D permit in the future. The EPA has no information with which to estimate whether any new facilities will seek RD&D permits. Owners/operators operating under existing RD&D permits are not expected to incur any new costs as a result of this final rule. The annual costs for ongoing recordkeeping and annual reporting requirements are estimated at $2,410 per facility.

    It is important to note that applying for a RD&D permit remains voluntary. This action does not impose any new regulatory burden. This action allows the Director of an approved State to increase the number of extensions of the permit period for existing facilities, or offer more extensions of the permit term for new facilities, for those owners and operators who choose to participate in this research program. Increasing the possible number of extensions of the RD&D permit term may benefit current owners and operators of RD&D units by providing additional time to recover their costs, if the Director of an approved State chooses to extend existing permits. For example, data from one RD&D permitted facility show a projected increase of 3% in the rate of return for 20 years compared to 12 years.1

    1 See docket item EPA-HQ-RCRA-2015-0126-0012, Smiths Creek Bioreactor Report.

    Increasing the possible number of extensions of RD&D permit terms is also expected to provide more time for the EPA to collect additional data on the potential benefits of the approaches being taken under these RD&D permits. These potential benefits include: Decreased costs for leachate treatment due to leachate recirculation in bioreactors; increased revenue from the sale of landfill gas for use as a renewable source of fuel; decreased risk due to a reduction in the transportation of leachate for treatment; accelerated production and capture of landfill gas for use as a renewable fuel; and accelerated stabilization and corresponding decreased post-closure care activities, for facilities as a result of the accelerated decomposition of waste.

    II. Background

    Under Subchapter IV of RCRA, 42 U.S.C. 6941-6949a, the EPA has promulgated minimum national standards for MSWLFs at 40 CFR part 258 (56 FR 50978, October 9, 1991). As specified in 42 U.S.C. 6981(a), RCRA also directs EPA to encourage research and development for, among other things, the development and application of new and improved methods of collecting and disposing of solid waste.

    The initial 1991 MSWLF regulations addressed seven basic areas: Location restrictions; operation; design; groundwater monitoring; corrective action; closure and post-closure care; and financial assurance. These MSWLF landfill regulations focused on dry-tomb landfills to minimize the possibility of groundwater contamination from the production and subsequent leakage of leachate. After the promulgation of those standards, the EPA became aware that landfill technology had advanced sufficiently that some alternative designs and operations could benefit from further study through research and demonstration projects. For example, some of these methods, particularly the addition of liquids and leachate recirculation, could accelerate biodegradation and provide additional potential benefits. These include:

    —Acceleration of landfill gas generation which can be collected as a source of renewable fuel; —minimization of leachate treatment requirements during the operational life of the landfill; —more rapid reduction in concentration of leachate constituents of concern, thereby limiting the corresponding post-closure activities for leachate control; and —an increase in the rate of landfill settlement resulting in the more efficient use of permitted landfill capacity.

    As a means to advance innovation in landfill design, in 2000 the EPA selected four landfills to participate in its Project XL program,2 all of which involved some use of bioreactor technology or leachate recirculation. The landfills are located in Buncombe County, North Carolina; Yolo County, California; King George County, Virginia; and the Maplewood facility in Amelia Country, Virginia.

    2 EPA began Project XL in 1995, and accepted projects until 2002, as a national pilot program to help business, state and local governments, and federal facilities work with EPA to develop and test innovative approaches to achieve better and more cost-effective environmental and public health protection. The provisions for the four Project XL landfills discussed here are codified in § 258.41.

    In addition to Project XL, in 2001 the EPA began using Cooperative Research and Development Agreements (CRADAs) to promote collaborative research between federal and non-federal scientists as an additional means to explore the addition of liquids to landfills to promote faster biodegradation and stabilization. Bioreactor landfill sites operating with CRADAs include the Outer Loop landfill in Louisville, Kentucky; and the Polk County landfill in Florida.

    Subsequently, in 2004, the EPA amended the part 258 MSWLF regulations to create a broader RD&D research program. The 2004 RD&D action (69 FR 13242, March 22, 2004), which added § 258.4, enabled the Director of an approved State to allow RD&D projects with variances to specific provisions of the MSWLF criteria, including variances from operating criteria in part 258 with respect to run-on controls (§ 258.26(a)(1)) and the liquids restrictions in § 258.28(a). In addition, the 2004 RD&D rule allows an additional variance for the final cover requirements set forth in the closure criteria in § 258.60(a)(1), (a)(2) and (b)(1). The 2004 RD&D rule limits the duration of the initial permit to three years, and the permit can be renewed for up to three additional 3-year terms, for a total of 12 years.

    As of March 2014, in the most recent compilation of data available to the EPA, there were 30 active RD&D projects in 11 approved states and one project on tribal lands.3 The maximum permit period for the first of these projects is coming to an end. This final rule allows the Director of an approved State to continue to extend the permit period for up to a total of 21 years to allow for continued research.

    3 Permitting of Landfill Bioreactor Operations: Ten years After the RD&D Rule, EPA document number EPA/600/R-14/335.

    A. What did EPA propose?

    EPA proposed this rulemaking through an action in the Federal Register published at 80 FR 70180, November 13, 2015. EPA proposed to allow the Director of an approved State to increase the maximum term for RD&D permits from 12 to 21 years at § 258.4(e)(1), in order to provide the EPA more time to continue to support research into the performance of bioreactors, alternative covers and run-on systems. In effect, the proposal would allow the Director of an approved State to increase the number of permit renewals from three to six. The EPA did not propose any other changes to the RD&D permit program and made it clear that EPA was not reopening at this time any other provision of the existing RD&D rule or MSWLF criteria in 40 CFR part 258.

    Separately from this final rule, the EPA plans to publish an Advanced Notice of Proposed Rulemaking (ANPRM) seeking comment on the possibility of revising other sections of the MSWLF criteria (40 CFR part 258) to authorize the operation of wet landfills and bioreactors and other possible changes to the national criteria on a permanent basis. Interested parties will have an opportunity to comment on broader issues relating to bioreactor operation during the public comment period on that ANPRM.

    In response to the 80 FR 70180, November 13, 2015 proposed rule, the Agency received six sets of comments during the comment period that closed on December 14, 2015. The six sets of comments were from: The States of Iowa, Kansas, Michigan and Nebraska; the Southeast Michigan Council of Governments, and the Solid Waste Disposal and Conversion Task Force of the Association of State and Territorial Solid Waste Management Officials. All comments can be reviewed on-line at http://www.regulations.gov/, using “EPA-HQ-RCRA-2015-0126” in the search box, and then by opening the docket folder and select `view comments' to review any or all of the comments.

    Five of the six commenters expressed support for extending maximum permit term for RD&D permits to EPA's proposed term of 21 years. Several commenters (including the one commenter that did not support an extension to 21 years) indicated support for eliminating the overall permit term entirely, arguing that any time limit may discourage entities from making investments. Several commenters also encouraged the EPA to establish a mechanism to convert RD&D permits into permanent designs and operational practices subject to appropriate monitoring and performance standards as administered by an approved state. Commenters indicated support for making permanent changes to the regulations at 40 CFR part 258 to authorize bioreactor operations.

    After consideration of these comments, and in light of other information in the record, the EPA has decided to issue the final rule as proposed. The EPA disagrees with the comments that the RD&D permit program should not be time-limited, which is consistent with the EPA position since the original RD&D rule was promulgated in 2004. The RD&D permits have always been intended to be used for innovation and experimentation for a limited period of time. As such, the RD&D rule is not intended to authorize activities on a permanent basis, as unlimited renewals could effectively allow. In addition, EPA notes that the commenters did not suggest an alternative, discrete, maximum time frame other than EPA's proposal for a maximum permit term of 21 years.

    The issue of making changes to the part 258 regulations to authorize bioreactor operations on a permanent basis is outside the scope of this rule, as EPA stated in the proposed rule (80 FR 70180, November 13, 2015). As discussed previously, EPA plans to publish an ANPRM requesting data relating to wet landfills and bioreactors. EPA intends this ANPRM to begin the process of considering additional changes to the part 258 regulations. In that proceeding, the commenters are free to raise concerns about how existing RD&D projects can be appropriately addressed under any potential future amendments to the existing MSWLF regulations. Thus, the comments did not change EPA's view that a maximum term of 21 years is an appropriate balance between allowing more time for continued research by EPA and allowing the facilities to continue operating for a significant but not open-ended period of time.

    B. Basis for This Final Rule

    In the 2004 RD&D final rule, the EPA made clear its intention that MSWLF RD&D permits be of limited duration while also providing data to support future rulemaking. This final rule is intended to further these dual goals. Although the EPA does not expect that all RD&D permits will necessarily extend to the full permit term, the EPA believes that the current 12-year time limit may not be sufficient to realize potential benefits in all cases. Thus, extending the permit period for up to 21 years will provide more time to collect data on potential benefits and any problems without making the permit period so long as to be open-ended.

    Extending the maximum permit term will help continuing efforts to collect data at existing RD&D units. If the EPA did not take this action, owners and operators using existing RD&D permits would need to make significant modifications to their disposal units or cease operation altogether, before reaching the end of their normal operations or closure. Because of the potential environmental benefits that may be derived from bioreactors, alternative cover designs, and run-on systems, the EPA believes that it is important to extend the maximum permit period to 21 years to provide more time to characterize the performance of RD&D projects without making the permit period so long as to be open-ended.

    The EPA also wishes to enhance the economic feasibility to build and operate bioreactors or employ alternative approaches for final covers, which would provide additional sources of data in the future. The EPA has heard from stakeholders that limiting the permit period to 12 years has the unintended consequence of discouraging the development of bioreactors.

    C. Implementation of This Final Rule

    This rule does not require states with EPA-approved RD&D programs to modify their solid waste permit programs. Since this change to the 2004 RD&D rule provides more flexibility than existing federal criteria, states are not required to amend existing solid waste permit programs that have been determined by EPA to be adequate under 40 CFR part 239. At the same time, the RD&D rule (including the revised maximum permit term) is not self-implementing, and states are required to adopt the RD&D rule and obtain EPA approval for their RD&D program in order to issue a RD&D permit. States previously approved to issue RD&D permits that wish to increase the total length of time for which RD&D permits can be issued will need to notify the EPA in accordance with 40 CFR part 239. States with EPA-approved solid waste permit programs that have not previously sought approval for an RD&D program and now wish to do so will need to apply to EPA for approval of an RD&D program, including approval of the longer time period allowed by this rulemaking. Any state without an EPA-approved solid waste permit program may submit an application to EPA for a determination of adequacy under 40 CFR part 239 and may include a request for approval of the RD&D permit provisions reflecting the longer time period allowed by this rule. For MSWLF units located in Indian Country, EPA intends to consider the longer maximum permit term when issuing or modifying any site-specific RD&D rule. EPA has previously issued draft guidance on the site-specific flexibility request process in Indian Country. See “Site-Specific Flexibility Requests for Municipal Solid Waste Landfills in Indian Country,” EPA 530-R-97-016, August 1997.

    III. Statutory and Executive Orders Reviews

    Additional information about these statutes and Executive Orders can be found at http://www.epa.gov/laws-regulations/laws-and-executive-orders.

    A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review

    This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review.

    B. Paperwork Reduction Act (PRA)

    This action does not impose any new Information Collection Request (ICR) burden under the PRA. The purpose of this action is to extend the maximum allowable permit period for this program, and this change to the RD&D program itself does not impose any additional reporting requirements. The OMB has previously approved the information collection activities contained in the existing regulations in two different, applicable ICRs. The ICRs affected by this proposal are for 40 CFR part 239, Requirements for State Permit Program Determination of Adequacy and part 258, MSWLF Criteria. The OMB has reviewed the ICR for part 239 (ICR# 1608.07, OMB# 2050-0152). The EPA will request comments under the ICR review process from states that plan to make these revisions so that the EPA can better understand the expected burden that would be incurred by states who wish to make these changes. In addition, the EPA will also be requesting information from MSWLF owners/operators on the reporting burden that they would incur under an extended permit term provided in accordance with this rule under the part 258, MSWLF criteria ICR (ICR# 1381.09, OMB# 2050-0122) when that review process begins. This process is scheduled to be completed in June 2016.

    C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. In making this determination, the impact of concern is any significant adverse economic impact on small entities. An agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, has no net burden or otherwise has a positive economic effect on the small entities subject to the rule. This rule will not create any additional burden for small entities. Small entities are not required to take any action as a consequence of this rule, and this action will not have a significant impact on a substantial number of small entities. We have therefore concluded that this action will have no net regulatory burden for all directly regulated small entities.

    D. Unfunded Mandates Reform Act (UMRA)

    This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. The action imposes no enforceable duty on any state, local or tribal governments or the private sector. The costs involved in this action are imposed only by voluntary participation in a federal program.

    E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

    F. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments

    This action does not have tribal implications as specified in Executive Order 13175. The EPA has concluded that this action will have no new tribal implications, nor would it present any additional burden on the tribes. It will neither impose substantial direct compliance costs on tribal governments, nor preempt tribal law. Thus, Executive Order 13175 does not apply to this action.

    G. Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks

    This action is not subject to Executive Order 13045, because it is not economically significant as defined in Executive Order 12866, and because the EPA does not believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. The underlying RD&D rule requires all RD&D permits to include terms and conditions that are at least as protective as the criteria for municipal solid waste landfills to assure protection of human health and the environment, and this rule does not reopen or otherwise change that requirement.

    H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution or Use

    This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.

    I. National Technology Transfer and Advancement Act (NTTAA)

    This rulemaking does not involve technical standards.

    J. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations

    The EPA believes the human health and environmental risk addressed by this action will not have a new disproportionately high and adverse human health or environmental effects on minority, low-income or indigenous populations. The underlying RD&D regulations require all RD&D permits to include terms and conditions that are at least as protective as the criteria for municipal solid waste landfills to assure protection of human health and the environment. This final rule is an administrative action to extend the maximum permit period, and it does not reopen or otherwise change the requirement for protectiveness. Therefore, the EPA finds that the human health and environmental risks addressed by this action will not have disproportionately high and adverse human health or environmental effects on minority, low-income or indigenous populations, because this action does not affect the level of protection provided to human health or the environment.

    K. Congressional Review Act (CRA)

    This action is subject to the CRA, and the EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

    List of Subjects in 40 CFR Part 258

    Environmental protection, Municipal landfills, Reporting and recordkeeping requirements, Waste treatment and disposal.

    Dated: April 29, 2016. Gina McCarthy, Administrator.

    For the reasons set forth in the preamble, EPA amends 40 CFR part 258 as follows:

    PART 258—CRITERIA FOR MUNICIPAL SOLID WASTE LANDFILLS 1. The authority citation for part 258 continues to read as follows: Authority:

    33 U.S.C. 1345(d) and (e); 42 U.S.C. 6902(a), 6907, 6912(a), 6944, 6945(c) and 6949a(c), 6981(a).

    Subpart A—General 2. Revise § 258.4(e)(1) to read as follows:
    § 258.4 Research, development, and demonstration permits.

    (e) * * *

    (1) The total term for a permit for a project including renewals may not exceed twenty-one (21) years; and

    [FR Doc. 2016-10993 Filed 5-9-16; 8:45 am] BILLING CODE 6560-50-P
    DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Parts 204, 209, 212, 227, 237, and 252 [Docket DARS-2014-0017] RIN 0750-AH54 Defense Federal Acquisition Regulation Supplement: Disclosure to Litigation Support Contractors (DFARS Case 2012-D029) AGENCY:

    Defense Acquisition Regulations System, Department of Defense (DoD).

    ACTION:

    Final rule.

    SUMMARY:

    DoD is adopting as final, with changes, an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2012 that provides DoD the authority to allow its litigation support contractors access to “sensitive information” subject to certain restrictions.

    DATES:

    Effective May 10, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Ms. Amy G. Williams, telephone 571-372-6106.

    SUPPLEMENTARY INFORMATION:

    I. Background

    DoD published an interim rule in the Federal Register at 79 FR 11337 on February 28, 2014, to implement section 802 of the National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112-81), which provides DoD the express authority to allow its litigation support contractors access to “sensitive information,” provided that the litigation support contractor is subject to certain restrictions on using and disclosing such information. Two respondents submitted public comments in response to the interim rule.

    II. Discussion and Analysis

    DoD reviewed the public comments in the development of the final rule. A discussion of the comments received and the changes made to the rule as a result of those comments follows:

    A. Summary of Significant Changes From the Interim Rule

    1. A new paragraph (b)(4) is added to the provision at DFARS 252.204-7013 and a new paragraph (b)(5) is added to the clause at DFARS 252.204-7014 to clarify that the offeror and the contractor, respectively, shall destroy or return to the Government, at the request of the contracting officer, all litigation information in its possession upon completion of the authorized litigation support activities.

    2. A new paragraph (b)(2) is added to the clause at DFARS 252.204-7014 to clarify that the contractor shall not disclose litigation information to any entity outside the contractor's organization unless, prior to disclosure, the contracting officer has provided written consent.

    B. Analysis of Public Comments 1. Inclusion of Third Party Information

    Comment: One respondent commented that the interim rule went beyond the definition of “sensitive information” provided in 10 U.S.C. 129d because, as implemented, “sensitive information” is not limited to information owned by the Department of Defense. The respondent suggested that the absence of the language “obtained from a person” as used in Exemption 4 of the Freedom of Information Act (5 U.S.C. 552(b)(4)) indicates that 10 U.S.C. 129d was intended to apply only to information “owned by the Department of Defense.” The respondent stated that because the interim rule does not limit the scope of sensitive information to only information owned by DoD, the rule could expose the Government to liability or penalties for unauthorized disclosure of information under the Federal Tort Claims Act, or a taking of property under the U.S. Constitution, the Procurement Integrity Act, 41 U.S.C. 2101 et seq., and the Trade Secrets Act, 18 U.S.C. 1905. The respondent called for rescission of the interim rule until the definition of “sensitive information” was narrowed.

    Response: The statutory language and legislative history do not indicate that 10 U.S.C. 129d is limited only to information owned by the Department of Defense (or the U.S. Government). Prior to, and notwithstanding, the enactment of the statute, DoD was authorized to disclose information that it owns. 10 U.S.C. 129d authorizes disclosure of “sensitive information,” without limitation related to the ownership or source of the information, for the sole purpose of providing litigation support to DoD. To narrow the definition as the respondent suggests would obviate the need for any statutory authorization. The new DFARS subpart 204.74 established by the interim rule implements the statutory authorization for litigation information, including sensitive information owned by or obtained from non-DoD sources. Disclosure of such information is thus authorized by law when done pursuant to DFARS subpart 204.74. No change is made in the final rule.

    2. Safeguarding Unclassified Controlled Technical Information

    Comment: One respondent questioned whether litigation support contractors, and their subcontractors, will be required to comply with the requirements at DFARS clause 252.204-7012, formerly entitled “Safeguarding of Unclassified Controlled Technical Information.”

    Response: The requirements of the clause at DFARS 252.204-7012, now entitled “Safeguarding Covered Defense Information and Cyber Incident Reporting,” will apply to contractors, and their subcontractors, as required by the clause.

    3. Disposition of Litigation Information

    Comment: One respondent suggested that the interim rule should be amended to include requirements for the information provided to a litigation support contractor to be destroyed or returned to DoD when no longer needed or at the end of contract performance.

    Response: Paragraph (b)(4) is added to the provision at DFARS 252.204-7013 and paragraph (b)(5) is added to the clause at DFARS 252.204-7014 to clarify that the contractor shall destroy or return to the Government, at the request of the contracting officer, all litigation information in its possession upon completion of the authorized litigation support activities.

    4. Use of Litigation Information

    Comment: One respondent suggested limiting the authorized use of litigation information to the litigation support required by the individual contract, under which the litigation information was received.

    Response: Litigation support contractors must be able to use the litigation information provided by the Government as needed. A contractor may provide litigation support under multiple contracts. In such instances, limiting the scope of authorized use to only the contract under which the litigation information was provided could require the Government to provide the same information multiple times. Having to exchange and handle multiple copies of the same information increases the risk of inadvertent disclosure and the cost of performance and administration. No change is made in the final rule.

    5. Third Party Beneficiary Rights

    Comment: One respondent stated that if “sensitive information” includes information owned by third parties, then the interim rule should be amended to require litigation support contractors to comply with Federal Acquisition Regulation (FAR) 9.505-4(b) and have a direct nondisclosure agreement between the owner of the sensitive information and the litigation support contractor. The respondent also stated that the third party beneficiary rights are illusory without notice to the owner of the sensitive information.

    Response: A direct nondisclosure agreement or prior notice requirement could prejudice the Government by providing premature warning of possible litigation or of the Government's litigation strategies. Accordingly, DoD has determined that requiring a direct nondisclosure agreement pursuant to FAR 9.505-4(b) for litigation support contractors would not be in the Government's interest. 10 U.S.C. 129d does not require that DoD confer upon an owner of sensitive information any third party beneficiary rights; however, at paragraph (d) of the clause at 252.204-7014, DoD has chosen to provide third party beneficiary rights analogous to those afforded by paragraph (c) of the clause at DFARS 252.227-7025. No change is made in the final rule as a result of this comment.

    6. Appropriateness of an Interim Rule

    Comment: One respondent stated that issuing an interim rule was not appropriate because there was inadequate justification for the determination of urgent or compelling reasons for doing so. The respondent suggested that, without further justification, a proposed rule was more appropriate and urged rescission of the interim rule.

    Response: DoD published the basis for its determination that urgent and compelling reasons existed to authorize the use of an interim rule. After consideration of the respondent's comment, DoD determined that rescission of the interim rule was not warranted.

    7. Release of Information to Litigation Support Subcontractors

    Comment: One respondent stated that while litigation support contractors are required to flow down the clause at DFARS 252.204-7014 to subcontractors, it is not clear whether litigation support contractors and any subcontractors would be subject to DFARS clause 252.204-7000, Disclosure of Information.

    Response: This rule does not affect the applicability of the clause DFARS at 252.204-7000. In accordance with its prescription at DFARS 204.404-70(a), the clause applies to all solicitations and contracts when the contractor will have access to or generate unclassified information that may be sensitive and inappropriate for release to the public. That clause will flow down to subcontracts, in accordance with paragraph (c) of the clause. There is no conflict between the DFARS 252.204-7000 clause and the DFARS 252.204-7014 clause, at the prime or subcontract level. The clause at DFARS 252.204-7000 prohibits the release of information outside the contractor's organization without permission from the contracting officer, while the DFARS 252.204-7014 clause requires the litigation support contractor to protect against any unauthorized releases of information, and does not authorize the contractor to make any releases outside the contractor's organization. However, to minimize any potential confusion, paragraph (b)(2) is added to the DFARS 252.204-7014 clause to state more clearly that it does not authorize the contractor to release litigation information outside the contractor's organization without permission of the contracting officer. Contracting officers, in conjunction with the Government litigation team, maintain control over the flow of information to litigation support contractors and outside parties.

    8. Prescription Conflict

    Comment: One respondent pointed out that the prescription in the interim rule at DFARS 204.7403(c) would have precluded DFARS 252.204-7015 from ever being included in a contract.

    Response: This error was corrected in a technical amendment to the DFARS published in the Federal Register at 79 FR 13568 on March 11, 2014.

    C. Other Changes

    A summary of revisions made to the rule to make necessary conforming changes, clarifications, and editorial changes follows:

    1. Definitions

    a. The definition of “litigation information” is revised to clarify that information contained in publicly available solicitations will not be protected from disclosure as litigation information, because the information has already been released to the public. A corresponding policy statement is also added at DFARS 204.7402(c).

    b. A policy statement is added at DFARS 204.7402(d) to state that contracting officers, when sharing sensitive information with a litigation support contractor, shall ensure that all other applicable requirements for handling and safeguarding the relevant types of sensitive information re included in the contract (e.g., FAR subparts 4.4 and 24.1; DFARS subparts 204.4 and 224.1).

    c. The definition of “litigation support contractor” is revised to clarify that, in addition to experts and technical consultants, the term also includes the contractor's subcontractors and suppliers. The text “the Department of Defense” is also removed, since the clause is only used in DoD contracts.

    d. DFARS subpart 204.74, the provision at 252.204-7013, and the clauses at 252.204-7014 and 252.204-7015 are revised to include the full text of all relevant definitions, rather than cross-referencing the definitions that were provided in full-text only in the contract clause at DFARS 252.204-7014. Further, the definition of “sensitive information” is clarified by removing the term “confidential information” and replacing it with “controlled unclassified information” in subpart 204.74, the provision, and the clauses.

    2. Conforming Changes

    a. A conforming change has been made to DFARS 209.505-4(b)(i) in order to differentiate between the requirements that pertain to litigation support contractors from the requirements for other contractors, consistent with the changes in this rule.

    b. DFARS 209.505-4(b)(ii) is added to clarify the policies and procedures (set forth in 204.74 and associated provisions and clauses) governing access to proprietary information for litigation support activities as an element of the coverage for organizational and consultant conflicts of interest.

    3. Technical Clarifications

    a. At paragraph (c)(2) of the provision at DFARS 252.204-7013 and at paragraph (d)(2) of the clause at DFARS 252.204-7014, the reference to “data or software” is changed to “litigation information” and the reference to “the unauthorized duplication, release or disclosure” is changed to “any such unauthorized use or disclosure,” to more accurately refer to all of the unauthorized activities described at paragraph (c)(1) of the provision and paragraph (d)(1) of the clause.

    b. The term “Solicitation” is removed from the title of the provision at DFARS 252.204-7013, as it is not necessary because the title already refers to “Offerors.”

    c. Paragraph (b) of the clause at DFARS 252.204-7014 is revised to state that the contractor “shall” instead of “agrees and acknowledges” to ensure the contractor complies with the limitations set forth in paragraph (b) during contract performance.

    d. The title of the clause at DFARS 252.204-7015 is revised to “Notice of Authorized Disclosure of Information for Litigation Support” to more accurately depict the intent of the clause.

    III. Applicability to Contracts at or Below the Simplified Acquisition Threshold and for Commercial Items, Including Commercially Available Off-the-Shelf Items

    The prescriptions for use of the provision and clauses of this rule, which implement section 802 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2012 (Pub. L. 112-81) include use in contracts and subcontracts valued at or below the simplified acquisition threshold (SAT) and contracts and subcontracts for the acquisition of commercial items, including commercially available off-the-shelf (COTS) items.

    A. Applicability to Contracts at or Below the SAT

    41 U.S.C. 1905 governs the applicability of laws to contracts or subcontracts in amounts not greater than the SAT. It is intended to limit the applicability of laws to such contracts or subcontracts. 41 U.S.C. 1905 provides that if a provision of law contains criminal or civil penalties, or if the FAR Council makes a written determination that it is not in the best interest of the Federal Government to exempt contracts or subcontracts at or below the SAT, the law will apply to them. The Director, Defense Procurement and Acquisition Policy (DPAP), is the appropriate authority to make comparable determinations for regulations to be published in the DFARS, which is part of the FAR system of regulations.

    DoD has determined that it is in the best interest of the Federal Government to apply the rule to contracts and subcontracts in amounts not greater than the SAT. Section 802 of the NDAA for FY 2012 was enacted to ensure DoD ligation support contractors protect sensitive information from any unauthorized disclosure and are prohibited from using such information for any purpose other than providing litigation support services to DoD. Based on data available in the Federal Procurement Data System (FPDS) for FY 2015, 421 of the 453 total DoD awards for professional attorney services or associated legal services were valued at less than the SAT. An exception for contracts valued at or under the SAT would exclude a large portion (93 percent) of the contracts intended to be covered by section 802, thereby undermining the overarching public policy purpose of the law and adversely affecting the Government's ability to successfully engage in legal proceedings.

    B. Applicability to Contracts for the Acquisition of Commercial Items, Including COTS Items

    41 U.S.C. 1906 governs the applicability of laws to contracts for the acquisition of commercial items, and is intended to limit the applicability of laws to contracts for the acquisition of commercial items. 41 U.S.C. 1906 provides that if a provision of law contains criminal or civil penalties, or if the FAR Council makes a written determination that it is not in the best interest of the Federal Government to exempt commercial item contracts, the provision of law will apply to contracts for the acquisition of commercial items. Likewise, 41 U.S.C. 1907 governs the applicability of laws to COTS items, with the Administrator for Federal Procurement Policy the decision authority to determine that it is in the best interest of the Government to apply a provision of law to acquisitions of COTS items in the FAR. The Director, DPAP, is the appropriate authority to make comparable determinations for regulations to be published in the DFARS, which is part of the FAR system of regulations.

    Given that the requirements of section 802 of the NDAA for FY 2008 were enacted to protect sensitive information provided to DoD litigation support contractors from unauthorized use and disclosure, DoD has determined that it is in the best interest of the Federal Government to apply the rule to contracts for the acquisition of commercial items, as defined at FAR 2.101. Based on data available in FPDS for FY 2015, 352 of the 453 total DoD awards for legal support services were classified as commercial contracts. An exception for contracts for the acquisition of commercial items, would exclude 78 percent of the contracts intended to be covered by the law, thereby undermining the overarching public policy purpose of the law.

    IV. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 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). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is a significant regulatory action and, therefore, was subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

    V. Regulatory Flexibility Act

    DoD does not expect this final rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. However, a final regulatory flexibility analysis has been prepared and is summarized as follows:

    This rule amends the Defense Federal Acquisition Regulation Supplement (DFARS) to implement statutory authority (10 U.S.C. 129d) for DoD to allow its litigation support contractors to have access to “sensitive information,” provided that the litigation support contractor is subject to certain restrictions on using and disclosing such information.

    The objective of the rule is to expressly authorize DoD to provide its ligation support contractors with access to certain types of non-public information, provided that the ligation support contractors are required to protect that information from any unauthorized disclosure, and are prohibited from using that for any purpose other than providing litigation support services to DoD.

    No significant issues were raised by the public comments in response to the initial regulatory flexibility analysis published with the interim rule.

    According to data available in the Federal Procurement Data System for fiscal year 2015, DoD awarded 453 total contracts for legal support services to 212 unique vendors. Of those awards, 340 awards or 75 percent were made to 162 small businesses.

    The rule imposes no reporting, recordkeeping, or other information collection requirements; rather, the rule subjects litigation support contractors to certain restrictions on using and disclosing litigation support information. DoD organizations using litigation support contractors are generally already using very restrictive nondisclosure agreements to govern any sensitive information that may be provided to, or developed or discovered by, the litigation support contractors in providing litigation support services for DoD. These DoD organizations will likely review their current practices and make any necessary modifications to ensure that there are no inconsistencies with the new requirements. As such, DoD does not expect the rule to have a significant economic impact on the small businesses affected by this rule.

    There are no known significant alternatives to the rule. The impact of this rule on small business is not expected to be significant.

    VI. Paperwork Reduction Act

    The rule contains no new information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

    List of Subjects in 48 CFR Parts 204, 209, 212, 227, 237, and 252

    Government procurement.

    Jennifer L. Hawes, Editor, Defense Acquisition Regulations System.

    Therefore, the interim rule amending 48 CFR parts 204, 212, 227, 237, and 252 which was published at 79 FR 11338 on February 28, 2014, is adopted as a final rule with the following changes:

    1. The authority citation for 48 CFR parts 204, 209, 212, and 252 continues to read as follows: Authority:

    41 U.S.C. 1303 and 48 CFR chapter 1.

    PART 204—ADMINISTRATIVE MATTERS 2. Section 204.7401 is revised to read as follows:
    204.7401 Definitions.

    As used in this subpart—

    Computer software means computer programs, source code, source code listings, object code listings, design details, algorithms, processes, flow charts, formulae, and related material that would enable the software to be reproduced, recreated, or recompiled. Computer software does not include computer data bases or computer software documentation.

    Litigation information means any information, including sensitive information, that is furnished to the contractor by or on behalf of the Government, or that is generated or obtained by the contractor in the performance of litigation support under a contract. The term does not include information that is lawfully, publicly available without restriction, including information contained in a publicly available solicitation.

    Litigation support means administrative, technical, or professional services provided in support of the Government during or in anticipation of litigation.

    Litigation support contractor means a contractor (including its experts, technical consultants, subcontractors, and suppliers) providing litigation support under a contract that contains the clause at 252.204-7014, Limitations on the Use or Disclosure of Information by Litigation Support Contractors.

    Sensitive information means controlled unclassified information of a commercial, financial, proprietary, or privileged nature. The term includes technical data and computer software, but does not include information that is lawfully, publicly available without restriction.

    Technical data means recorded information, regardless of the form or method of the recording, of a scientific or technical nature (including computer software documentation). The term does not include computer software or data incidental to contract administration, such as financial and/or management information.

    3. Section 204.7402 is amended by adding paragraphs (c) and (d) to read as follows:
    204.7402 Policy.

    (c) Information that is publicly available without restriction, including publicly available solicitations for litigation support services, will not be protected from disclosure as litigation information.

    (d) When sharing sensitive information with a litigation support contractor, contracting officers shall ensure that all other applicable requirements for handling and safeguarding the relevant types of sensitive information are included in the contract (e.g., FAR subparts 4.4 and 24.1; DFARS subparts 204.4 and 224.1).

    4. Section 204.7403 is revised to read as follows:
    204.7403 Solicitation provision and contract clauses.

    (a) Use the provision at 252.204-7013, Limitations on the Use or Disclosure of Information by Litigation Support Offerors, in all solicitations for contracts that involve litigation support services, including solicitations using FAR part 12 procedures for the acquisition of commercial items.

    (b) Use the clause at 252.204-7014, Limitations on the Use or Disclosure of Information by Litigation Support Contractors, in all solicitations and contracts that involve litigation support services, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items.

    (c) Use the clause at 252.204-7015, Notice of Authorized Disclosure of Information for Litigation Support, in all solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items.

    PART 209—CONTRACTOR QUALIFICATIONS 5. Amend section 209.505-4 by— a. Redesignating paragraph (b) as paragraph (b)(i); b. In newly resdesignated paragraph (b)(i), removing “For contractors” and adding “For contractors, other than litigation support contractors,” in its place; and c. Adding new paragraph (b)(ii).

    The addition reads as follows:

    209.505-4 Obtaining access to proprietary information.

    (b) * * *

    (ii) For litigation support contractors accessing litigation information, including that originating from third parties, use and nondisclosure requirements are addressed through the use of the provision at 252.204-7013 and the clause at 252.204-7014, as prescribed at 204.7404(a) and 204.7404(b), respectively. Pursuant to that provision and clause, litigation support contractors are not required to enter into nondisclosure agreements directly with any third party asserting restrictions on any litigation information.

    PART 212—SOLICITATION PROVISIONS AND CONTRACT CLAUSES FOR THE ACQUISITION OF COMMERCIAL ITEMS
    212.301 [Amended]
    6. Amend section 212.301 by— a. In paragraph (f)(ii)(E), removing the term “Solicitation”; and b. In paragraph (f)(ii)(G), removing “Disclosure of Information to Litigation Support Contractors” and adding “Notice of Authorized Disclosure of Information for Litigation Support” in its place.
    PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 7. Amend section 252.204-7013 by— a. Revising the section heading. b. In the clause heading, removing “Support Solicitation Offerors” and adding “Support Offerors” in its place; c. Removing the clause date “(FEB 2014)” and adding “(MAY 2016)” in its place; d. Revising paragraph (a). e. In the paragraph (b) introductory text, adding “that” after “acknowledges”; f. In paragraph (b)(1), removing “That all” and adding “All” in its place; g. In paragraph (b)(2), removing “That the” and adding “The” in its place; h. In paragraph (b)(3), removing “That” and adding “The” in its place and removing “contracts.” and adding “contracts; and” in its place; i. Adding paragraph (b)(4); and j. In paragraph (c)(2), removing “such data or software, for the unauthorized duplication, release, or disclosure” and adding “such litigation information, for any such unauthorized use or disclosure” in its place.

    The revisions and addition read as follows:

    252.204-7013 Limitations on the Use or Disclosure of Information by Litigation Support Offerors.

    (a) Definitions. As used in this provision—

    Computer software means computer programs, source code, source code listings, object code listings, design details, algorithms, processes, flow charts, formulae, and related material that would enable the software to be reproduced, recreated, or recompiled. Computer software does not include computer data bases or computer software documentation.

    Litigation information means any information, including sensitive information, that is furnished to the contractor by or on behalf of the Government, or that is generated or obtained by the contractor in the performance of litigation support under a contract. The term does not include information that is lawfully, publicly available without restriction, including information contained in a publicly available solicitation.

    Litigation support means administrative, technical, or professional services provided in support of the Government during or in anticipation of litigation.

    Sensitive information means controlled unclassified information of a commercial, financial, proprietary, or privileged nature. The term includes technical data and computer software, but does not include information that is lawfully, publicly available without restriction.

    Technical data means recorded information, regardless of the form or method of the recording, of a scientific or technical nature (including computer software documentation). The term does not include computer software or data incidental to contract administration, such as financial and/or management information.

    (b) * * *

    (4) Upon completion of the authorized litigation support activities, the Offeror will destroy or return to the Government at the request of the Contracting Officer all litigation information in its possession.

    8. Amend section 252.204-7014 by— a. In the clause heading, removing the clause date “(FEB 2014)” and adding “(MAY 2016)” in its place; b. In paragraph (a), revising the introductory text and the definitions of “Litigation information”, “Litigation support contractor”, and “Sensitive information”; c. Revising paragraph (b); d. Redesignating paragraphs (c), (d), and (e) as paragraphs (d), (e), and (f); e. Adding a new paragraph (c); f. In newly redesignated paragraph (d)(2), removing “such data or software, for the unauthorized duplication, release, or disclosure” and adding “such litigation information, for any such unauthorized use or disclosure” in its place; and g. In newly redesignated paragraph (f), removing “this paragraph (e)” and add “this paragraph (f)” in its place.

    The revisions and addition read as follows:

    252.204-7014 Limitations on the Use or Disclosure of Information by Litigation Support Contractors.

    (a) Definitions. As used in this clause—

    Litigation information means any information, including sensitive information, that is furnished to the contractor by or on behalf of the Government, or that is generated or obtained by the contractor in the performance of litigation support under a contract. The term does not include information that is lawfully, publicly available without restriction, including information contained in a publicly available solicitation.

    Litigation support contractor means a contractor (including its experts, technical consultants, subcontractors, and suppliers) providing litigation support under a contract that contains this clause.

    Sensitive information means controlled unclassified information of a commercial, financial, proprietary, or privileged nature. The term includes technical data and computer software, but does not include information that is lawfully, publicly available without restriction.

    (b) Limitations on use or disclosure of litigation information. Notwithstanding any other provision of this contract, the Contractor shall—

    (1) Access and use litigation information only for the purpose of providing litigation support under this contract;

    (2) Not disclose litigation information to any entity outside the Contractor's organization unless, prior to such disclosure the Contracting Officer has provided written consent to such disclosure;

    (3) Take all precautions necessary to prevent unauthorized disclosure of litigation information;

    (4) Not use litigation information to compete against a third party for Government or nongovernment contracts; and

    (5) Upon completion of the authorized litigation support activities, destroy or return to the Government at the request of the Contracting Officer all litigation information in its possession.

    (c) Violation of paragraph (b)(1),(b)(2), (b)(3), (b)(4), or (b)(5) of this clause is a basis for the Government to terminate this contract.

    9. Amend section 252.204-7015 by— a. Revising the section heading, introductory text, the clause heading, and paragraph (a); and b. In the paragraph (b) heading, removing “Authorized disclosure” and adding “Notice of authorized disclosures” in its place.

    The revision read as follows:

    252.204-7015 Notice of Authorized Disclosure of Information for Litigation Support.

    As prescribed in 204.7403(c), use the following clause:

    Notice of Authorized Disclosure of Information for Litigation Support (May 2016)

    (a) Definitions. As used in this clause—

    Computer software means computer programs, source code, source code listings, object code listings, design details, algorithms, processes, flow charts, formulae, and related material that would enable the software to be reproduced, recreated, or recompiled. Computer software does not include computer data bases or computer software documentation.

    Litigation support means administrative, technical, or professional services provided in support of the Government during or in anticipation of litigation.

    Litigation support contractor means a contractor (including its experts, technical consultants, subcontractors, and suppliers) providing litigation support under a contract that contains the clause at 252.204-7014, Limitations on the Use or Disclosure of Information by Litigation Support Contractors.

    Sensitive information means controlled unclassified information of a commercial, financial, proprietary, or privileged nature. The term includes technical data and computer software, but does not include information that is lawfully, publicly available without restriction.

    Technical data means recorded information, regardless of the form or method of the recording, of a scientific or technical nature (including computer software documentation). The term does not include computer software or data incidental to contract administration, such as financial and/or management information.

    [FR Doc. 2016-10822 Filed 5-9-16; 8:45 am] BILLING CODE 5001-06-P
    DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Parts 212, 215, 216, and 225 Defense Federal Acquisition Regulation Supplement; Technical Amendments AGENCY:

    Defense Acquisition Regulations System, Department of Defense (DoD).

    ACTION:

    Final rule.

    SUMMARY:

    DoD is making technical amendments to the Defense Federal Acquisition Regulation Supplement (DFARS) to provide needed editorial changes.

    DATES:

    Effective May 10, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Ms. Jennifer L. Hawes, Defense Acquisition Regulations System, OUSD(AT&L)DPAP(DARS), Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060. Telephone 571-372-6115; facsimile 571-372-6094.

    SUPPLEMENTARY INFORMATION:

    This final rule amends the DFARS as follows—

    1. Corrects cross references at DFARS 212.301(f)(xvi), Acquisition of Information Technology, in paragraphs (A) and (B);

    2. Directs contracting officers to additional DFARS Procedures, Guidance, and Information (PGI) by adding a cross reference at DFARS 215.300 and updates the date of the Director, Defense Procurement and Acquisition Policy memorandum entitled “Department of Defense Source Selection Procedures”;

    3. Corrects a threshold at DFARS 215.408(3)(ii)(A)(1)(i) to reflect $750,000 in lieu of $700,000 that was inadvertently omitted in the inflation adjustment DFARS Case 2014-D025 published in the Federal Register at 80 FR 36903;

    4. Adds DFARS section 216.104 to provide guidance concerning selection and negotiation of the most appropriate contract type and also directs contracting officers to additional PGI coverage.

    5. Redesignates paragraphs within DFARS 225.7003-2 to add a new paragraph (b) to provide an internet link for more information on specialty metals restrictions and reporting of noncompliances.

    List of Subjects in 48 CFR 212, 215, 216, and 225

    Government procurement.

    Jennifer L. Hawes, Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 212, 215, 216, and 225 are amended as follows:

    1. The authority citation for 48 CFR parts 212, 215, 216, and 225 continues to read as follows: Authority:

    41 U.S.C. 1303 and 48 CFR chapter 1.

    PART 212—ACQUISITION OF COMMERCIAL ITEMS
    212.301 [AMENDED]
    2. Amend section 212.301, in paragraphs (f)(xvi)(A) and (B), by removing “239.7603(a)” and “239.7603(b)” and adding “239.7604(a)” and “239.7604(b)” in each place, respectively.
    PART 215—CONTRACTING BY NEGOTIATION 3. Revise section 215.300 to read as follows:
    215.300 Scope of subpart.

    Contracting officers shall follow the principles and procedures in Director, Defense Procurement and Acquisition Policy memorandum dated April 1, 2016, entitled “Department of Defense Source Selection Procedures,” when conducting negotiated, competitive acquisitions utilizing FAR part 15 procedures. See PGI 215.300.

    215.408 [AMENDED]
    4. Amend section 215.408, in paragraph (3)(ii)(A)(1)(i), by removing “$700,000” and adding “$750,000” in its place.
    PART 216—TYPES OF CONTRACTS 5. Add section 216.104 to read as follows:
    216.104 Factors in selecting contract type.

    Contracting officers shall follow the principles and procedures in Director, Defense Procurement and Acquisition Policy memorandum dated April 1, 2016, entitled “Guidance on Using Incentive and Other Contract Types,” when selecting and negotiating the most appropriate contract type for a given procurement. See PGI 216.104.

    PART 225—FOREIGN ACQUISITION 6. Amend section 225.7003-2 by— a. Redesignating paragraphs (a) and (b) as (1) and (2), respectively; b. Designating the introductory text as paragraph (a); c. In the newly redesignated paragraph (1), redesignating paragraphs (1) through (6) as paragraphs (i) through (vi), respectively; and d. Adding paragraph (b).

    The addition reads as follows:

    225.7003-2 Restrictions.

    (b) For more information on specialty metals restrictions and reporting of noncompliances, see http://www.acq.osd.mil/dpap/cpic/ic/restrictions_on_specialty_metals_10_usc_2533b.html.

    [FR Doc. 2016-10830 Filed 5-9-16; 8:45 am] BILLING CODE 5001-06-P
    DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Part 217 [Docket DARS-2015-0067] RIN 0750-AI80 Defense Federal Acquisition Regulation Supplement: Multiyear Contract Requirements (DFARS Case 2015-D009) AGENCY:

    Defense Acquisition Regulations System, Department of Defense (DoD).

    ACTION:

    Final rule.

    SUMMARY:

    DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2015 and a section of the Department of Defense Appropriations Act, 2015, which address various requirements for multiyear contracts.

    DATES:

    Effective May 10, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Mr. Christopher Stiller, telephone 571-372-6176.

    SUPPLEMENTARY INFORMATION:

    I. Background

    DoD published a proposed rule in the Federal Register at 80 FR 81499 on December 30, 2015, to amend the DFARS to implement section 816 of the National Defense Authorization Act for Fiscal Year 2015 (Pub. L. 113-291) and section 8010 of the Department of Defense Appropriations Act, 2015 (Division C, Title VIII of Pub. L. 113-235), which address various requirements for multiyear contracts. There were no public comments submitted in response to the proposed rule. There are no changes from the proposed rule made in the final rule.

    II. Applicability to Contracts at or Below the Simplified Acquisition Threshold (SAT) and for Commercial Items, Including Commercially Available Off-the-Shelf (COTS) Items

    This rule does not add any new provisions or clauses or impact any existing provisions or clauses.

    III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 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). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

    IV. Regulatory Flexibility Act

    A final regulatory flexibility analysis (FRFA) has been prepared consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is summarized as follows:

    The purpose of this rule is to implement section 816 of the National Defense Authorization Act for Fiscal Year 2015 and section 8010 of the Department of Defense Appropriations Act, 2015, which address various requirements for multiyear contracts. The rule will amend the Defense Federal Acquisition Regulation Supplement to require the head of agency to—

    • Provide written notice to the congressional defense committees at least 30 days before termination of any multiyear contract; and

    • For defense acquisition programs specifically authorized by law to be carried out using multiyear authority, ensure the Secretary of Defense certifies to Congress certain conditions for the multiyear contract have been met no later than 30 days before entry into the contract.

    No comments were received from the public regarding the initial regulatory flexibility analysis.

    The rule is not expected to impact small entities, because the rule applies to multiyear contract authorities for specific major defense acquisition programs for which small entities would not have the capacity or infrastructure to fulfill or sustain. Small entities may perform under multiyear contracts as subcontractors; however, the rule invokes requirements that apply at the prime contract level.

    This rule does not create any new reporting or recordkeeping requirements.

    There are no known significant alternatives to the rule. The impact of this rule on small business is not expected to be significant because it only affects DoD internal operating procedures.

    V. Paperwork Reduction Act

    The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

    List of Subjects in 48 CFR Part 217

    Government procurement.

    Jennifer Hawes, Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR part 217 is amended as follows:

    PART 217—SPECIAL CONTRACTING METHODS 1. The authority citation for 48 CFR part 217 continues to read as follows: Authority:

    41 U.S.C. 1303 and 48 CFR chapter 1.

    2. Revise section 217.170(b) to read as follows:
    217.170 General.

    (b) The head of the agency must provide written notice to the congressional defense committees at least 30 days before termination of any multiyear contract (section 8010 of Division C, Title VIII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235) and similar sections in subsequent DoD appropriations acts).

    3. Amend section 217.172— a. In paragraph (c), by removing “10 U.S.C. 2306b(i)(3)” and adding “10 U.S.C. 2306b(i)(1)” in its place; b. In paragraph (e)(1), by removing the word “and”; c. In paragraph (e)(2), by removing the period and adding a semicolon in its place; d. By adding paragraphs (e)(3), (4), and (5); e. In paragraph (h) introductory text, by removing “under the authority described in paragraph (b) of this section:” and adding “for a defense acquisition program that has been specifically authorized by law to be carried out using multiyear contract authority:” in its place; f. In paragraph (h)(2) introductory text, by removing “March 1 of the year in which the Secretary requests legislative authority to enter” and adding “30 days before entry” in its place and by removing “10 U.S.C. 2306b(i)(1)(A) through (G)” and adding “10 U.S.C. 2306b(i)(3)” in its place; g. In paragraph (h)(2)(i)— i. By removing “FAR 17.105” and adding “FAR 17.105-1” in its places; ii. By adding a comma after “(5)”; and iii. By removing “10 U.S.C. 2306b(i)(1)(A)” and adding “10 U.S.C. 2306b(i)(3)(A)” in its place; h. In paragraph (h)(2)(ii), by removing “10 U.S.C. 2306b(i)(1)(B)” and adding “10 U.S.C. 2306b(i)(3)(B)” in its place; i. In paragraph (h)(2)(iii), by removing “10 U.S.C. 2306b(i)(1)(C)” and adding “10 U.S.C. 2306b(i)(3)(C)” in its place; j. In paragraph (h)(2)(iv), by removing “10 U.S.C. 2306b(i)(1)(D)” and adding “10 U.S.C. 2306b(i)(3)(D)” in its place; k. In paragraph (h)(2)(v), by removing “10 U.S.C. 2306b(i)(1)(E)” and adding “10 U.S.C. 2306b(i)(3)(E)” in its place; l. In paragraph (h)(2)(vi), by removing “10 U.S.C. 2306b(i)(1)(F)” and adding “10 U.S.C. 2306b(i)(3)(F)” in its place; m. In paragraph (h)(2)(vii), by removing “10 U.S.C. 2306b(i)(1)(G)” and adding “10 U.S.C. 2306b(i)(3)(G)” in its place; n. In paragraph (h)(3), by removing “10 U.S.C. 2306b(i)(4)(A)” and adding “10 U.S.C. 2306b(i)(5)(A)” in its place; o. In paragraph (h)(4), by removing “10 U.S.C. 2306b(i)(4)(B)” and adding “10 U.S.C. 2306b(i)(5)(B)” in its place; p. In paragraph (h)(5), by removing “10 U.S.C. 2306b(i)(5)” and adding “10 U.S.C. 2306b(i)(6)” in its place; q. In paragraph (h)(6), by removing “10 U.S.C. 2306b(i)(6)” and adding “10 U.S.C. 2306b(i)(7)” in its place; r. Removing paragraph (h)(7); s. Redesignating paragraph (h)(8) as (h)(7); and t. In newly redesignated paragraph (h)(7) introductory text, adding “(10 U.S.C. 2306b(i)(4))” after “law's specific savings requirement” before the period.

    The additions read as follows:

    217.172 Multiyear contracts for supplies.

    (e) * * *

    (3) Cancellation provisions in the contract do not include consideration of recurring manufacturing costs of the contractor associated with the production of unfunded units to be delivered under the contract;

    (4) The contract provides that payments to the contractor under the contract shall not be made in advance of incurred costs on funded units; and

    (5) The contract does not provide for a price adjustment based on a failure to award a follow-on contract (section 8010 of Division C, Title VIII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235) and similar sections in subsequent DoD appropriations acts).

    [FR Doc. 2016-10823 Filed 5-9-16; 8:45 am] BILLING CODE 5001-06-P
    DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Parts 225 and 252 [Docket DARS-2015-0052] RIN 0750-AI76 Defense Federal Acquisition Regulation Supplement: Duty-Free Entry Threshold (DFARS 2015-D036) AGENCY:

    Defense Acquisition Regulations System, Department of Defense (DoD).

    ACTION:

    Final rule.

    SUMMARY:

    DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to update the threshold for duty-free entry on foreign supplies that are not from qualifying countries.

    DATES:

    Effective May 10, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Mr. Christopher Stiller, telephone 571-372-6176.

    SUPPLEMENTARY INFORMATION: I. Background

    DoD published a proposed rule in the Federal Register at 80 FR 72672 on November 20, 2015, to revise DFARS 225.901(3), and the clause 252.225-7013, Duty-Free Entry, by updating the $200 threshold that was established on April 30, 2003, to $300. There were no public comments submitted in response to the proposed rule. There are no changes from the proposed rule made in the final rule.

    II. Applicability to Contracts at or Below the Simplified Acquisition Threshold and for Commercial Items, Including Commercially Available Off-the-Shelf Items

    This rule merely updates the threshold for duty-free entry on foreign supplies that are not qualifying country suppliers or eligible products under a trade agreement. The clause at DFARS 252.225-7013, Duty-Free Entry, which is prescribed for use in lieu of Federal Acquisition Regulation clause 52.225-8, may be used in acquisitions at or below the simplified acquisition threshold when the savings from waiving the duty is anticipated to be more than the administrative cost of waiving the duty. The clause is not prescribed for use in contracts for commercial items, including commercially available off-the-shelf items.

    III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 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). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

    IV. Regulatory Flexibility Act

    A final regulatory flexibility analysis (FRFA) has been prepared consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is summarized as follows:

    The objective of this rule is to amend Defense Federal Acquisition Supplement (DFARS) subpart 225.9 and the clause at 252.225-7013, Duty-Free Entry, to update the threshold for duty-free entry on foreign supplies that are not from the qualifying countries.

    No comments were received from the public regarding the initial regulatory analysis.

    DoD does not expect this rule to have a significant economic impact on a substantial number of small entities because this rule only makes an upward inflationary adjustment of an administrative threshold, from $200 to $300, at DFARS 225.901(3) and the clause at DFARS 252.225-7013. The information requested in DFARS clause 252.225-7013 supplements the information requested in the Federal Acquisition Regulation clause at 52.225-10 and is required only if the contractor is requesting duty-free entry.

    Current data indicates, on average, approximately 31,500 duty-free entry certificates on foreign supplies for DoD per year. DoD does not expect a change in the estimated duty-free entry processes because the change is consistent with the rate of inflation; therefore, small entities will not be materially affected by this rule.

    This rule does not impose any additional reporting, recordkeeping, and other compliance requirements.

    There are no known significant alternatives to the rule. The impact of this rule on small business is not expected to be significant.

    V. Paperwork Reduction Act

    The rule affects the information collection requirements in the clause at DFARS 252.225-7013, currently approved under OMB Control Number 0704-0229, entitled “Defense Federal Acquisition Regulation Supplement Part 225, Foreign Acquisition, and related clauses,” in accordance with the Paperwork Reduction Act (44.U.S.C. chapter 35). The impact, however, is negligible, because this rule only makes an upward adjustment of the duty-free entry threshold from the $200 to $300, consistent with the rate of inflation.

    List of Subjects in 48 CFR Parts 225 and 252

    Government procurement.

    Jennifer L. Hawes, Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 225 and 252 are amended as follows:

    1. The authority citation for parts 225 and 252 continues to read as follows: Authority:

    41 U.S.C. 1303 and 48 CFR chapter 1.

    PART 225—FOREIGN ACQUISITION
    225.901 [Amended]
    2. In section 225.901, amend paragraph (3) by removing “$200” and adding “$300” in its place.
    PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES
    252.225-7013 [Amended]
    3. Amend section 252.225-7013 by— a. Removing the clause date “(NOV 2014)” and adding “(MAY 2016)” in its place; and b. Amending paragraph (b)(3) by removing “$200” and adding “$300” in its place.
    [FR Doc. 2016-10826 Filed 5-9-16; 8:45 am] BILLING CODE 5001-06-P
    DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Part 239 [Docket DARS-2015-0046] RIN 0750-AI72 Defense Federal Acquisition Regulation Supplement: Long-Haul Telecommunications (DFARS Case 2015-D023) AGENCY:

    Defense Acquisition Regulations System, Department of Defense (DoD).

    ACTION:

    Final rule.

    SUMMARY:

    DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to add a definition of “long-haul telecommunications.”

    DATES:

    Effective May 10, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Mr. Christopher Stiller, telephone 571-372-6176.

    SUPPLEMENTARY INFORMATION: I. Background

    DoD published a proposed rule in the Federal Register at 80 FR 72674 on November 20, 2015, to revise DFARS subpart 239.74 to add “long-haul telecommunications” to the telecommunications services definitions and identify Defense Information Systems Agency as the procurer of long-haul telecommunications services for DoD, as mentioned in DoD Directive 5105.19, Defense Information Systems Agency. There were no public comments submitted in response to the proposed rule. There are no changes from the proposed rule made in the final rule.

    II. Applicability to Contracts at or Below the Simplified Acquisition Threshold and for Commercial Items, Including Commercially Available Off-the-Shelf Items

    This case does not add any new provisions or clauses or impact any existing provisions or clauses.

    III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 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). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

    IV. Regulatory Flexibility Act

    A final regulatory flexibility analysis (FRFA) has been prepared consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is summarized as follows:

    The purpose of this final rule is to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to add a definition of “long-haul telecommunications” and provide a pointer to DFARS Procedures, Guidance, and Information for procedures internal to DoD.

    No comments were received from the public regarding the initial regulatory flexibility analysis.

    The requirements under this rule will apply to long-haul telecommunications (Product Service Code D304) requirements as defined in the DoD Directive 5105.19, Defense Information Systems Agency. According to data available in the Federal Procurement Data System-Next Generation (FPDS-NG) for fiscal year 2014 through July 31, 2015, DoD awarded 13,596 new long-haul telecommunications contracts. Approximately 3 percent (451) of the total were awarded to small entities (comprised of 222 unique small entities).

    This rule does not create any new reporting or recordkeeping requirements.

    There are no known significant alternatives to the rule. The impact of this rule on small entities is not expected to be significant because it only affects DoD internal operating procedures.

    V. Paperwork Reduction Act

    The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

    List of Subjects in 48 CFR Part 239

    Government procurement.

    Jennifer L. Hawes, Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR part 239 is amended as follows:

    PART 239—ACQUISITION OF INFORMATION TECHNOLOGY 1. The authority citation for part 239 continues to read as follows: Authority:

    41 U.S.C. 1303 and 48 CFR chapter 1.

    2. Amend section 239.7401 by— a. Removing the alphabetical paragraph designation from each definition; and b. Adding, in alphabetical order, a new definition for “Long-haul telecommunications”.

    The addition reads as follows:

    239.7401 Definitions.

    Long-haul telecommunications means all general and special purpose long-distance telecommunications facilities and services (including commercial satellite services, terminal equipment and local circuitry supporting the long-haul service) to or from the post, camp, base, or station switch and/or main distribution frame (except for trunk lines to the first-serving commercial central office for local communications services).

    3. Amend section 239.7402 by adding paragraph (d) to read as follows:
    239.7402 Policy.

    (d) Long-haul telecommunications services. When there is a requirement for procurement of long-haul telecommunications services, follow PGI 239.7402(d).

    [FR Doc. 2016-10825 Filed 5-9-16; 8:45 am] BILLING CODE 5001-06-P
    DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Part 241 [Docket DARS-2015-0050] RIN 0750-AI74 Defense Federal Acquisition Regulation Supplement: Contract Term Limit for Energy Savings Contracts (DFARS Case 2015-D018) AGENCY:

    Defense Acquisition Regulations System, Department of Defense (DoD).

    ACTION:

    Final rule.

    SUMMARY:

    DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to clarify the contract term for energy savings contracts awarded under 10 U.S.C. 2913.

    DATES:

    Effective May 10, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Ms. Amy Williams, telephone 571-372-6106.

    SUPPLEMENTARY INFORMATION:

    I. Background

    DoD published a proposed rule in the Federal Register at 80 FR 72675 on November 20, 2015, to clarify the contract term for contracts awarded under the statutory authority of 10 U.S.C. 2913. Ten respondents submitted public comments in response to the proposed rule.

    II. Discussion and Analysis

    DoD reviewed the public comments in the development of the final rule. A discussion of the comments received and the changes made to the rule as a result of those comments follows:

    A. Summary of Significant Changes From the Proposed Rule

    The final rule has been revised at DFARS 241.103(2) to provide that the contracting officer may enter into an energy savings contract under 10 U.S.C. 2913 for a period not to exceed 25 years. This change to “energy savings contract” from “shared energy savings contract” brings the term limit for all activities authorized by section 2913 under the final rule.

    B. Analysis of Public Comments 1. General Support for the Rule

    Comment: Several respondents expressed support for the changes in the proposed rule, indicating that the term limit of 25 years would promote the use of shared energy savings contracts, have a positive benefit on small businesses, facilitate greater partnerships between utilities and DoD customers, and increase competition. One respondent indicated that the term limit of 25 years would lead to several benefits including deeper retrofits, elimination of cream skimming, effectively leveraging private sector funding, and accomplishing the President's Performance Contracting Challenge goals.

    Response: Noted.

    2. Clarification of the Contract Period

    Comment: One respondent requested clarification of the date that the contract period commences. The respondent stated that the rule would most effectively accomplish its goal of accommodating project financing needs if the contract period were tied to the payment term, and suggested that the rule be revised to state the following: “The contracting officer may enter into a shared energy savings contract under 10 U.S.C. 2913 for a `payment term' not to exceed 25 years.”

    Response: Payment term is interpreted as the performance period of the contract, which is not to exceed 25 years. The contract period will include the entire performance period, including construction, if any.

    3. Inclusion of Water-Related Projects

    Comment: One respondent expressed concern that the rule's failure to address water-related projects authorized by 10 U.S.C. 2866 would result in ambiguity and confusion with regard to the term limit for such contracts. The respondent suggested that the rule be revised to state the following: “The contracting officer may enter into a contract under 10 U.S.C. 2913 or 10 U.S.C. 2866 for a period not to exceed 25 years.”

    Response: The recommendation is beyond the scope of the case.

    4. Application of 10 U.S.C. 2913 to Agreements With Gas or Electric Utilities

    Comment: One respondent stated that 10 U.S.C. 2913 applies not only to shared energy savings contracts, but also to agreements with gas or electric companies, and recommended removing the reference to shared energy savings contracts.

    Response: The final rule has been revised at 241.103(2) to provide that the contracting officer may enter into an energy savings contract under 10 U.S.C. 2913 for a period not to exceed 25 years.

    III. Applicability to Contracts at or Below the Simplified Acquisition Threshold and for Commercial Items, Including Commercially Available Off-the-Shelf Items

    This rule does not add any new provisions or clauses or impact any existing provisions or clauses.

    IV. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 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). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

    V. Regulatory Flexibility Act

    A final regulatory flexibility analysis (FRFA) has been prepared consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is summarized as follows:

    This final rule amends the Defense Federal Acquisition Regulation Supplement (DFARS) to clarify the contract term for contracts awarded under the statutory authority of 10 U.S.C. 2913. Section 2913 requires DoD to develop a simplified method of contracting for shared energy savings contract services that will accelerate the use of such contracts. DoD is authorized by section 2913 to contract with utility service providers to implement energy conservation measures on military bases. Section 2913 does not indicate a term limit for contracts or activities executed under this authority, and this has created ambiguity and inconsistency throughout DoD on the term limit that is imposed on contracts awarded under the authority. Additionally, the ambiguity has resulted in a hesitation to enter shared energy savings contracts, contrary to the intent of section 2913.

    No comments were received from the public regarding the initial regulatory flexibility analysis.

    The rule is not anticipated to have a significant economic impact on small business entities. The number of contract awards made under the authority of 10 U.S.C. 2913 is not currently tracked by DoD's business systems. However, it is estimated that approximately 25 shared energy savings projects are initiated across DoD each year, with approximately 17 being awarded annually. It is believed that most awards are made to large utility providers, with generally 25% or more of the renovation and operations and maintenance work executed under the awards being subcontracted to local small business by the utility provider.

    This rule does not create any new reporting or recordkeeping requirements.

    There are no known significant alternatives to the rule.

    VI. Paperwork Reduction Act

    The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

    List of Subjects in 48 CFR Part 241

    Government procurement.

    Jennifer L. Hawes, Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR part 241 is amended as follows:

    PART 241—ACQUISITION OF UTILITY SERVICES 1. The authority citation for part 241 continues to read as follows: Authority:

    41 U.S.C. 1303 and 48 CFR chapter 1.

    2. Amend section 241.103 by— a. Redesignating paragraphs (2) and (3) as paragraphs (3) and (4); and b. Adding a new paragraph (2).

    The addition reads as follows:

    241.103 Statutory and delegated authority.

    (2) The contracting officer may enter into an energy savings contract under 10 U.S.C. 2913 for a period not to exceed 25 years.

    [FR Doc. 2016-10824 Filed 5-9-16; 8:45 am] BILLING CODE 5001-06-P
    81 90 Tuesday, May 10, 2016 Proposed Rules DEPARTMENT OF ENERGY 5 CFR Chapter XXIII 10 CFR Chapters II, III, and X Reducing Regulatory Burden AGENCY:

    Office of the General Counsel, Department of Energy.

    ACTION:

    Request for information (RFI).

    SUMMARY:

    As part of its implementation of Executive Order 13563, “Improving Regulation and Regulatory Review,” issued by the President on January 18, 2011, the Department of Energy (Department or DOE) is seeking comments and information from interested parties to assist DOE in reviewing its existing regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed. The purpose of DOE's review is to make the agency's regulatory program more effective and less burdensome in achieving its regulatory objectives. In this request for information, DOE also highlights its most recent regulatory review and reform efforts conducted to date in light of comments from interested parties.

    DATES:

    Written comments and information are requested on or before July 11, 2016.

    ADDRESSES:

    Interested persons are encouraged to submit comments, identified by “Regulatory Burden RFI,” by any of the following methods:

    White House Web site: http://www.whitehouse.gov/engage.

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

    Email: [email protected] Include “Regulatory Burden RFI” in the subject line of the message.

    Mail: U.S. Department of Energy, Office of the General Counsel, 1000 Independence Avenue SW., Room 6A245, Washington, DC 20585.

    Docket: For access to the docket to read background documents, or comments received, go to the Federal eRulemaking Portal at http://www.regulations.gov.

    The Department's plan for retrospective review of its regulations and its subsequent update reports can be accessed at http://energy.gov/gc/services/open-government/restrospective-regulatory-review.

    FOR FURTHER INFORMATION CONTACT:

    Matthew Zogby, Office of the Assistant General Counsel for Legislation, Regulation, and Energy Efficiency, U.S. Department of Energy, Office of the General Counsel, 1000 Independence Avenue SW., Washington, DC 20585. Email: [email protected]

    SUPPLEMENTARY INFORMATION:

    On January 18, 2011, the President issued Executive Order 13563, “Improving Regulation and Regulatory Review,” to ensure that Federal regulations seek more affordable, less intrusive means to achieve policy goals, and that agencies give careful consideration to the benefits and costs of those regulations. To that end, the Executive order requires, among other things, that:

    • Agencies propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; and that agencies tailor regulations to impose the least burden on society, consistent with obtaining the regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; and that, consistent with applicable law, agencies select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity).

    • The regulatory process encourages public participation and an open exchange of views, with an opportunity for the public to comment.

    • Agencies coordinate, simplify, and harmonize regulations to reduce costs and promote certainty for businesses and the public.

    • Agencies consider low-cost approaches that reduce burdens and maintain flexibility.

    • Regulations be guided by objective scientific evidence.

    Additionally, the Executive Order directs agencies to consider how best to promote retrospective analyses of existing rules. Specifically, agencies were required to develop a plan under which the agency will periodically review existing regulations to determine which should be maintained, modified, strengthened, or repealed to increase the effectiveness and decrease the burdens of the agency's regulatory program. DOE's plan and its subsequent update reports can be accessed at http://energy.gov/gc/services/open-government/restrospective-regulatory-review.

    The Department is committed to maintaining a consistent culture of retrospective review and analysis. DOE will continually engage in review of its rules to determine whether there are burdens on the public that can be avoided by amending or rescinding existing requirements. To that end, DOE is publishing this RFI to again explicitly solicit public input. In addition, DOE is always open to receiving information about the impact of its regulations. To facilitate both this RFI and the ongoing submission of comments, interested parties can identify regulations that may be in need of review at the following White House Web site: http://www.whitehouse.gov/engage. DOE has also created a link on the Web page of DOE's Office of the General Counsel to an email in-box for the submission of comments, [email protected]

    While the Department promulgates rules in accordance with the law and to the best of its analytic capability, it is difficult to be certain of the consequences of a rule, including its costs and benefits, until it has been tested. Because knowledge about the full effects of a rule is widely dispersed in society, members of the public are likely to have useful information and perspectives on the benefits and burdens of existing requirements and how regulatory obligations may be updated, streamlined, revised, or repealed to better achieve regulatory objectives, while minimizing regulatory burdens. Interested parties may also be well-positioned to identify those rules that are most in need of review and, thus, assist the Department in prioritizing and properly tailoring its retrospective review process. In short, engaging the public in an open, transparent process is a crucial step in DOE's review of its existing regulations.

    The Department's dedication to involve the public in the regulatory process includes a number of ongoing successful public engagement efforts. These efforts include seeking public input on the retrospective review process, posting comments on our Web page to encourage the public to share their thoughts on the comments of others, and considering input received through a dedicated retrospective review email address. These efforts encourage public engagement in the retrospective review process, and provide the ability for the public to comment and engage in a dialog on the improvement of DOE regulations.

    The Department has developed another innovative way to engage the public in the regulatory review process. The Department has tasked the Appliance Standards and Rulemaking Federal Advisory Committee (ASRAC) to assist DOE in the retrospective review process. ASRAC was created as an advisory committee to provide advice and recommendations on the development of standards and test procedures for residential appliances and commercial equipment, certification and enforcement of standards, and product labeling. ASRAC is comprised of representatives from industry, utilities, energy efficiency/environmental advocacy groups, and consumer groups. As a part of the retrospective regulatory review process, the Department has tasked ASRAC to identify particular rules for which revision would have the most positive impact and potential improvement to the regulatory process. ASRAC meetings are also open to the public and notice of ASRAC meetings are published in the Federal Register. ASRAC has also been tasked with writing a report that details their recommendations for the regulatory review process. ASRAC held two meetings at which retrospective regulatory review was on the agenda. Involving ASRAC in the regulatory review process will provide the public with another means to help the Department determine the regulations that could benefit the most from retrospective review.

    Department of Energy Retrospective Review Successes

    The Department highlights the examples below as retrospective review successes resulting from public engagement in the regulatory process. For further details and additional examples, the public is invited to review DOE's previous update reports, available at http://www.energy.gov/gc/services/open-government/restrospective-regulatory-review. New retrospective successes from DOE's March 2016 and July 2015 reports are described below.

    (1) DOE published a proposed rule to amend its regulations for the timely coordination of Federal Authorizations for proposed interstate electric transmission facilities pursuant to section 216(h) of the Federal Power Act. This rulemaking will improve the pre-application procedures and result in more efficient processing of applications. The proposed rule implements a number of Presidential directives, including the Presidential Memorandum on “Speeding Infrastructure Development through More Efficient and Effective Permitting and Environmental Review” (August 31, 2011), Executive Order 13604, “Improving Performance of Federal Permitting and Review of Infrastructure Projects” (March 22, 2012), the Presidential Memorandum on “Modernizing Federal Infrastructure Review and Permitting Regulations, Policies, and Procedures ” (May 17, 2013, and the Presidential Memorandum on “Transforming our Nation's Electric Grid Through Improved Siting, Permitting, and Review” (June 7, 2013).

    (2) DOE published a final rule amending the administrative requirements for grants and cooperative agreements with for-profit organizations. Specifically, the rule modifies title provisions and requirements related to the handling of real property and equipment acquired with federal funds. The rule also adds provisions related to export control requirements and supporting U.S. manufacturing, reporting on utilization of subject inventions, novation of financial assistance agreements, and changes of control of recipients. The rule will reduce the burden on grant recipients because they will need to file only UCC-1s and will not have to negotiate a separate “priority” term in their individual grant agreements. As part of its retrospective review efforts, DOE will continue to consider input from affected parties on ways to reduce burdens on its grant recipients and entities with which DOE enters cooperative agreements.

    (3) DOE issued a comprehensive update of regulations in 10 CFR part 810 concerning Assistance to Foreign Atomic Energy Activities, making the regulations consistent with current global civil nuclear trade practices and nonproliferation norms. DOE has also initiated a process improvement program to reduce the public burden associated with nuclear technology export authorizations, to reduce specific authorization processing time, and to create a guide to part 810 and an electronic application and tracking (e-810) system. Since the Part 810 final rule went into effect on March 25, 2015, DOE has created guidance and FAQs, which are available online. As a result of the rule revisions, DOE estimates a net benefit, for the period 2013-2030, of $19,896,142 per year at a 7-percent discount rate and $19,253,076 per year at a 3-percent discount rate. The process improvement program is expected to reduce the time needed for DOE to process nuclear export authorizations and provide more transparency to submitters regarding process steps and the associated time needed to complete each step.

    List of Questions for Commenters

    The following list of questions is intended to assist in the formulation of comments and not to restrict the issues that may be addressed. In addressing these questions or others, DOE requests that commenters identify with specificity the regulation or reporting requirement at issue, providing legal citation where available. The Department also requests that the submitter provide, in as much detail as possible, an explanation why a regulation or reporting requirement should be modified, streamlined, expanded, or repealed, as well as specific suggestions of ways the Department can better achieve its regulatory objectives.

    (1) How can the Department best promote meaningful periodic reviews of its existing rules and how can it best identify those rules that might be modified, streamlined, expanded, or repealed?

    (2) What factors should the agency consider in selecting and prioritizing rules and reporting requirements for review?

    (3) Are there regulations that are or have become unnecessary, ineffective, or ill advised and, if so, what are they? Are there rules that can simply be repealed without impairing the Department's regulatory programs and, if so, what are they?

    (4) Are there rules or reporting requirements that have become outdated and, if so, how can they be modernized to accomplish their regulatory objectives better?

    (5) Are there rules that are still necessary, but have not operated as well as expected such that a modified, stronger, or slightly different approach is justified?

    (6) Does the Department currently collect information that it does not need or use effectively to achieve regulatory objectives?

    (7) Are there regulations, reporting requirements, or regulatory processes that are unnecessarily complicated or could be streamlined to achieve regulatory objectives in more efficient ways?

    (8) Are there rules or reporting requirements that have been overtaken by technological developments? Can new technologies be leveraged to modify, streamline, or do away with existing regulatory or reporting requirements?

    (9) How can the Department best obtain and consider accurate, objective information and data about the costs, burdens, and benefits of existing regulations? Are there existing sources of data the Department can use to evaluate the post-promulgation effects of regulations over time? We invite interested parties to provide data that may be in their possession that documents the costs, burdens, and benefits of existing requirements.

    (10) Are there regulations that are working well that can be expanded or used as a model to fill gaps in other DOE regulatory programs?

    The Department notes that this RFI is issued solely for information and program-planning purposes. Responses to this RFI do not bind DOE to any further actions related to the response. All submissions will be made publically available on http://www.regulations.gov.

    Issued in Washington, DC on May 3, 2016. Steven P. Croley, General Counsel.
    [FR Doc. 2016-10956 Filed 5-9-16; 8:45 am] BILLING CODE 6450-01-P
    DEPARTMENT OF AGRICULTURE Food and Nutrition Service 7 CFR Parts 272, 274, and 280 [FNS 2015-0021] RIN 0584-AE00 Supplemental Nutrition Assistance Program (SNAP): Disaster Supplemental Nutrition Assistance Program (D-SNAP) AGENCY:

    Food and Nutrition Service, USDA.

    ACTION:

    Proposed rule.

    SUMMARY:

    This proposed rule would amend the Supplemental Nutrition Assistance Program (SNAP) (formerly the Food Stamp Program) regulations to establish procedures for planning, requesting and operating a Disaster Supplemental Nutrition Assistance Program (D-SNAP). The rulemaking is necessary to implement a section of the Food and Nutrition Act of 2008. This rulemaking also addresses a section of the Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988 and accompanying Executive Order 12673, which provides the authority for the Department to determine the need for SNAP assistance during a presidentially-declared disaster.

    DATES:

    Written comments on this proposed rule must be received on or before July 11, 2016.

    ADDRESSES:

    The Food and Nutrition Service (FNS) invites interested persons to submit comments on this proposed rule. Comments may be submitted by any of the following methods:

    Federal eRulemaking Portal: Preferred method. Go to http://www.regulations.gov; follow the online instructions for submitting comments on Docket FNS 2015-0021.

    FAX: Submit comments by facsimile transmission to (703) 305-2486, attention: Sasha Gersten-Paal.

    Mail: Send comments to Sasha Gersten-Paal, Branch Chief, Certification Policy Branch, Program Development Division, Supplemental Nutrition Assistance Program, Food and Nutrition Service, 3101 Park Center Drive, Room 812, Alexandria, Virginia, 22302, (703) 305-2507.

    Hand Delivery or Courier: Deliver comments to Sasha Gersten-Paal at the above address.

    Additional electronic filing information: You may download a copy of this rule from www.fns.usda.gov/SNAP. You may also comment via the Internet at the same address. Please include ATTENTION RIN: 0584-AE00 in the subject line and your name and address in the message. If you do not receive a confirmation that we have received your comment please call Sasha Gersten-Paal at 703-305-2507.

    All comments on this proposed rule will be included in the record and will be made available to the public. Please be advised that the substance of the comments and the identity of the individuals or entities submitting the comments will be subject to public disclosure. FNS will make the comments publicly available on the Internet via http://www.regulations.gov.

    All submissions will be available for public inspection at the office of FNS during regular business hours (8:30 a.m. to 5:00 p.m., Monday through Friday) at 3101 Park Center Drive, Room 810, Alexandria, Virginia 22302-1594.

    Written comments on this proposed rule should be specific, confined to issues pertinent to the rule, and should explain the reason for any change you recommend. Where possible, you should reference the specific section or paragraph you are addressing. We may not consider or include in the Administrative Record that supports the final rulemaking comments that we receive after the close of the comment period or comments delivered to an address other than that listed above. We will make available all comments for public inspection, including, name, address and other contact information of respondents. If you wish to request that we consider withholding your name, address, or other contact information from public review or from disclosure under the Freedom of Information Act, you must state this prominently at the beginning of your comment. We will honor requests for confidentiality on a case-by-case basis to the extent allowed by law. We will make available for public inspection in their entirety all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses.

    FOR FURTHER INFORMATION CONTACT:

    For further information concerning this Notice of Proposed Rulemaking (NPRM) you may contact Sasha Gersten-Paal, Branch Chief, Certification Policy Branch, Program Development Division, Supplemental Nutrition Assistance Program, 3101 Park Center Drive, Room 810, Alexandria, Virginia, 22302, or by email at [email protected]

    SUPPLEMENTARY INFORMATION: Background

    The basic premise underlying the D-SNAP and this proposed rule is that when a disaster occurs (and after commercial channels of food distribution are operating again) there is an increased and immediate need for nutrition assistance for families that have suffered loss of income and/or incurred additional costs due to the disaster. SNAP is not designed to take disaster-related expenses into account in determining eligibility. SNAP eligibility requirements typically do not match the sudden (but temporary) needs of households affected by disaster, and SNAP's procedural requirements make it difficult for States to handle the large number of people suddenly in need of immediate assistance. Thus, it may be necessary to implement a D-SNAP that uses a different set of rules to determine need and issue benefits.

    How D-SNAP Currently Operates

    D-SNAP provides temporary food assistance for households affected by a disaster when there is a Presidential disaster declaration that includes the provision of individual assistance. Currently, D-SNAP provides one month of benefits to eligible disaster survivors and can facilitate the issuance of supplemental SNAP benefits for currently certified households. To be eligible for D-SNAP, a household must live (or in some cases, work) in the identified disaster area, have been affected by the disaster, and meet certain D-SNAP eligibility criteria. D-SNAP is designed for situations where a large number of households have disaster-related expenses not contemplated when an individual applies for SNAP.

    The primary responsibility for providing emergency food assistance rests with the State agency. Currently, utilizing FNS Guidance, State agencies design their own D-SNAP Plan, evaluate the need for a D-SNAP or another feeding program should a disaster strike, submit to FNS a detailed request to operate a D-SNAP, effectively implement the D-SNAP, ensure program integrity in D-SNAP operations, submit daily reports, perform post-disaster reviews and report their findings to FNS.

    What acronyms or abbreviations are used in this supplementary discussion of the proposed provisions?

    In the discussion of the proposed provisions in this rule, we use the following acronyms or other abbreviations to stand in for certain words or phrases:

    Phrase Acronym,
  • abbreviation,
  • or symbol
  • Code of Federal Regulations CFR. United States Code U.S.C. Disaster Supplemental Nutrition Assistance Program D-SNAP. Electronic Benefit Transfer EBT. Individual Assistance IA. Federal Register FR. Federal Fiscal Year FY. Food and Nutrition Act of 2008 Act. Food and Nutrition Service FNS. Secretary of Agriculture the Secretary. Supplemental Nutrition Assistance Program SNAP. U. S. Department of Agriculture the Department. Robert T. Stafford Disaster Relief and Emergency Assistance Act Stafford Act. Federal Emergency Management Agency FEMA.
    Legislation and Regulations What authorities does the Department have regarding disasters?

    FNS can provide disaster nutrition assistance in three ways:

    • Provide USDA purchased foods for shelters and other mass feeding sites (42 U.S.C. 5180);

    • Provide USDA commodity (food) assistance for distribution directly to households in need in certain limited circumstances (42 U.S.C.5180);

    • Approve a State D-SNAP operation and provide funding for 100 percent of disaster benefits and 50 percent of State administrative costs. FNS supports the State's efforts to provide D-SNAP benefits by providing policy guidance, training, and technical assistance to State agencies as they plan, implement, and assess their D-SNAP activities (42 U.S.C. 5179).

    All three types of assistance may be needed for disaster victims throughout or at different points of time following the disaster. However, households cannot simultaneously receive both D-SNAP benefits and commodity assistance.

    Under the Stafford Act the President is authorized to declare a “major disaster” when requested to do so by the Governor of a state stuck by a natural disaster. The President may direct Federal agencies to support States' response efforts and assist in the distribution of food and other consumable supplies.

    After consultation with FEMA, the Secretary also has the authority to establish temporary emergency standards of eligibility for victims of a disaster if they are in need of temporary food assistance, and commercial channels of food distribution were disrupted, but have again become available. FNS has generally approved States' requests for D-SNAP under Stafford Act authority when areas affected by disasters have received a Presidential disaster declaration that includes an individual assistance declaration, since this establishes the need for assistance at the household level.

    What does legislation say about D-SNAP?

    The Stafford Act provides the Secretary of Agriculture with the authority to operate a D-SNAP when affected areas have received a Presidential major disaster declaration for individual assistance (IA) and when commercial channels of food distribution are available. Section (5)(h) of the Act provides the Secretary with the authority to establish temporary emergency standards of eligibility for households who are survivors of a disaster that disrupts commercial channels of food distribution, after those channels have been restored. The Act requires that the Secretary establish a disaster task force to assist States in the implementation and operation of a D-SNAP and send members to the disaster site if cost-effective. The Act also requires that the regulations address replacement benefits for households currently certified in SNAP that experience food loss, and provides for the adjustment of issuance and reporting requirements in the D-SNAP.

    Under Section 11(e)(14) of the Act, as part of a State agency's overall Plan of Operation, the State agency is required to specify a plan for providing SNAP for households that are victims of a disaster and that such plan shall include, but not be limited to, procedures for informing the public about the disaster program and how to apply for its benefits. The plan should also give consideration to coordinating efforts with other Federal and private relief agencies, as well as local government officials.

    Has the Department previously published rules for D-SNAP?

    The Department published the interim rule in 1981, at 46 FR 8922-01 (January 27, 1981) (amended in 1991 and 2005), which established the Department's authority to approve temporary emergency standards of eligibility for disaster victims without regard to Section 4(c) of the Act or the procedures set forth in the Administrative Procedure Act (5 U.S.C. 553). Based on this authority, as disasters have occurred, the Department has approved the specific procedures to be used, depending on the circumstances of each particular disaster. The procedures in the interim rulemaking (that was never published as a final rule) for certifying disaster-affected households and issuing D-SNAP benefits initially served as a basis for D-SNAP guidance to States. FNS guidance has since evolved and has been updated as necessary based on experience and States' needs.

    Would this proposed rule address the “Disaster Task Force” discussed in the Act?

    The proposed rule does not address the D-SNAP task force. FNS employs staff at its national office and in its regional offices that work with State staff, and coordinate with other Federal agencies in preparing for disasters. FNS staff assists with D-SNAP operations as appropriate, including going on-site in many instances. While these staffs change over time in response to the need for disaster-related activity, they constitute the flexible type of task force contemplated by the Act. Thus, there is no need to regulate this provision of the Act.

    What do the current interim regulations for D-SNAP say?

    The interim regulations currently in effect state that:

    • The Secretary shall, after consultation with the official empowered to exercise the authority provided for by the Stafford Act, establish temporary emergency standards of eligibility for the duration of the emergency for households who are victims of a disaster which disrupts commercial channels of food distribution, if such households are in need of temporary food assistance and if commercial channels of food distribution have again become available to meet the temporary food needs of such households.

    • Such standards as are prescribed for individual emergencies may be promulgated without regard to section 4(c) of this Act or the procedures set forth in 5 U.S.C. 553.

    • In addition to establishing temporary emergency standards of eligibility, the Secretary shall provide for emergency allotments to eligible households to replace food destroyed in a disaster. Such emergency allotments would be equal to the value of the food actually lost in such disaster but not greater than the applicable maximum monthly allotment for the household size.

    • The Secretary may also approve alternate methods for issuing food stamp benefits during a disaster when reliance on Electronic Benefits Transfer (EBT) systems is impracticable.

    What has the Department learned using this authority?

    The Department has learned several lessons over the years. First, each disaster situation is different and it is important to provide States flexibility in requesting a D-SNAP that will meet the needs of the disaster victims and is compatible with the State's plans and administration. Second, disaster planning and preparation are critical to a timely and well coordinated response to different disaster situations. Third, State monitoring and reporting on program operations and integrity must be integrated into the planning and implementation of any D-SNAP.

    What aspects of the D-SNAP does the proposed rule address?

    This proposed rule primarily addresses several aspects of the D-SNAP, including:

    • The development of a Disaster Plan • Circumstances necessary for approval of a D-SNAP • Required content of the State request to FNS for a D-SNAP • The basic eligibility and benefit policy for participation in D-SNAP • The application processing requirements for D-SNAP • Policy regarding currently certified SNAP participants residing in disaster areas • Monitoring State D-SNAP operations • State Reporting on D-SNAP (both during and at the conclusion of disaster operations) Does this proposed rule establish detailed operating and policy requirements for all D-SNAP operations?

    This proposed rule is intended to provide as much flexibility as possible in the design of each D-SNAP operation while establishing consistent rules for requesting, monitoring and reporting on the D-SNAP. The reason for this is the varied and unpredictable nature of each disaster. While there are similarities among disasters, each set of circumstances is different enough that any attempt to limit State and FNS flexibility could cause delays in Federal and State response time in providing benefits to the victims of disasters. Thus, regulations that inherently seek to standardize policy and procedures, regardless of specific circumstances, can become problematic when the circumstances call for flexibility. In this proposal, the Department provides a basic framework for D-SNAP that sets clear expectations for State and local administrators while still allowing as much flexibility as possible. Furthermore, the Department is attempting to provide responsible fiscal controls of the disaster benefits while ensuring that benefits are provided to eligible applicants during disasters.

    Does FNS provide additional direction or guidance regarding D-SNAP?

    Yes, FNS provides detailed guidance which can be found on the FNS Web site at http://www.fns.usda.gov/disasters/response/D-SNAP_Handbook/D-SNAP_handbook.pdf. This guidance is based upon lessons learned by FNS and States' best practices in several types of disasters. It is designed to assist States in all aspects of the D-SNAP. Adherence to this guidance can improve preparedness, expedite approval of requests and reduce the potential for waste and fraud in D-SNAP operations.

    When is it appropriate to request D-SNAP?

    D-SNAP timing varies with the unique circumstances of each disaster, but begins after there has been a Presidentially-declared disaster for IA and commercial channels of food distribution have been restored so families are able to purchase and prepare food.

    What is IA?

    IA is financial or direct assistance to individuals and families whose property has been damaged or destroyed as a result of a Presidentially-declared disaster, and whose losses are not covered by insurance. The decision to designate an area as eligible for IA is made by FEMA. The IA is intended to help households with critical expenses that cannot be covered in other ways.

    FNS proposes to approve the operation of D-SNAP under Stafford Act authority when affected areas have received a Presidential disaster declaration for IA because receipt of an individual assistance declaration is indicative of households' need for food assistance in the affected area. However, since D-SNAP is intended to meet households' immediate needs, States would be required to implement D-SNAP within a reasonable time period following the IA declaration. FNS is reluctant to approve requests for D-SNAP that are made after the immediate need for food assistance has passed.

    How is D-SNAP funded?

    FNS provides 100 percent of disaster benefits and 50 percent of State administrative costs.

    What is a State's responsibilities in D-SNAP?

    The Department proposes that the primary responsibility for providing emergency food assistance continue to rest with the States. State agencies would continue to design their own D-SNAP Plan, evaluate the need for a D-SNAP or another feeding program when a disaster strikes, submit a detailed request to FNS to operate a D-SNAP, effectively implement the D-SNAP, ensure program integrity in D-SNAP operations, submit daily reports, perform post-disaster reviews, and report their findings to FNS.

    Basic D-SNAP Policies How do D-SNAP non-financial eligibility criteria differ from SNAP?

    Eligibility criteria vary depending upon the disaster, the demographics of the affected jurisdictions and States' D-SNAP requests. FNS has exercised its disaster authority to waive SNAP eligibility restrictions, streamline States' D-SNAP operations and ensure that families in the affected areas are served as efficiently as possible.

    How is the allotment calculated in D-SNAP?

    D-SNAP provides a full month's allotment to disaster affected households who may not normally qualify for or participate in SNAP. The allotment for a household is equal to the maximum monthly allotment for the household size provided under SNAP.

    D-SNAP allotments are updated yearly and available on the FNS Web site. In order to serve disaster affected households already participating in SNAP and residing in areas approved to operate a D-SNAP, States may supplement the SNAP benefit up to the maximum allotment for the household size.

    What is the D-SNAP “Application Period”?

    The Department proposes that States may only accept applications for D-SNAP benefits from households not participating in SNAP and requests for supplements only from households currently certified in SNAP during the approved application period. FNS has generally approved application periods of 7 consecutive days (business days at the State's option), though States have the option to request more or fewer days in the D-SNAP request. FNS proposes to continue with this approach. The State should also inform FNS, as part of the D-SNAP request, whether applications will be accepted on Saturday and/or Sunday. If the State is accepting requests for supplements from households currently certified in SNAP over the phone and mailing the forms to the household, the required affidavit attesting to the loss of food purchased with SNAP benefits must requested during the application period.

    What is a D-SNAP “Benefit Period”?

    The Department proposes that the benefit period be a 30-day period approved by FNS for each D-SNAP. The benefit period is the period during which disaster-related expenses are to be counted; the start date is used to determine household composition and resources. Only income received, expenses incurred and resources that are accessible during the benefit period are considered in determining D-SNAP eligibility. The benefit period begins on the first date of the disaster generally referred to as the “Incident Period” identified in the Presidential Disaster Declaration.

    Can the Application and Benefit Periods be modified?

    The Department proposes that any modifications to a D-SNAP be approved by FNS in writing. For example, if a State agency determines that the initial benefit period requested is not appropriate, it may request a modification of the benefit period start/end dates. This could, for example, accommodate disaster related expenses incurred in preparation for the disaster. However, once the application period has commenced the benefit period could not be changed. Doing so would introduce unnecessary complexity and potential inequity into the D-SNAP.

    If demand for D-SNAP benefits increases or remains high during the initially approved application period, FNS may consider a State's request for an extension of the application period. States requesting an extension should address the ongoing demand for assistance and any program integrity concerns in their request.

    What are the basic eligibility criteria for D-SNAP?

    To be eligible for D-SNAP, the Department proposes that an applicant household must first meet basic criteria, including: (1) Residency; (2) Household Composition; (3) Adverse effects due to the disaster; and (4) Income requirements.

    How is residency determined?

    Under this proposed rule, the household must have lived in the disaster area at the time of the disaster. However, States may also choose to extend eligibility to those who worked in the disaster area at the time of the disaster. When submitting their D-SNAP requests, States should specify if they will serve households that (a) lived in the disaster area, or (b) lived or worked in the disaster area.

    How is household composition established?

    The Department proposes that D-SNAP household composition be established based upon persons who live, purchase food, and prepare meals together on the date of the first day of the disaster benefit period, which will be considered to be the earliest date that households are in need. This rulemaking proposes that the benefit period begin on the date of the disaster or the date of any mandatory evacuation preceding the disaster.

    What is an adverse effect?

    The Department proposes that disaster-related adverse effects include three categories:

    ○ Loss or inaccessibility of income involving a reduction or termination of income, or a significant delay in receipt of income.

    ○ Inaccessibility of liquid resources, including situations in which the household is unable to access cash resources for a portion of the disaster benefit period.

    ○ Disaster related expenses that the household has incurred during the disaster benefit period that result from the effects of the disaster.

    The FNS Disaster SNAP Guidance provides specific expenses that shall be considered disaster related, and States can propose other reasonable expenses in their disaster request.

    How is household income dealt with for D-SNAP?

    The Department proposes that the income of households that meet the residency, household composition and adverse effect criteria be measured against the D-SNAP gross income limit (DGIL) in order to determine eligibility. The DGIL is explained below.

    Unlike SNAP, which includes separate tests for income and resources, the Department proposes that D-SNAP would group income and resources together under one test. This is the method that is already being used in D-SNAP. To determine a household's D-SNAP income:

    • Add all income received or expected to be received during the benefit period to accessible liquid resources (liquid resources include cash on hand, and funds in accessible checking and saving accounts on the first day of the benefit period);

    • Subtract the value of unreimbursed disaster related expenses incurred during the disaster benefit period from the income/liquid resource amount (any reimbursements received or anticipated to be received by the household during the benefit period, including insurance and FEMA payments would reduce the allowable disaster-related expense amount); and

    • Compare the result compared to the DGIL and if it is less than or equal to the DGIL, the household would be eligible for D-SNAP benefits.

    What is the Department proposing to include as D-SNAP income?

    The Department proposes that D-SNAP income would be the net (take-home) pay of all household members during the benefit period, including:

    • Wages a household actually receives after taxes and all other payroll withholding (including contributions to 401(k) or other inaccessible accounts, automatic payments to creditors, etc.);

    • Public assistance payments or other unearned income; and

    • Net self-employment income.

    As determined by the State agency, income that has been delayed for a substantial portion of the benefit period due to the disaster would be considered inaccessible.

    For example, household X consists of four people who are not currently participating in SNAP. Their household was impacted by the disaster and they apply for D-SNAP. One individual is employed and receives monthly take-home pay of $1200, after payroll taxes and health insurance premium are taken out. The other individual receives $850 in TANF benefits each month. The household's total income for D-SNAP purposes is $1200 + $850 = $2050.

    What is the Department proposing to exclude as D-SNAP resources?

    The Department proposes that the following be deemed as not accessible liquid resources:

    • Retirement accounts;

    • Disaster insurance payments;

    • Disaster assistance received or expected to be received during the benefit period; and

    • Payments from Federal, state or county/local government agencies or disaster assistance organizations (including disaster-related Unemployment Compensation).

    Inaccessible liquid resources would also include otherwise liquid resources that are temporarily inaccessible (for instance, because a bank with a household's certificate of deposit is closed due to the disaster) during the benefit period. In the Department's experience, this is an infrequent occurrence, as households can usually access their resources via online banking or ATMs even if bank branches are closed in the affected area. For example, on the day the disaster struck, household X had $50 in cash, and $250 in its checking account, with an additional $300 in a savings account. The funds in these accounts are accessible. The household has applied for FEMA assistance for the property damage it incurred. The household's total accessible liquid resources are $50 + $250 + $300 = $600, since the FEMA assistance will not be received before the benefit period ends. Their household's total accessible liquid resources are $50 + $250 + $300 = $600.

    How is the DGIL calculated?

    The Department proposes to calculate each year's disaster gross income limit by adding together the SNAP maximum monthly net income limit, the SNAP maximum standard income deduction amount, and the SNAP maximum capped shelter expense deduction for each household size. Together, these amounts establish a simplified process to determine if households are in need of assistance that is grounded in the SNAP income methodology and standards for determining eligibility. For household X in the above examples, the total D-SNAP “income” of $2650 ($2050 + $600), would be compared to the DGIL for a household of four to determine eligibility for D-SNAP.

    How is the requirement that households purchase food applied?

    The Department proposes that, to be eligible, households must either plan on purchasing food during the disaster benefit period, or have already purchased food during the benefit period. This would clearly apply to most households, other than with very large disasters where households may remain in shelters and be served through congregate feeding throughout the benefit period.

    What are disaster-related expenses?

    These are expenses that the household has incurred during the disaster benefit period due to the disaster. Eligible expenses would include the following, plus any other reasonable disaster-related expenses determined by the State agency:

    • Home or business repairs • Temporary shelter expenses • Evacuation expenses • Home/business property protection • Medical expenses due to personal injury • Disaster-related funeral expenses • Expenses related to replacing necessary personal and household items, such as clothing, appliances, tools, and educational materials • Fuel for primary heating source • Clean-up items expense • Disaster-damaged vehicle expenses • Storage expenses • Food lost in the disaster Are all disaster-related expenses deductible?

    In the past, all of the above expenses would be deductible if they have been or are anticipated be paid during the benefit period unless the household receives or anticipates receiving a reimbursement for these expenses during the benefit period, in which case only any remaining obligation expense is deductible. The Department's practice to date has been only to allow a deduction for expenses which are paid during the benefit period. Consequently, bills paid by credit card or other payments over time have not been allowed as deductions. The Department is now proposing to allow deductions for expenses that are incurred during the benefit period even if those expenses will be paid after the benefit period. The Department believes that this policy would be more equitable since households that incur similar disaster related expenses should not be treated differently simply because they pay using a credit card instead of cash or a check. The Department is interested in receiving comments on this proposed change.

    What options do States have in determining deductions?

    In conjunction with the options discussed below, the Department proposes that States may also choose to consider households that have experienced food loss as their only disaster-related expense to be eligible for the D-SNAP. The State would use available information such as power outage maps showing affected homes or zip codes to determine if allowing eligibility based upon food-loss alone is appropriate. Households reporting excessively large amounts of food loss, or any other questionable information, would be referred to fraud investigators or senior staff for further review.

    This proposed rule would provide States the following two options in determining if households have disaster-related expenses and the amount of the expense to use in determining D-SNAP income. The option selected would be identified in the State's D-SNAP request.

    • Use of the disaster-related expenses identified above and in the FNS Disaster SNAP Guidance. Under this option, states may choose to have food-loss only or food loss plus one additional disaster related expense in order to be eligible.

    • Use of a Disaster Standard Expense Deduction (DSED). For households with $100 or more in deductible disaster-related expenses (including food loss), the DSED would be added to the disaster gross income limit and households whose take-home pay plus available liquid resources is less than or equal to this amount (DSED+DISASTER GROSS INCOME LIMIT) would qualify for D-SNAP benefits. Because the DSED is designed to capture food loss along with other disaster-related expenses, such as loss of income and damage to or destruction of property, as noted earlier, it could not be applied to cases in which food loss is the only disaster-related expense.

    The DSED that has been used by several States is based upon information gathered from actual disaster-related expenses reported in a prior D-SNAP. As proposed in this rulemaking, only households with actual, unreimbursed disaster-related expenses equal to or greater than $100 would qualify for the DSED. Households with deductible disaster-related expenses that fall below the $100 threshold would have their eligibility determined using their actual expenses. If a household has disaster expenses which exceed the DSED for its size, the State may, at its option, use actual expenses to determine eligibility.

    How is food loss in a disaster addressed in the proposed rule?

    The Department proposes that the loss of food due to the disaster be considered a disaster-related expense and that including “food loss alone” as a criterion for eligibility be optional and be addressed in the D-SNAP request to FNS. It is important to note that households currently certified in SNAP can always request the replacement of lost food that was purchased with their SNAP benefits under standard SNAP rules. Food lost or spoiled due to the disaster or extended power outage is always considered a disaster expense.

    What verification is required in a D-SNAP?

    The Department proposes that verification rules be eased (relative to SNAP) to reduce administrative burdens and to reflect the reality that due to the nature of a disaster, households and eligibility workers may not have access to usual verification sources. Proposed verification requirements for D-SNAP in the proposed rule are three-tiered:

    • Identity must be verified;

    • Verification of residency and household composition must be attempted in all cases, and must be pursued if questionable; and

    • Loss/inaccessibility of income or liquid resources and food loss must be verified if questionable.

    Such verification shall be performed in accordance with the requirements at 7 CFR 273.2(f).

    What requirements are proposed regarding duplicate participation

    The Department proposes that States check for duplicate information up front or accept applications and inform applicants that eligibility is contingent upon a subsequent duplicate check. States would be required to screen all household members for duplicate participation in:

    • D-SNAP and SNAP • D-SNAP and disaster commodity food assistance • Multiple D-SNAPs with overlapping benefit periods • Approved D-SNAP and denied D-SNAP applicants (to identify attempted duplicate participation) Disaster Plan What does the rule propose requiring in States' disaster plans?

    The Department proposes in § 280.1(b) that the State Disaster Plan must include the following information:

    • Agencies and Responsibilities. This would identify State and Federal government agencies with responsibilities for disaster assistance, including a description of responsibilities for each agency.

    • Points of Contact. This would provide names, positions, and phone numbers of county/local, State and Federal government officials, and their back-ups, who are key contact persons during a disaster (including the State agency disaster coordinator).

    • Community Partners and Roles. This would identify private disaster relief agencies within the State, such as the Red Cross, Salvation Army, or community groups, and a description of their roles in D-SNAP implementation.

    • Staffing and Resources. This would identify staffing and related resources available to assist in a disaster, and how they will be mobilized to target disaster areas in need. It would also explain how the State/counties will manage the increased administrative burden associated with running a D-SNAP and SNAP operations simultaneously.

    • Application System. This would describe application systems to be used for D-SNAP household management, including any workarounds to the SNAP system, considerations associated with running SNAP and D-SNAP operations concurrently, compliance with D-SNAP reporting requirements, etc.

    • Issuance System. This would describe benefit issuance systems to be used for D-SNAP household management.

    • EBT Card Stock. This would identify EBT card stock available, type of cards to be used, steps and timeline for ordering additional cards, and any special procedures or resources that will be needed to meet SNAP and D-SNAP issuance timeframes.

    • Application Sites. This would describe site selection procedures, including potential application/issuance sites for disasters that vary in size and scope, and any agreements in place with those locations. If D-SNAP will operate out of local offices, it would explain how application sites will handle running D-SNAP and SNAP concurrently.

    • Data. This would identify general demographic data that can help the agency tailor its response to a disaster. It would identify resources and contact information for disaster impact data, including preliminary data assessments, flood maps, or electrical outage data.

    • Public Information and Outreach. This would describe public information strategy to ensure that timely, accurate information reaches eligible households. It would outline roles, expectations, and responsibilities of any SNAP outreach partners included in the State Outreach Plan that will assist with D-SNAP.

    • Retailer Communication. This would describe procedures to notify retailers of new waivers (see discussion of the potential for hot foods below) and new D-SNAP households.

    • Procedures to Reduce Applicant Hardship. This would outline steps the State will take to reduce hardship for D-SNAP applicants and SNAP caseload, including provisions for security, human needs, language services, elderly/disabled, etc.

    • Certification Process. This would describe the specifics of the certification process, including potential application sites, staffing, separation of eligibility and issuance, and how application sites will manage large crowds. If online applications are to be used by workers or households, the plan would describe that process and back-up systems in place if the online system is not available.

    • Use of a DSED and the income limits.

    • Reasonable Accommodations for Individuals with Disabilities. This would describe what special accommodations will be made for individuals with disabilities at the application and issuance sites. This section may also include special accommodations to provide program access to individuals with disabilities beyond those required at application and issuance sites, such as transportation services or home visits, as determined by the State agency on a case by case basis, but without imposing an undue burden on the State agency.

    • Household Materials. This would include sample household application and household notices in various languages.

    • Issuance Process. This would describe how benefits will be made available within 72 hours of D-SNAP application and how to ensure continuation of SNAP certification, issuance, and other actions concurrently. It would indicate how the State will monitor stock levels and ensure sufficient EBT card stock. It would describe EBT card on-site or mail issuance procedures and reconciliation, as well as security procedures, including how D-SNAP benefits will be tracked separately from SNAP benefit issuance. Plans would need to adhere to FNS reconciliation guidelines so benefits posted to accounts can be compared to benefits issued by the State eligibility system.

    • Security and Fraud Prevention Plan. This would describe how the State will ensure security and mitigate the risk of fraud, including a specific plan for handling applications submitted by State agency employees, procedures for handling questionable applications, process for checking all household members for duplicate participation, and any onsite security.

    • Disaster Reporting and Post-Disaster Review Report. This would describe procedures to ensure that required federal reporting and post-disaster review report will be complete and timely. This would include daily reporting.

    Disaster plans should also address any circumstances unique to the State which may affect D-SNAP operations, including: Coordination of resources among County-level administrations; serving isolated populations, the development of “work-arounds” to allow SNAP systems to accommodate D-SNAP operations; and, contingency plans for local offices located in flood plains or otherwise subject to closure.

    Conforming amendments are proposed in 7 CFR 272.2(a), 272.2(d), and 272.2(e) to acknowledge the Disaster component of the State agency's overall State plan.

    How often should the D-SNAP Plan be updated?

    To ensure that necessary advance preparations are current, the Department proposes in § 280.1(b) of this rulemaking that State agencies be required to review their existing Disaster Plan on at least an annual basis and submit a revision, if a substantive change is being made, or a notice of no substantive change, for FNS approval by the 15th of August each year or another negotiated due date approved by FNS. As specified in § 280.8(f), State agencies would be required to amend the plan if deficiencies are found in a D-SNAP post-disaster review. If plans are not changed from the prior submissions, States would be able to submit letters to this affect rather that a complete plan.

    What training is required related to the D-SNAP plan?

    The Department proposes that, at a minimum, States be required to provide D-SNAP training to management in each SNAP local office and call center. While FNS encourages that training be as complete and inclusive as practical, at least one manager (perhaps a D-SNAP coordinator) from each SNAP office must be included in whatever training the State deems appropriate.

    What State System requirements are there related to D-SNAP preparations?

    While there is a variety of programming that could be in place to be ready in preparation for a disaster and improve operational efficiency, each State is expected to make such choices based upon their administrative needs and system capabilities. The exception to this general expectation is that the Department proposes to require that every State have the ability to check for duplicate participation for all household members, as well as conduct reconciliation of D-SNAP benefits and generate the reports required by this rule. This includes being able to track disaster benefits separately from SNAP benefit issuance. States would also need to have a method in place to allow for tracking of multiple D-SNAPs simultaneously should they be struck by two disasters within a short timeframe. States also must adhere to FNS reconciliation requirements so that they can compare benefits posted to accounts to benefits issued by the State eligibility system.

    Requesting D-SNAP What is required in the D-SNAP request?

    The Department proposes that D-SNAP requests be submitted with a signed cover memorandum from the State that includes a thorough explanation of the components listed below. Well-documented requests can be considered and approved more quickly—clearly a priority in a disaster situation. It is proposed that each D-SNAP request include:

    • A description of the disaster—what happened, dates it occurred, the affected area.

    • The geographic area and explanation of any differences between the area included in the presidential declaration and the requested area in which to operate the D-SNAP.

    • The start and end dates of the application period. If it will be staggered, give dates for each county/area. Note if application sites will be open over the weekend or for extended hours.

    • The start and end dates of the 30-day benefit period. The start of the benefit period should generally match the first day of the “incident period” on the disaster declaration. If not, the State should explain the reason for the difference.

    • Whether a DSED is being used and how it is structured.

    • Whether only households that lived in the disaster area will be eligible for D-SNAP or if households that worked in the disaster area will also be eligible.

    • Whether “food loss alone” will be a criterion for eligibility.

    • Whether supplements will be automatic or individual (by affidavit of disaster) for currently participating SNAP households. If automatic, the request would need to describe who is eligible and include supporting data. Supporting data may include but is not limited to an estimate of the value of issuances for automatic supplements. If individual, the request would need to include information on the process for requesting supplements—by phone/mail affidavit, electronically, or in person at a local office/D-SNAP application site.

    • The estimated total number of people, homes, businesses, etc., impacted by the disaster, as well as estimates of anticipated D-SNAP applicants and number of currently certified SNAP households expected to be served, along with an explanation of how the estimates were derived.

    • A description of issuance procedures, the number of EBT cards on hand, and plans for requesting, receiving, and distributing additional cards as needed. The request would need to indicate whether D-SNAP cards can be replaced if lost or stolen.

    • A description of the plans for publicity, application sites, and security/crowd control.

    • Plans for utilizing staff from other program areas, counties, or States, as appropriate. The request would need to indicate number of staff available and how staff/supervisors will be distributed among the application sites.

    • A description of application sites, security/crowd control, and procedures to ensure program access and reasonable accommodation for persons with disabilities.

    • A description of when and how program information will be disseminated to the public. This would include a list of partner organizations involved and describe the responsibilities of each, including role of volunteers, if applicable. It is important that sufficient time be allowed to notify the public prior to the start of the program. Examples of partner activities include providing D-SNAP information on behalf of the State or providing onsite application assistance.

    • A description of the fraud prevention strategies and security measures in place.

    • A description of the recipient claim procedures and thresholds to be followed if they differ from regulations at § 273.18 or the State's FNS-approved procedures for handling recipient claims in SNAP.

    • A description of the procedures that will be used for identifying and handling applications by State agency/State employees.

    • Draft press releases, sample application, preliminary damage assessments, and map of disaster area. In addition to these required items, other supporting documentation may be included.

    When should requests for D-SNAP be submitted?

    Since the purpose of D-SNAP is to meet households' immediate needs, the request should be submitted to allow for implementation of D-SNAP within a reasonable amount of time following the IA declaration. In addition, it should be submitted to FNS at least several days prior to the planned implementation date to allow time for FNS review and approval. Most importantly, the State should allow sufficient time to effectively publicize the availability of D-SNAP for the affected population prior to implementation. The Department is interested in receiving comments on whether there is a need to establish a standard time frame for submission of requests for D-SNAP relative to the projected implementation date.

    What changes can be made to the D-SNAP after implementation?

    Sometimes, States' approved requests for D-SNAP need modification. As with the initial submission, the Department is proposing that States must submit written, signed requests for changes to an approved D-SNAP. These requests, and their corresponding approvals, would generally be approved more quickly than the initial waiver, since much of the information about the disaster is already known. The three most likely types of changes to the D-SNAP are listed below, along with an explanation of each.

    Expansion—After initial approval, a State may want to expand operations because an additional county is in need of the program. While the application period in the expanded area may differ from what was originally approved, the benefit period will generally remain the same. In such cases, the State should submit to FNS a request for expansion, detailing the impact of the disaster in the new area, the application period, and the anticipated number of applicants and currently certified SNAP households that will be served. If the benefit period will change, for example, because flooding due to the same storms struck another County at a later date, the new benefit period's dates and justification should also be included.

    Extension—In some cases, States may find that their initial application period is not sufficient to serve all eligible households, and so they may wish to request that the application period be extended. Requests to extend the D-SNAP application period must be submitted with sufficient time for FNS review and approval prior to the end of the initial application period and must be accompanied with justification of the need for additional time. Once the application period has ended and operations have closed, further extensions would not be permitted.

    Modification—A request to change an aspect of the D-SNAP other than those mentioned above is known as a modification. Most modifications, including any that would affect applicant eligibility, can only be made prior to the start of the application period to ensure that the eligibility criteria are applied equitably to all applicants. Occasionally, modifications may be made after D-SNAP operations have begun, such as when a State that was originally approved for individual supplements decides to issue automatic supplements in a certain area. Because of the limited window of time in which most modifications can be requested, FNS encourages State agencies to carefully consider their program options prior to submitting the initial request.

    Are there other waivers that must be requested separate from the D-SNAP request?

    There are operational and policy issues that, while are related to the disaster situation, are not included under the authority of the D-SNAP and so are not addressed in this proposed rule. The one exception is the extension of the timeframe to report a loss and request replacement of food purchased with SNAP benefits as addressed below. While this proposed rule only addresses the waiver for Timely Reporting of Food Loss, three additional waivers are also discussed, for informational purposes only, because they are the most frequently requested and approved relative to D-SNAP operations.

    Timely Household Reporting of Food Loss—SNAP regulations at § 274.6 require that replacement issuances be provided to current SNAP recipients only if a household reports a loss of food purchased with SNAP benefits to the State within 10 days of the date the food is destroyed in a household misfortune. This waiver has allowed the State agency to extend the amount of time households have to report the loss of food purchased with SNAP benefits beyond 10 days. The Department proposes to change the reporting timeframe for the loss of food purchased with SNAP benefits from 10 days to 30 days when the President issues a major disaster declaration for IA. In all other cases, the 10-day timeframe would remain intact.

    Automatic/Mass Replacements—Per SNAP regulations at § 274.6, replacement benefits are available (by affidavit) to SNAP households anytime they experience an adverse effect causing them to lose food purchased with their benefits. This waiver allows the automatic replacement of a certain percentage of a household's benefit (depending on the time of the month, the State's benefits issuance cycle, and the type of disaster) for all participating households within the disaster area, without the need to submit individual requests. This waiver may be granted without a D-SNAP approval or IA designation. This waiver does not remove the responsibility of local offices to process individual affidavits before or after the waiver implementation as required by § 274.6(a).

    Hot Foods—A waiver of the hot foods exclusion in the Act allows SNAP households to purchase hot, prepared foods at authorized retailers with their EBT cards. FNS has the authority to grant this waiver provided that an IA declaration has been issued. The coverage of this waiver may extend to areas beyond those that received D-SNAP approval if households that lived in the disaster area have been displaced or temporarily relocated to other parts of the State.

    Expunging D-SNAP benefits—State agencies may request to use a shorter timeframe (typically 90 days) for expunging benefits for D-SNAP-only households. Following the implementation of the Food and Nutrition Act of 2008, Pub. L. 110-246, this waiver requires approval from FNS. State agencies that wish to implement this waiver must submit it along with their D-SNAP requests. Any State operating under this waiver must inform D-SNAP-only households of the timeframe for expunging benefits. This waiver may only be used when the State has received approval to operate a D-SNAP and an IA declaration has been issued. A prerequisite for this waiver is the ability of the State automated system to identify the disaster cases and benefits separately from SNAP cases (this is required for FNS reporting as well).

    Issuance and Reconciliation What are the Issuance requirements in D-SNAP?

    The Department proposes to require that each State be prepared to issue D-SNAP benefits through its EBT system during an emergency. As noted earlier, EBT issuance is also proposed as a required component of State Disaster Plans. As such, a State's D-SNAP issuance plan should incorporate procedures for:

    • Ensuring that approved households have benefits available, including EBT cards, and Personal Identification Numbers (PINs), and that their benefits are available no more than 72 hours from when the application was filed, unless there is questionable information on the application that requires verification. In these latter situations the State may extend the 72-hour time frame for making benefits available to no more than a total of seven days from the date of application.

    • Accessing sufficient card stock to operate a D-SNAP.

    • Replacing households EBT cards that are lost in a disaster as soon as possible but within the card replacement timeframes required at 7 CFR 274.6(b). If the normal EBT replacement process is to mail the replacement card to the household's home, and the disaster response requires card delivery to a disaster issuance site or alternative address in a non-disaster area, the State must be able to override the EBT system.

    What does the rule require regarding replacing EBT Cards for currently certified SNAP households?

    The Department proposes that when SNAP households lose their EBT cards in a disaster, the EBT disaster system design have procedures for providing currently certified SNAP cases with replacement cards as soon as possible, but always within the card replacement timeframes required at 7 CFR 274.6(b). Specifically, current SNAP regulations require State agencies to make replacement EBT cards available for pick up, or to place the card in the mail, within two business days following notice by the household to the State agency that the card has been lost, stolen or damaged. However, under a D-SNAP situation, the Department proposes to require State agencies to make reasonable efforts to replace EBT cards sooner if possible; the Department is not requiring a specific or more stringent timeframe for making card replacements under D-SNAP situations in order to provide States and their EBT processors some flexibility in unpredictable situations. However, the Department also wishes to ensure that clients receive their cards as soon as possible under circumstances in which the household may have not only lost their card, but all their food as well. The Department welcomes comments on whether or not a more specific and stricter card replacement timeframe should be implemented for D-SNAP situations.

    What are the D-SNAP reconciliation requirements?

    The Department is proposing that the State be required to develop a system for reconciling both cards and benefits. Cards shipped from a central location would be required to be tracked until distributed locally to households. Each issuance site would be required to maintain a beginning and ending inventory and track new cards received, total cards available, and cards issued. If the State assigns PINs, they must also account for PIN mailers or envelopes to ensure adequate security, except when the PIN is formulated by some other means, such as from the Primary Account Number (which is a number on the EBT card and encoded onto the card to identify the State and EBT account holder.) The State would also be required to:

    • Reconcile the number of cards set-up with EBT accounts and the number of cards issued and then research and explain any discrepancies;

    • Track D-SNAP benefits separately from SNAP benefit issuance; and

    • Adhere to FNS reconciliation guidelines so that they can compare benefits posted to accounts with benefits issued by the State eligibility system.

    Currently Certified SNAP Households How does the SNAP work during a disaster?

    The Department recognizes that SNAP households will often need replacement benefits or supplements. As noted earlier in the discussion of the D-SNAP request, currently certified SNAP households are not eligible for D-SNAP, but those affected by the disaster are generally eligible for a supplemental issuance.

    What are supplements?

    Supplements are additional benefits issued to SNAP households affected by the disaster in amounts that bring the households' benefit level up to the maximum allotment for their household size. Supplemental benefits provide parity between new D-SNAP households and SNAP households. By virtue of their participation in SNAP, the food needs of SNAP households are already known. The request to issue individual or automatic supplements (see below), and the supporting justification, must be included in the State's D-SNAP request. By addressing the needs for SNAP households immediately, and prior to the start of D-SNAP operations, overcrowding of SNAP participants seeking service at D-SNAP locations can be minimized.

    What is the difference between individual and automatic supplements?

    Under this proposed rule, the State agency must decide if it is most appropriate to issue supplemental benefits on an individual basis, via the filing of an affidavit by the household, or automatically, to all currently certified SNAP households in a designated area. To obtain an individual supplement, households are required to complete an affidavit of disaster impact. For this reason, individual supplements work best in areas where there is a small-scale disaster and applicant volume is not anticipated being very high. For individual supplements to be effective, the State agency must have the capacity to handle the individual requests for supplements, and issue the supplemental benefits, while it is also taking D-SNAP applications.

    Automatic supplements are additional benefits issued to all currently certified SNAP households in a defined geographic area and are appropriate when the majority of that area is impacted by a disaster. They are intended to help SNAP households deal with the impact of the disaster and generally work best when the State agency is able to clearly identify areas in which households share the adverse effects of the disaster, such as the loss of electrical power. Automatic issuance can help the State agency quickly and efficiently meet the needs of SNAP households, while freeing up staff and resources to direct toward the population of new D-SNAP applicants.

    The Department is proposing that States include their desire to issue automatic supplements in their D-SNAP requests and demonstrate their ability to effectively target the benefits to geographic areas that were heavily impacted by the disaster. Any SNAP households not designated to receive automatic supplements, that were living in the area approved to operate D-SNAP and experienced disaster losses, may still request supplemental benefits via an affidavit of disaster. As with replacements benefits (discussed below), requests for automatic supplements must be accompanied by supporting data which indicates that a majority of the population in a given area has suffered an adverse effect as a result of the disaster. States should work closely with FNS to determine how to best find, use and evaluate available information in a post-disaster situation. This can include information from power companies, flood maps, or FEMA assessments.

    Can already certified SNAP households obtain replacement benefits?

    Replacement benefits are always available on an individual basis to SNAP households that lose food purchased with their benefits in a household misfortune. However, replacement issuances shall be provided to current SNAP recipients only if a household reports a loss of food purchased with SNAP benefits orally or in writing to the State within 10 days of the date the food is destroyed in a household misfortune. The Department is proposing that the 10-day timeframe to report a loss of food purchased with SNAP benefits be extended to 30 days when there is a major disaster declared under 7 CFR part 280. Reports will be considered timely if made to the State agency within 30 days of the date the food is destroyed. Household misfortunes such as mass power outages and flood and structural damage would qualify. In all other cases, the 10-day timeframe to report a loss of food would remain the same.

    How do automatic/mass replacements work in D-SNAP?

    As discussed earlier, the automatic/mass replacement requires a waiver that allows a State agency to replace a portion/percentage of currently certified households' monthly SNAP allotments in a disaster without the requirement that a household request a replacement individually, and travel to a local office to sign an affidavit of disaster. With this option/waiver, households would not have the added burden of signing paperwork and local offices would not have to process cases manually for each household needing a benefit replacement.

    As with automatic supplements, approval of the mass replacement waiver typically requires a majority of the residences in the disaster area (county, zip code) to have lost power or be in another way affected by the disaster, resulting in the loss of food purchased with their benefits. Outages of four hours or more are typically considered. The replacement percentage is not fixed and generally depends on the time of the month in which the disaster took place as well as the State's issuance schedule. The extent and type of disaster (e.g., flooding or power outages), perishables/non-perishables, and consumption, are also factors in determining the percentage of benefits to be replaced. In preparing requests for mass replacements, States need to assess the extent of the losses and provide justification for the percentage they request. Further, a mass replacement waiver does not remove the responsibility of local offices to process individual affidavits before or after the waiver implementation as required by 7 CFR 274.6(a).

    Reporting What does the proposed rule require in the daily reports?

    The Department proposes that States operating a D-SNAP submit a daily report to FNS. Daily reports are used to monitor progress, troubleshoot problem areas, inform FNS policy officials, ensure that adequate funds are available in States' letters of credit and provide information to allow responses to inquiries from the media and other government agencies. The State agency would be required to begin submitting reports on the day following the first day of D-SNAP operations and continue submitting the reports on a daily basis until all applications are processed. FNS is proposing that all States utilize a daily reporting template provided by FNS in its D-SNAP guidance. Data would be submitted by county, as indicated in the template provided in FNS' D-SNAP guidance. The reports would contain:

    1. Number of D-SNAP applications received

    2. Number of new D-SNAP households approved

    3. Number of new D-SNAP persons approved

    4. Number of SNAP households receiving supplements

    5. Number of people previously certified for SNAP approved for supplements

    6. Number of new D-SNAP households denied

    7. Number of SNAP households receiving replacement issuance

    8. Value of new D-SNAP benefits approved

    9. Value of SNAP supplements approved

    10. Value of SNAP replacement issuance

    11. Average benefit per new D-SNAP household

    12. Average benefit per SNAP household

    13. Any additional information the State believes FNS should be aware of

    In addition to the quantitative data above, the inclusion of any qualitative information on challenges the State may have encountered with the daily reports will help keep State and Federal policymakers up to date on the situation on the ground.

    What other D-SNAP reports does the proposed rule require?

    In addition to the daily report, the Department proposes that the following be required from States with approved D-SNAPs:

    Form FNS-292B, Report of Supplemental Nutrition Assistance Program Benefit Issuance for Disaster Relief—Within 45 days of the termination of a D-SNAP operation, the State agency would be required to submit its final disaster figures on form FNS-292B. All reports would be submitted electronically in the Food Programs Reporting System (FPRS). Form FNS 292B would contain the following issuance data for D-SNAP operations:

    • Number of new households issued D-SNAP benefits

    • Total number of new persons issued D-SNAP benefits

    • Number of households certified in SNAP that were issued supplements

    • Total value of benefits issued to D-SNAP households and supplements issued to SNAP households.

    The FNS-292B report would not include the value of any replacements issued. States would report the value of replacements on the FNS 388 Monthly Issuance Report.

    Form FNS-388, Monthly Issuance Report—Form FNS-388 would reflect disaster issuance and participation figures, including replacement benefits. Replacement benefits should be reported for the month for which they are intended.

    Form FNS-209, Status of Claims Against Households Report—In the remarks section of the FNS-209, State agencies would be required to indicate the number of D-SNAP claims established and collected. D-SNAP claims must be identified on backup documentation in accounting systems for form FNS-209.

    Form FNS-46, Issuance Reconciliation Report—States would be required to report D-SNAP issuance and returns in the Issuance and Returns section of form FNS-46. Forms FNS-46 and FNS-388 should reconcile with the reported net issuance.

    Post-disaster Report—The Department is proposing that a post-disaster review report be required and that it be comprised of four parts: Comprehensive review, individual case reviews, problem analysis, and proposed improvements to the disaster plan. The comprehensive review should begin with an overview of the D-SNAP operation, including where and when it took place, how it was staffed, and the total number of applications approved and amount of benefits issued. The State should then describe the systems or methods employed, document any major issues (i.e. problems or challenges) encountered in any of the areas below, and discuss the interventions used to address those issues.

    • Certification systems

    • Fraud control

    • Issuance

    • Public information and outreach

    • Program accessibility

    • Security

    The Department is proposing that individual case reviews include: A sample of approved D-SNAP cases; a sample of actions taken to deny applications for D-SNAP benefits; and a review of all approved applications for State agency employees. The review of approved cases would include: A case record review; an interview with the participant; verification of each element of eligibility for the State's D-SNAP program including identity, residency, income, household size and disaster related expenses; a determination of eligibility for disaster assistance; and an analysis of errors.

    The Department proposes that States with 10,000 or more approved D-SNAP households (excluding State employees) select a sample of 400 approved cases for review. States with less than 10,000 but more than 300 approved D-SNAP households would select a sample of between 300 and 400 cases as shown below. States with 300 or fewer households would review all cases.

    Approved D-SNAP households (N) Minimum sample size (n) 10,000 and over n = 400. 300 to 9,999 n = 300 + [0. 01031 (N−300)]. Under 300 n = all cases.

    The Department is proposing that a sample of 100 denied D-SNAP applications be reviewed to identify errors made in not providing benefits to eligible households. If there are fewer than 100 denied applications, all denied applications would be reviewed. Finally, the Department is proposing that States be required to review 100 percent of all State agency employee applications—approved and denied.

    For all three types of case reviews, no cases would be dropped from the review results for any reason and the State would be required to report information gathered from all case reviews.

    State agencies would be required to submit the post disaster report containing the results of the reviews, the problem analysis, and proposed improvements (that would be included in their next D-SNAP plan submission) within 6 months of the close of each D-SNAP operation.

    Integrity

    Along with the duplicate participation and verification discussed above, the Department proposes that additional safeguards should be built into D-SNAP operations.

    What does the proposed rule require regarding fraud prevention?

    An important aspect of fraud prevention is appropriate internal controls. To ensure that only eligible households receive benefits and that the amount of benefits issued is accurate, the Department is proposing that States operating a D-SNAP be required to:

    • Input information for all household members into the eligibility determination system to prevent individuals from obtaining benefits as a member of more than one household.

    • Input denied applications into the eligibility determination system each day, so that households that are denied and later reapply are detected and referred to fraud prevention staff. Note that such households may be eligible if their circumstances have changed.

    • Check for duplicate participation by any individual applying for D-SNAP using onsite or offsite computer databases (or in disasters with very few applicants, hardcopy participant lists). Update computer database participant lists every day.

    • Refer households without required verification or with inconsistent information to onsite investigators or highly-experienced staff for review.

    What does the proposed rule require concerning employee fraud?

    The Department recognizes that State agency employees may be legitimately eligible for D-SNAP benefits. States should take care to balance encouragement of eligible employees to apply for program benefits with the risk of employee fraud. The Department proposes that States be required to take these special measures to prevent employee fraud:

    • Use separation of duties for certification and issuance.

    • Include a question on the D-SNAP application asking if anyone in the household (or its authorized representative) is employed by the State, State SNAP agency, or County, if applicable.

    • Utilize supervisors or investigators to conduct employee certification interviews.

    • Audit all State agency employee applications and publicize that policy. The proposed rule would require the State to review all applications from its employees and to communicate that to employees up front.

    Are D-SNAP cases subject to quality control (QC) reviews?

    Since the rules governing the determination of D-SNAP benefits differ significantly from the SNAP, D-SNAP cases are not subject to QC review and are not included when determining SNAP timeliness and payment accuracy rates. This is specified in 7CFR 275.11(f) (1). This is why the Department is proposing that States be required to conduct a comprehensive review of general program performance and reviews of individual cases.

    What are the D-SNAP recipient claims collection requirements?

    The Department is proposing that if a household receives D-SNAP benefits to which it was not entitled, the State agency must establish a claim against the household consistent with the claims collection requirements of SNAP regulations. Claims must be established as soon as possible after the close of the disaster operation. States may also either follow their FNS-approved procedures and thresholds for establishing claims in SNAP for claims arising from D-SNAP, or include alternate procedures or thresholds in their D-SNAP request.

    If a claim is established against a household for an overpayment of SNAP benefits, the Department proposes that this amount may not be collected from the D-SNAP allotment. However, claims based upon D-SNAP over-issuances can be collected through a repayment agreement or through offsets against SNAP issuances.

    D-SNAP Close Out What happens after D-SNAP operations end?

    The Department proposes that close out of D-SNAP Operations includes the following:

    • Close out the D-SNAP application/issuance sites;

    • Transition eligible cases to SNAP;

    • Submit issuance reporting and reconciliation;

    • Pursue fair hearings, claims and restored benefits; and

    • Submit post-disaster report.

    What are the fair hearings requirements in a D-SNAP?

    The proposed rule would require that:

    • Any household who applied for D-SNAP benefits and was denied benefits may request a fair hearing;

    • A household which has requested a fair hearing is entitled to an immediate onsite supervisory review;

    • Households not satisfied with the outcome of this review retain the right to request a fair hearing through the normal process; and

    • The number of fair hearings is reported on form FNS-366B, Program Activity Statement.

    Are households entitled to restored benefits in D-SNAP?

    SNAP regulations require State agencies to issue restored benefits to households when benefits were lost due to an agency error and when a denial of benefits is subsequently reversed. The Department proposes that this requirement also apply to D-SNAP benefits; State agencies should follow their normal procedures for issuance in such cases. The State's eligibility system must clearly indicate that an issuance was a restored D-SNAP benefit.

    Executive Order 12866 and Executive Order 13563

    Executive Orders 12866 and 13563 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 proposed rule has been designated a not significant regulatory action. Accordingly, the rule has not been reviewed by the Office of Management and Budget.

    Regulatory Impact Analysis

    This proposed rule has been designated as not significant by OMB, therefore, no Regulatory Impact Analysis is required.

    Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612) requires Agencies to analyze the impact of rulemaking on small entities and consider alternatives that would minimize any significant impacts on small entities. Pursuant to that review, FNS Administrator, Audrey Rowe, has certified that this proposed rule would not have a significant impact on small entities. State agencies that administer SNAP will be affected to the extent they choose to implement major changes in program operations. State agencies will also be affected to the extent they perform ME reviews of large, medium and small project areas.

    Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local and tribal governments and the private sector. Under section 202 of the UMRA, the Department generally must prepare a written statement, including a cost benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures by State, local or tribal governments, in the aggregate, or the private sector, of $146 million or more (when adjusted for 2015 inflation; GDP deflator source: Table 1.1.9 at http://www.bea.gov/iTable) in any one year. When such a statement is needed for a rule, Section 205 of the UMRA generally requires the Department to identify and consider a reasonable number of regulatory alternatives and adopt the most cost effective or least burdensome alternative that achieves the objectives of the rule.

    This rule does not contain Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local and Tribal governments or the private sector of $146 million or more in any one year. Thus, the rule is not subject to the requirements of sections 202 and 205 of the UMRA.

    Executive Order 12372

    SNAP is listed in the Catalog of Federal Domestic Assistance under No. 10.551. For the reasons set forth in the final rule in 7 CFR part 3015, subpart V and related notice (48 FR 29115, June 24, 1983), this Program is excluded from the scope of Executive Order 12372, which requires intergovernmental consultation with State and local officials.

    Federalism Impact Statement

    Executive Order 13132 requires Federal agencies to consider the impact of their regulatory actions on State and local governments. Where such actions have federalism implications, agencies are directed to provide a statement for inclusion in the preamble to the regulations describing the agency's considerations in terms of the three categories called for under section (6)(b)(2)(B) of Executive Order 13132. FNS has considered the impact of this rule on State and local governments and has determined that this rule does not have federalism implications. This proposed rule does not impose substantial or direct compliance costs on State and local governments. Therefore, under Section 6(b) of the Executive order, a federalism summary impact statement is not required.

    Prior Consultation With State Officials

    While FNS did not seek direct consultation with State officials on this proposed rule, FNS staff works with several different States' staff on D-SNAP requests and operations every year. This has provided valuable feedback on the need for flexibility in program design and operations. In addition, FNS regional offices host periodic training meetings and review States' D-SNAP plans. These interactions provide insights into the challenges States face and are reflected in this proposed rule.

    Nature of Concerns and the Need To Issue This Rule

    The primary intent of this NPRM is to improve clarity for States in their planning for and requests to implement a D-SNAP. This should help ensure timely approval of requests and improved Federal/State coordination in responding to disaster situations. The NPRM is also intended to inform States of their responsibilities in reporting and monitoring D-SNAP. The USDA Office of Inspector General has recommended publication of regulations for the D-SNAP to improve controls over D-SNAP operations and reduce the potential for threats to program integrity.

    Extent to Which We Meet Those Concerns

    The Department believes that the proposals in this rulemaking would provide the necessary clarity and structure for D-SNAP planning, requests, and reporting while maintaining the needed flexibility for States. In drafting this NPRM, FNS considered its impact on State and local agencies. In addition, the Department is seeking comments on those areas of discretion and will use those comments to inform its decision making before issuing final regulations.

    Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. This proposed rule, when published as a final rule, is intended to have preemptive effect with respect to any State or local laws, regulations or policies which conflict with its provisions or which would otherwise impede its full implementation. This proposed rule is not intended to have retroactive applicability unless so specified in the “Effective Date” paragraph of the final rule. Prior to any judicial challenge to the provisions of this rulemaking or the application of its provisions, all applicable administrative procedures must be exhausted.

    Executive Order 13175

    This proposed rule has been reviewed in accordance with the requirements of Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments.” Executive Order 13175 requires Federal agencies to consult and coordinate with tribes on a government-to-government basis on policies that have tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

    FNS has assessed the impact of this proposed rule on Indian tribes and determined that this rule does not, to our knowledge, have Tribal implications that require tribal consultation under EO 13175. On February 18, 2015 the agency held a webinar for tribal participation and comments. During the comment period, FNS did not receive any comments on the proposed rule. If a Tribe requests consultation, FNS will work with the Office of Tribal Relations to ensure meaningful consultation is provided for those changes, additions and modifications identified herein that are not expressly mandated by Congress.

    Civil Rights Impact Analysis

    FNS has reviewed this proposed rule in accordance with the Department Regulation 4300-4, “Civil Rights Impact Analysis,” to identify and address any major civil rights impacts the rule might have on minorities, women, and persons with disabilities. After a careful review of the rule's intent and provisions, and the characteristics of SNAP participants, FNS has determined that an important impact of this proposed rule will be to help alleviate the adverse effects of disasters on certain protected classes. All data available to FNS indicate that protected individuals have the same opportunity to participate in D-SNAP as non-protected individuals. FNS specifically prohibits the State and local government agencies that administer SNAP from engaging in actions that discriminate based on race, color, national origin, gender, age, disability, marital or family status (SNAP's nondiscrimination policy can be found at 7 CFR 272.6 (a)). Where State agencies have options, and they choose to implement a certain provision, they must implement it in such a way that it complies with the regulations at 7 CFR 272.6.

    Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; see 5 CFR part 1320) requires that the Office of Management and Budget (OMB) approve all collections of information by a Federal agency from the public before they can be implemented. Respondents are not required to respond to any collection of information unless it displays a current valid OMB control number. This proposed rule contains requirements that are subject to review and approval by OMB; therefore, FNS has submitted a new information collection request under OMB Control No: 0584-NEW Supplemental Nutrition Assistance Program (SNAP): Disaster Supplemental Nutrition Assistance Program (D-SNAP) Plans, Procedures, and Reports which contains the proposed reporting burden from adoption of the proposals in the rule, for OMB's review and approval. The estimated burden for the information collections in the proposed rulemaking accompanying this request will be merged into the approved OMB Control Numbers listed in the following sections, contingent upon OMB approval. When the information collection requirements have been approved, FNS will publish a separate action in the Federal Register announcing OMB's approval. The D-SNAP certification burden for State participation is included in the currently approved reporting burden under the OMB Control No. 0584-0064, SNAP: Applications, Periodic Reports, and Notices (expiration date: 4/30/2016), which includes all information collection activities associated with the certification of participating and applicant households. Under SNAP regulations, States are responsible for designing their own forms (this burden is included in OMB No. 0584-0064 and will not be duplicated here) including the application for D-SNAP assistance used by individual households. The burden associated with Statewide D-SNAP plans is included in the currently approved burden for OMB Control No. 0584-0083, SNAP: Operating Guidelines, Forms, and Waivers, Program and Budget Summary Statement (expiration date 04/30/2017), which includes all the information collection activities associated with the preparation, review, and submission of updated D-SNAP plans by State agencies. The burden associated with the submission of State agency requests to operate a D-SNAP to FNS is included under the currently approved burden for OMB Control No. 0584-0336, SNAP: Supplemental Nutrition Assistance for Victims of Disaster (expiration date 11/30/2015).

    Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on those who are to respond, including use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.

    Send comments to the Office of Information and Regulatory Affairs, OMB, attention: Desk Officer for FNS, Washington, DC 20503. Please also send a copy of your comments to Sasha Gersten-Paal, Branch Chief, Certification Policy Branch, Food and Nutrition Service, U.S. Department of Agriculture, 3101 Park Center Drive, Alexandria, VA 22302. For further information, or for copies of the information collection package, please contact Sasha Gersten-Paal at the above address or via email at [email protected]

    All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record. These proposed changes are contingent upon OMB approval under the Paperwork Reduction Act of 1995. When the information collection requirements have been approved, FNS will publish a separate action in the Federal Register announcing OMB's approval.

    Comments on the information collection pursuant to this proposed rule must be received by July 11, 2016.

    Title: Supplemental Nutrition Assistance Program (SNAP): Disaster Supplemental Nutrition Assistance Program (D-SNAP) Plans, Procedures, and Reports.

    OMB Number: 0584-NEW.

    Expiration Date: N/A.

    Type of Request: Information Collection Request.

    Abstract: The Disaster Relief and Emergency Assistance Act (1974), as amended by the Robert T. Stafford Disaster Relief and Assistance Act (1988) (enclosed), and Section (5)(h) of the Food and Nutrition Act of 2008 (the Act) provides the Secretary of Agriculture with the authority to establish temporary emergency standards of eligibility for households who are survivors of a disaster that disrupts commercial channels of food distribution after those channels have been restored.

    This proposed rule would establish the requirements for planning, requesting and monitoring D-SNAP while maintaining State flexibility in program design within the basic eligibility requirements for D-SNAP. This information collection accounts for information that State agencies are required to provide to FNS in support of a request to operate a D-SNAP. As this proposed rule merely codifies practices State agencies already perform, it will have minimal impact on the State agency workloads.

    Respondents: 53 State agencies.

    Estimated Number of Responses per Respondent: 53 annual reviews of D-SNAP plan; 5 updates of D-SNAP plan; 9 D-SNAP requests; 45 D-SNAP daily reports; 9 D-SNAP post-Disaster reports.

    The Department is proposing in this rulemaking that States would be required to review their existing Disaster Plan on at least an annual basis, and when applicable, submit a revision or a notice of no change, by the 15th of August each year. As the majority of States have already prepared disaster plans, the Department estimates that it will take an average of 6.58 staff hours per State each year to review their Disaster Plans, for a total burden of 349 hours (53 States × 1 time annually = 53 total annual response × 6.58 hours = 349 hours). The Department further estimates that on average five of these States will update their plans and require an additional 2.5 hours to do so, for an annual total of 12.5 burden hours. Once approved by OMB, this proposed burden will be merged with the currently approved burden for OMB Control No. 0584-0083, SNAP: Operating Guidelines, Forms, and Waivers, Program and Budget Summary Statement (expiration date 04/30/2017), which includes all the information collection activities associated with the preparation, review, and submission of updated D-SNAP plans by State agencies.

    The number of disasters that occur annually and the average number of households affected by the disasters cannot be predicted. For example, during the period from fiscal year 2009 through fiscal year 2014, the number of State requests for disaster programs ranged from 3 to 23 requests per year. However, the Department estimates an average of 9 State agencies will submit 1 D-SNAP request per year to operate D-SNAPs for a total annual request of 9 applications per year. A D-SNAP request normally contains a request to waive the normal SNAP operating procedures and outlines the State's proposed procedures including: Description of incident; geographic area; application period; benefit period; eligibility criteria; currently certified SNAP households eligibility; affected population; electronic benefit card issuance process; logistical plans for D-SNAP rollout; staffing; public information outreach; duplicate participation check process; fraud prevention strategies; and employee application procedures. It is estimated that preparation of a request under the proposed rule will require approximately 10 staff hours for each State, for a total of 90 burden hours. Once approved by OMB, this proposed burden will be merged with the currently approved burden for OMB Control No. 0584-0083, SNAP: Operating Guidelines, Forms, and Waivers, Program and Budget Summary Statement (expiration date 04/30/2017).

    In addition, the Department is proposing that States operating a D-SNAP must submit a daily report to FNS. Daily reports are used to monitor progress, troubleshoot problem areas, inform FNS policy officials, ensure that adequate funds are available, and respond to inquiries from the media and other government agencies. The State agency should begin submitting reports on the day following the first day of D-SNAP operations and continue submitting the reports on a daily basis until the end of the application period—typically five days. It is estimated that 0.5 hours will be required to prepare each daily report. Therefore, the burden would be 22.5 total hours for these reports (nine disasters × five reports x 0.5 hours = 22.5). The Department further proposes that a post-disaster report be submitted that includes four parts: a comprehensive review, individual case reviews, problem analysis, and proposed improvements. It is estimated that this report will require 0.5 hours to complete so the total burden for nine disaster reports would be 4.5 hours. FNS will not require a standardized form or specific format for daily reports or post-disaster reports, due to the dynamic nature of emergency situations and the need to quickly respond to conditions on the ground. Once approved by OMB, this proposed burden will be merged with the currently approved burden for OMB Control No. 0584-0083, SNAP: Operating Guidelines, Forms, and Waivers, Program and Budget Summary Statement (expiration date 04/30/2017).

    No new recordkeeping burden is estimated.

    The average burden per respondent is summarized in the following chart, with an estimated total annual burden of 478 hours. However as noted above, States have been performing many of these practices for years, so the actual new burden would be significantly less.

    Section of
  • Regulation
  • Requirement or burden activity States
  • responding per year
  • Responses per
  • respondent
  • Number of
  • responses
  • Hours per
  • response
  • Total burden hours
    280.1 Annual review of D-SNAP Plan 53 1 53 6.58 348.7 280.1 Revision of D-SNAP plan 5 1 5 2.5 12.5 280.3 D-SNAP Request 9 1 9 10 90 280.8 D-SNAP Daily report 9 5 45 0.5 22.5 280.8 D-SNAP Post Disaster Report 9 1 9 0.5 4.5 Totals 53 2.28 121 3.95 478
    E-Government Act Compliance

    FNS is committed to complying with the E-Government Act of 2002 (Pub. L 107-347) to promote the use of the Internet and other information technologies that provide increased opportunities for citizen access to government information and services and for other purposes.

    List of Subjects 7 CFR Part 272

    Alaska, Civil rights, Supplemental Nutrition Assistance Program, Grant programs—social programs, Penalties, Reporting and recordkeeping requirements, Unemployment compensation, Wages.

    7 CFR Part 274

    Supplemental Nutrition Assistance Program, Grant programs—social programs, Reporting and recordkeeping requirements.

    7 CFR Part 280

    Emergency food assistance for victims of disasters.

    For reasons set forth in the preamble, 7 CFR parts 272, 274, and 280 are proposed to be amended as follows:

    PART 272—REQUIREMENTS FOR PARTICIPATING STATE AGENCIES 1. The authority citation for part 272 continues to read as follows: Authority:

    7 U.S.C. 2011-2036.

    2. In § 272.2 revise paragraph (a)(2), (d)(1)(ii), and (e)(5) to read as follows:
    § 272.2 Plan of operation.

    (a) * * *

    (2) Content. The basic components of the State Plan of Operation (“the Plan”) are the Federal/State Agreement, the Budget Projection Statement, and the Program Activity Statement. In addition, certain attachments to the Plan are specified in this section and in § 272.3. The requirements for the basic components and attachments are specified in § 272.2(c) and § 272.2(d), respectively. The Federal/State Agreement is the legal agreement between the State and the Department of Agriculture. This Agreement is the means by which the State elects to operate the Supplemental Nutrition Assistance Program and to administer the program in accordance with the Food and Nutrition Act of 2008 and the FNS-approved State Plan of Operation. The Budget Projection Statement and Program Activity Statement provide information on the number of actions and amounts budgeted for various functional areas, such as certification and issuance. The Plan's attachments include the Quality Control Sample Plan, the Disaster Plan, the Employment and Training Plan, the optional Nutrition Education Plan, the optional plan for Program informational activities directed to low-income households, the optional plan for intercepting Unemployment Compensation (UC) benefits for collecting claims for intentional Program violations, the Systematic Alien Verification for Entitlements (SAVE) Plan, and the plan for the State Income and Eligibility Verification System. The State agency shall either include the Workfare Plan in its State Plan of Operation or append the Workfare Plan to the State Plan of Operation, as appropriate, in accordance with § 273.22(b)(3) of this chapter. The Workfare Plan shall be submitted separately, in accordance with § 273.22(b)(1) of this chapter. The ADP/CIS Plan is considered part of the State Plan of Operation but is submitted separately as prescribed under § 272.2(e)(8). State agencies and/or political subdivisions selected to operate a Simplified Application/Standardized Benefit Project shall include that Project's Work Plan in the State Plan of Operation. The Plan's attachments shall also include the Mail Issuance Loss Reporting Level Plan.

    (d) * * *

    (1) * * *

    (ii) Disaster Plan as required by § 280.1(b) of this chapter, or certification that a previously submitted Disaster Plan has been reviewed and remains current;

    (e) * * *

    (5) Disaster plan. State agencies shall review their existing disaster plan on at least an annual basis and submit a revision, if necessary, or a notice of no change, by the 15th of August (or as negotiated by individual states) each year for FNS approval.

    PART 274—ISSUANCE AND USE OF PROGRAM BENEFITS 3. The authority citation for part 274 continues to read as follows: Authority:

    7 U.S.C. 2011-2036.

    4. Revise § 274.6 (a)(3)(i) to read as follows:
    § 274.6 Replacement issuances and cards to households.

    (a) * * *

    (3) * * *

    (i) Replacement issuances shall be provided only if a household timely reports a loss orally or in writing. When the loss is a Presidentially-declared disaster (with or without individual assistance) the report shall be considered timely if it is made to the State agency within 30 days of the date food purchased with Program benefits is destroyed in the disaster. When the loss is the result of other household misfortune, the report shall be considered timely if it is made to the State agency within 10 days of the date food purchased with Program benefits is destroyed.

    PART 280—DISASTER SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (D-SNAP) 5. Revise the part heading to read as set out above. 6. Revise part 280 to read as follows: PART 280—DISASTER SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (D-SNAP) Sec. 280.1 Purpose. 280.2 Eligibility and benefits. 280.3 Disaster request. 280.4 Application processing and certification periods. 280.5 Households participating in the SNAP when D-SNAP is operating. 280.6 Reconciliation. 280.7 Post disaster review and corrections. 280.8 D-SNAP reporting. Authority:

    7 U.S.C. 2011-2036.

    § 280.1 Purpose.

    (a) This section establishes the requirements for planning, requesting, operating, and reporting on a D-SNAP. In addition, the appropriate Food and Nutrition Service directives and guidance provide additional detail and direction on the steps States should take to prepare for an emergency situation, and the procedures States should employ in operating D-SNAP.

    (b) Planning for D-SNAP. State agencies shall review their existing disaster plan on at least an annual basis and submit a revision, if necessary, or a notice of no change, by the 15th of August (or as negotiated by individual states) each year for FNS approval; this submission shall be an attachment of the Plan of Operation as provided in § 272.2 of this chapter. As specified in § 280.8(f), FNS will require State agencies to amend the plan if deficiencies are found in a D-SNAP post-disaster review. The plan shall include:

    (1) Identification of Federal and State government agencies involved in disaster relief activities in the State during a disaster, as well as a description of responsibilities for each agency.

    (2) Key points of contact. Provide names, positions, and phone numbers of county/local, State, and Federal government officials and their back-ups who are key contact persons during a disaster (including the State agency disaster coordinator).

    (3) Community partners. Identify private disaster relief agencies within the State such as the Red Cross, Salvation Army, or community groups and a description of their role in D-SNAP implementation.

    (4) SNAP staffing and resources. Identify staffing and related resources available to assist in a disaster and how they will be mobilized to target disaster areas in need. Explain how the State/counties will manage the increased administrative burden associated with running a D-SNAP and SNAP operations simultaneously.

    (5) D-SNAP application system development. Describe application systems to be used for D-SNAP household management, including any workarounds to the SNAP system, considerations associated with running SNAP and D-SNAP operations concurrently, compliance with D-SNAP reporting requirements, etc.

    (6) Issuance system. Describe the issuance systems to be used for D-SNAP household management.

    (7) EBT card stock. Identify EBT card stock available, type of cards to be used, steps and timeline for ordering additional cards, and any special procedures or resources that will be needed to meet SNAP and D-SNAP issuance timeframes, including having cards available at D-SNAP certification sites.

    (8) Application sites. Describe site selection procedures, including potential application/issuance sites for disasters that vary in size and scope and any agreements in place with those locations. If D-SNAP will operate out of local offices, explain how application sites will handle running D-SNAP and SNAP concurrently.

    (9) Demographic data. Identify general demographic data that can help the agency tailor its response to a disaster. Identify resources for disaster impact data, including preliminary data assessments, flood maps, or electrical outage data.

    (10) Public information and outreach. Describe public information strategy to ensure that timely, accurate information reaches households potentially eligible for D-SNAP benefits. Outline roles, expectations, and responsibilities of any SNAP outreach partners included in the State Outreach Plan that will assist with D-SNAP.

    (11) Retailer communication. Describe procedures to notify retailers of new waivers (see discussion of the potential for hot foods, below) and new D-SNAP households.

    (12) Procedures to reduce applicant hardship. Outline steps States will take to reduce hardship for D-SNAP applicants and the already certified SNAP caseload, including provisions for security, human needs, language services, etc.

    (13) Certification process. Describe the specifics of the certification process including potential application sites, staffing, separation of eligibility and issuance, how application sites will manage large crowds, and plans for ensuring access to persons with disabilities, the elderly and other vulnerable populations. If online pre-registrations are to be used by workers or households, describe that process and back-up systems in place if technical issues are encountered.

    (14) DSED. Include if the DSED will be used and, if so, specify the income limits.

    (15) Household materials. Include sample household application and household notices.

    (16) Issuance process. Describe how benefits will be made available within 72 hours of D-SNAP application and how to ensure continuation of SNAP certification, issuance, and other actions concurrently. Indicate how the State will monitor stock levels and ensure sufficient EBT card stock. Describe EBT card reconciliation and security procedures, including tracking D-SNAP benefits separately from SNAP benefit issuance and adherence to FNS reconciliation guidelines, so that benefits posted to accounts can be compared to benefits issued by the State eligibility system.

    (17) Security and fraud prevention plans. Describe how States will ensure security and mitigate the risk of fraud, including a specific plan for handling applications submitted by State agency employees, procedures for handling questionable applications, and process for checking all household members for duplicate participation.

    (18) Disaster reporting and post-disaster review report. Describe procedures to ensure that required federal reporting and post-disaster review reports will be complete and timely.

    (19) Reasonable accommodations for individuals with disabilities. Describe what special accommodations will be made for individuals with disabilities at application and issuance sites.

    (20) Circumstances unique to the State which may affect D-SNAP operations, including: coordination of resources among County-level administrations, how to serve isolated or homebound populations, development of procedural modifications to allow SNAP systems to accommodate D-SNAP operations, and contingency plans for local offices located in flood plains or otherwise subject to closure.

    (c) Training. The State shall issue instructions and provide training to project area offices on the handling of disaster assistance operations to ensure prior understanding of disaster procedures and prompt action upon issuance of a disaster declaration. At a minimum, States shall provide D-SNAP training to at least one manager (perhaps a D-SNAP coordinator) from each SNAP local office and call center in the State.

    (d) State Systems Requirements for D-SNAP. State automated systems shall have the ability to:

    (1) Check for duplicate participation as required in § 280.4(e).

    (2) Meet FNS reconciliation requirements that D-SNAP benefits posted to accounts be compared to benefits issued by the State eligibility system.

    (3) Generate the reports required in § 280.8. States systems shall have the ability to track disaster benefits separately from SNAP benefit issuance. States systems shall have the ability to allow tracking of multiple D-SNAPs simultaneously, if the State is struck by two disasters within a short timeframe.

    (e) EBT Systems and D-SNAP. Each State shall be prepared to issue D-SNAP benefits through its EBT system during a disaster. The EBT system shall have the ability to coordinate with the State's eligibility system and the State's EBT contractor's system. A State's D-SNAP issuance plan shall incorporate procedures for:

    (1) Ensuring that approved households have benefits available, including EBT cards and PINs no more than 72 hours from when the application was filed, unless there is questionable information on the application that requires verification. If there is questionable information, the State may extend the 72-hour time frame for making cards and benefits available to no more than a total of seven days from the date of application.

    (2) Accessing sufficient EBT card stock to operate a D-SNAP.

    (3) Replacing households EBT cards that are lost in a disaster as soon as possible but within the card replacement timeframes required at 7 CFR 274.6(b). If the normal EBT replacement process is to mail the replacement card to the household's home, and the disaster response requires card delivery to a disaster issuance site or alternative address in a non-disaster area, the State must be able to override the EBT system.

    § 280.2 Eligibility and benefits.

    (a) Eligibility. To be eligible for D-SNAP during a disaster a household must meet all of the following criteria:

    (1) At the time of the disaster, the household must have been residing within the geographical area authorized for disaster procedures at the time of the disaster. Such a household may be certified for disaster issuance even though it presently is occupying temporary accommodations outside of the disaster area (although it would need to come to the certification site to be certified for D-SNAP). States may also choose to extend eligibility to those who worked in the disaster area at the time of the disaster. When States submit their D-SNAP requests, they should specify if they will serve only households that lived in the disaster area, or either lived or worked in the disaster area.

    (2) The household will purchase food and prepare meals during the disaster benefit period. A household residing in a temporary shelter which is providing all its meals shall be ineligible.

    (3) The household has experienced at least one of the following adverse effects of the disaster: loss or inaccessibility of income, inaccessibility of liquid resources, or disaster-related expenses. At the State's option, households whose only disaster-related expense is food loss may be considered otherwise eligible for D-SNAP. States electing this option must indicate it in their D-SNAP request.

    (i) Loss or inaccessibility of income involves a reduction or termination of income or a significant delay in receipt of income. This could occur, for example, if a disaster has caused a place of employment to close or reduce its work days, if paychecks or other payments are lost or destroyed, if there is a significant delay in the issuance of paychecks, or if the work location is inaccessible due to the disaster.

    (ii) Inaccessibility of liquid resources includes situations in which the household is unable to access cash resources for a portion of the disaster benefit period.

    (iii) Regarding disaster-related expenses that the household has incurred during the disaster benefit period that result from the effects of the disaster: the FNS Disaster SNAP Guidance provides the specific expenses that shall be considered disaster-related, but States can request FNS approval of other reasonable expenses in their disaster request.

    (b) Determining income. (1) To be eligible to receive D-SNAP benefits, a household's net income received or expected to be received during the benefit period, in addition to its accessible liquid resources, minus any disaster-related expenses, shall not exceed the disaster gross income limit.

    (2) Accessible liquid resources are determined on the first day of the benefit period; any funds received during the remainder of the benefit period will be counted as income. Accessible liquid resources include cash on hand, and funds in accessible checking and saving accounts on the first day of the benefit period. Accessible liquid resources do not include:

    (i) Retirement accounts;

    (ii) Disaster insurance payments;

    (iii) Disaster assistance received or expected to be received during the benefit period; and

    (iv) Payments from Federal, state or county/local government agencies or disaster assistance organizations (including disaster-related Unemployment Compensation).

    (3) The most recent disaster gross income limit calculated by FNS shall be used to determine the maximum allowable income for each household size. The disaster gross income limit is calculated by adding together the maximum monthly net income limit, the maximum standard income deduction amount, and the maximum capped shelter expense deduction for each household size.

    (c) D-SNAP deductions. (1) Disaster-related expenses are deductible if they have been incurred during the disaster period. If the household receives or anticipates receiving a reimbursement for these expenses during the disaster period, only remaining expense amounts shall be deductible.

    (2) States shall elect one of the following options to determine if households have disaster-related expenses and the amount of the expense to use in determining D-SNAP income. The option selected shall be identified in the State's D-SNAP request:

    (i) Use of actual disaster-related expenses identified in the Disaster SNAP Guidance referenced in paragraph (a)(3)(iii) of this section. Households shall be screened to verify their residence in the affected area. Under this option, the State may require that households experience at least one disaster-related expense other than or in addition to food-loss in order to be eligible for the D-SNAP, while still considering food-loss in calculating a household's cumulative disaster-related expenses. Alternatively, the State may choose to consider households that have experienced food loss alone as their disaster-related expense to be otherwise eligible for the D-SNAP.

    (ii) Use of a Disaster Standard Expense Deduction (DSED.) For households with $100 or more in deductible disaster-related expenses, the DSED shall be added to the disaster gross income limit, and households whose take-home pay plus available liquid resources is less than or equal to this amount (DSED + the disaster gross income limit) shall qualify for D-SNAP benefits. The DSED shall not be applied to any household if food loss is their only disaster-related expense.

    (3) A State using “food loss alone” in paragraph (c)(2)(i) of this section shall verify using available information such as power outage maps showing affected homes or zip codes. The use of this information should be widely publicized and households shall be screened upon arrival to verify their residence in the affected area. Households reporting excessively large amounts of food loss, or any other questionable information, shall be referred to fraud investigators or senior staff for further review.

    (d) Benefit period and benefit amount. (1) Households meeting the eligibility criteria in § 280.2(a) through (c) shall receive the full SNAP allotment for their household size as provided under SNAP. SNAP allotments are updated yearly and available on the FNS Web site. For households already on SNAP and residing in an approved D-SNAP area that incur a disaster-related expense and submit an affidavit to that effect, States shall supplement their SNAP benefits to bring them up to the maximum allotment for their household size.

    (2) Household size and composition is established as of the first day of the disaster benefit period. The household includes those people living together, and purchasing and preparing food together at the time of a disaster. D-SNAP household does not include those people with whom applicants are temporarily staying due to the disaster.

    (3) The benefit period is the 30-day period approved by FNS for each D-SNAP, except in extraordinary circumstances as determined and approved by FNS. The benefit period is the period during which disaster-related expenses are to be counted; it is also the start date used to determine household composition and resources. Only income received, expenses incurred and resources that are accessible during the benefit period are considered in determining D-SNAP eligibility. The benefit period shall begin on the date of the disaster or the date of any mandatory evacuation preceding the disaster. This date is generally the first day of the “Incident Period” provided by the Presidential Disaster Declaration. State agencies needing to modify dates from those in their approved D-SNAP request must seek FNS approval to do so. States requesting an extension must address the ongoing demand for assistance and program integrity concerns.

    § 280.3 Disaster request.

    (a) Requests for D-SNAP. (1) The State agency may request authorization from FNS to implement temporary D-SNAP procedures when all or part of a SNAP project area as defined in 7 CFR 271.2 has been struck by a disaster, commercial channels of food distribution are available, there is a Presidentially-declared disaster that includes Individual Assistance (IA), and SNAP cannot respond to the temporary food needs due to the number of affected households.

    (2) The request shall be submitted when the affected community and State agency have recovered to allow for an effective administration of the D-SNAP (as determined by the State agency), including training for D-SNAP operations. The request must be submitted to allow for implementation of D-SNAP within a reasonable time period following the Individual Assistance declaration. The planned implementation date shall also allow sufficient time for the State to publicly notify the affected population in the disaster area of the availability of D-SNAP.

    (b) Content of request. Requests must be submitted with a signed cover memorandum from the State and include thorough explanations of the following components:

    (1) A description the disaster—what happened, the date the disaster began, and the affected area.

    (2) The geographic area (list of the project areas affected), and explain any differences between the area included in the presidential declaration (if applicable) and the requested area in which to operate the D-SNAP.

    (3) A draft press release, sample application, preliminary damage assessments, and map of disaster area. In addition to these required items, other supporting documentation may be included.

    (4) The start and end dates of the application period. If the application period will be staggered, give dates for each county/area. Note if application sites will be open over the weekend or for extended hours.

    (5) The start and end dates of the 30-day benefit period. The start of the benefit period should generally match the first day of the “incident period” on the disaster declaration. If not, then the State should explain the reason for the difference.

    (6) Identification of any options the State has chosen, including whether or not food loss only will be a qualifying expense, and if households that worked but did not live in the disaster area will be eligible.

    (7) Whether only households that lived in the disaster area will be eligible for D-SNAP, or if households that only worked in the disaster area will also be eligible.

    (8) Whether a DSED is being used. If so, include the income limits.

    (9) Whether “food loss alone” will be included as a criterion for eligibility.

    (10) Whether supplements will be automatic or individual (by affidavit) for currently certified SNAP households. If automatic, describe who is eligible and include supporting data. Also, indicate an estimate of the value of issuances for automatic supplements. Requests for automatic supplements must be accompanied by supporting data which indicate that a majority of the population in a given area has suffered an adverse effect as a result of the disaster. If individual supplements are to be used, include information on the process for requesting supplements—by phone/mail affidavit, electronically, or in person at local office/D-SNAP application site.

    (11) The estimated total number of people, homes, businesses, etc. impacted by the disaster; estimates of anticipated D-SNAP applicants; number of currently certified SNAP households to be served; and explanation of how both estimates were derived.

    (12) A description of issuance procedures, the number of EBT cards on hand, and plans for requesting, receiving, and distributing additional cards as needed.

    (13) A description of application sites, security/crowd control, and procedures to ensure program access and reasonable accommodation for persons with disabilities.

    (14) Plans for utilizing staff from other program areas, counties, or States, as appropriate. Indicate number of staff available and how staff/supervisors will be distributed among the application sites.

    (15) A description of how program information, including eligibility criteria and application sites, will be disseminated to the public. List partner organizations involved and describe the responsibilities of each, including role of volunteers, if applicable. Examples of partner activities include spreading D-SNAP information on behalf of the State or providing onsite application assistance. Sufficient time shall be allowed to notify the public prior to the start of the program.

    (16) A description of the recipient claim procedures and thresholds to be followed if they differ from either SNAP regulations at § 273.18 of this chapter or the State's FNS approved procedures for handling recipient claims in SNAP.

    (17) A description of the procedures that will be used for identifying and handling applications by State agency/State employees.

    (18) A description of the fraud prevention strategies and security measures in place.

    (c) Changes to an approved D-SNAP. (1) When a State believes that a modification to an approved D-SNAP request is necessary, it shall submit a written request to change its approved D-SNAP.

    (2) Expansion of D-SNAP. To expand the geographic coverage of an approved D-SNAP, a State shall submit a request to FNS for expansion, detailing the impact of the disaster in the new area, the application period, and the anticipated number of applicants and currently certified SNAP households that will be served. If the benefit period will also change, then the new benefit periods dates and justification for doing so shall also be included.

    (3) Extension to a D-SNAP. In some cases, States may find that their initial application period is not sufficient to serve all eligible households, and they may wish to request that the application period be extended. Requests to extend the D-SNAP application period shall be submitted to FNS with sufficient time for it to review and approve the request prior to the end of the initial application period; requests shall include justification of the need for additional time.

    (3) Other Modifications to D-SNAP. Other modifications, including any that would affect applicant eligibility, shall only be made prior to the start of the application period to ensure that the eligibility criteria are applied equitably to all applicants. Occasionally, modifications may be made after D-SNAP operations have begun, such as when a State that was originally approved for individual supplements decides to issue automatic supplements in a certain area. However, once the application period has commenced, the benefit period cannot be modified. Because of the limited window of time in which most modifications can be requested, States should carefully consider their program options prior to submitting the initial request.

    § 280.4 Application processing and certification periods.

    (a) Period for processing applications. (1) States shall only accept applications for D-SNAP benefits from new households, and requests for supplements from currently certified SNAP households, during the approved application period.

    (2) If the State is accepting requests for supplements from currently certified SNAP households over the phone and mailing the affidavit forms to the household, the request for an affidavit must be received during the D-SNAP application period.

    (3) Application periods shall last 7 days, though States retain the option to request more or fewer days as they deem appropriate to the circumstances. The State should provide its rationale for any deviation from the 7-day application period in its D-SNAP request. The State should also inform FNS, in its D-SNAP request, whether applications will be accepted on Saturday and/or Sunday.

    (b) Interviews. (1) All D-SNAP applicants or their authorized representatives are required to have a face-to-face interview. Exceptions to the face-to-face interview shall only be made for individuals with disabilities that preclude visiting an application site. States should use screening techniques prior to the interview to identify those households which do not meet required eligibility criteria, such as having been adversely affected by the disaster. The interview shall be conducted as an official discussion of household circumstances; however, it shall be designed to quickly process the application. If an applicant household does not meet the D-SNAP eligibility standards, the household shall be informed of the potential availability of benefits under SNAP.

    (2) The D-SNAP interview shall be conducted by State agency merit system personnel.

    (3) The individual interviewed must be a member of the household or an authorized representative. The household may be accompanied to the interview by anyone of its choice. The interviewer shall review the information that appears on the application to resolve unclear or incomplete information with the household.

    (c) Certification period. Households shall be assigned certification periods that coincide with the disaster benefit period. If the benefit period is one month, then income over this full month period shall be counted, disaster-related expenses that are incurred over this full month period shall be deducted, and the monthly SNAP maximum income limit for the appropriate household size shall equal the disaster eligibility limit. If the disaster benefit period is for half of a month, then income over the half-month period shall be counted, disaster-related expenses incurred over this period shall be deducted, and the disaster eligibility limit shall be one half of the monthly SNAP limit for size of the household.

    (d) Benefit availability. The State agency shall act promptly on all applications and make benefits available, including EBT cards and PINs, to eligible households that complete the D-SNAP application process no later than 72 hours following their filing of the application, unless the information provided by the applicant is deemed questionable. When information is found to be questionable, the State shall resolve the issue(s) to determine eligibility, and make benefits available within 7 days following the filing of the application or deny the application.

    (e) Screening for duplicate participation during disasters. States shall develop a system to detect duplicate applications for D-SNAP. States shall either check for duplicate information up front, or may accept applications and inform applicants that eligibility is contingent upon a subsequent check for duplicates. States shall check for duplicate participation using onsite or offsite computer databases, but shall include all individuals included on each application. States shall update computer databases on a daily basis throughout the application period. States shall screen D-SNAP applications for duplicate participation with:

    (1) SNAP.

    (2) Household disaster distribution of USDA Foods.

    (3) Other D-SNAPs with overlapping benefit periods.

    (4) Already approved D-SNAP applications.

    (5) Denied D-SNAP applicants (to identify attempted duplicate participation).

    (f) D-SNAP verification requirements. To expedite the certification for D-SNAP, the State agency shall use the procedures specified in this paragraph rather than the standard SNAP verification required by § 273.2(f). The applicant's identity shall be verified. Examples of acceptable verification which the household may provide include, but are not limited to: A driver's license, work or school ID, voter registration card, birth certificate, or, a collateral contact. Residency and household composition at the time of the disaster shall be verified where possible, and must be verified if questionable. In some situations (such as in the case of a household that arrived in the area just prior to the disaster), verification of residency may not be possible. When residency that is questionable cannot be verified despite the efforts of the State agency and the household, the household shall not be denied D-SNAP solely for this reason. Loss/inaccessibility of income or liquid resources and food loss shall be verified if questionable.

    (g) Applications from state and county employees. State and local staff may be entitled to D-SNAP benefits and shall be subject to the same eligibility criteria as any other applicant. States shall incorporate the following internal controls into their disaster operations.

    (1) Certification and issuance duties shall be handled by different staff.

    (2) A question shall be included on the D-SNAP application asking if anyone in the applicant household (or its authorized representative) is employed by the State or local SNAP agency.

    (3) Supervisors or investigators shall conduct employee certification interviews.

    (4) States shall audit all employee applications and inform employees of this policy in advance of implementing the D-SNAP.

    § 280.5 Households participating in the SNAP when D-SNAP is operating.

    (a) SNAP shall continue to operate during the disaster benefit period and shall continue to process applications and make eligibility determinations in the normal manner in accordance with parts 273 and 274 of the SNAP regulations in this chapter. Households currently certified for SNAP benefits may be eligible for supplemental benefits.

    (b) Disaster supplements. (1) When D-SNAP is approved and operating in a given jurisdiction, supplements shall be issued to currently certified SNAP households affected by the disaster in that jurisdiction that bring their benefit level up to the maximum allotment for their household size. States shall issue supplemental benefits on an individual basis, via the filing of an affidavit of disaster loss by the household, or automatically to all currently certified SNAP households in a designated area. By virtue of their participation in SNAP such households need not appear in person at the D-SNAP site.

    (2) To obtain an individual supplement, households shall complete an affidavit of disaster loss.

    (3) States' requests to issue automatic supplements and the supporting justification shall be included in the State's D-SNAP request. States shall specify their decision to issue automatic supplements and must be able to show that they can effectively target the benefits to geographic areas that were heavily impacted by the disaster. Currently certified SNAP households not receiving automatic issuance but who were living in the disaster area and experienced disaster losses may still request supplemental benefits via an individual affidavit of disaster.

    (c) Replacements. As provided in § 274.6, replacement benefits are always available to SNAP households that file an affidavit that they have experienced an adverse effect causing them to lose food purchased with their benefits.

    § 280.6 Reconciliation.

    (a) EBT cards. Cards shipped from a central location shall be tracked until distributed locally to households. Each issuance site shall maintain a beginning and ending inventory and track new cards received, total cards available, and cards issued. If the State assigns Personal Identification Numbers (PINs), they must also account for PIN mailers or envelopes to ensure adequate security, except when the PIN is formulated from the Primary Account Number. The State shall reconcile the number of cards set-up with EBT accounts and the number of cards issued to identify and resolve any discrepancies.

    (b) D-SNAP issuances. States shall track D-SNAP benefits separately from SNAP benefit issuance and adhere to FNS reconciliation guidelines so that they can compare benefits posted to accounts to benefits issued by the State eligibility system.

    § 280.7 Post disaster review and corrections.

    (a) States shall conduct a comprehensive review and individual case reviews. Based upon a problem analysis of the findings from these reviews, the State shall modify its disaster plan.

    (1) The comprehensive review should begin with an overview of the D-SNAP operation, including where and when it took place, how it was staffed, and the total number of applications approved and amount of benefits issued. The State should then examine the systems or methods employed, document any major problems or challenges encountered, and discuss the interventions used to solve those issues in the following areas:

    (i) Certification systems;

    (ii) Fraud control;

    (iii) Issuance;

    (iv) Public information and outreach;

    (v) Program accessibility;

    (vi) Security.

    (2)(i) The State agency shall conduct a post-disaster review of disaster certification activities by selecting and reviewing a sample of individual cases that applied for D-SNAP. The review of certified cases shall include: A case record review; an interview with the participant; verification of each element of eligibility for the State's D-SNAP program including identity, residency, income, household size and disaster related expenses; a determination of eligibility for disaster assistance; and an analysis of errors.

    (ii) States with 10,000 or more approved D-SNAP households shall select a sample of 400 approved cases for review. States with less than 10,000 but more than 300 approved D-SNAP households shall select a sample of between 300 and 400 cases as shown below. States with 300 or fewer would review all cases.

    Approved D-SNAP households (N) Minimum sample size (n) 10,000 and over n = 400 300 to 9,999 n = 300 + [0.01031(N−300)] Under 300 n = all cases

    (iii) A sample of 100 denied D-SNAP applications shall be reviewed to identify errors made in not providing benefits to eligible households. If there are fewer than 100 denied applications, all denied applications would be reviewed.

    (iv) If a State uses a random sample, the State shall identify this in the post disaster report described and include the following information:

    (A) The number of cases or in the sample universe;

    (B) A description of the sample frame and how it was constructed;

    (C) The sample size selected;

    (D) The number of sample cases completed; and

    (E) The findings from the sample cases completed.

    (3) States shall review all State agency employee applications—approved and denied.

    (4) For all case reviews, no cases shall be dropped for any reason and the State shall report information gathered from all case reviews.

    (5) State agencies shall submit the post disaster report containing the results of the reviews, the problem analysis, and proposed improvements within 6 months of the close of each D-SNAP operation.

    (b) Fair hearings requirements in a D-SNAP. Any household who applied for D-SNAP benefits and was denied may request a fair hearing. A household which has requested a fair hearing shall be offered an immediate onsite supervisory review. Households that are not satisfied with the outcome of the supervisory review retain the right to request a fair hearing in accordance with § 273.15 of this chapter.

    (c) Restored benefits from D-SNAP. States shall issue restored benefits to households when an incorrect denial of benefits is subsequently corrected. The issuance system shall clearly note that such corrected issuances were restored benefits.

    (d) D-SNAP recipient claims collection requirements. States shall establish a claim against the household consistent with the claims collection requirements of SNAP regulations at § 273.18 of this chapter. Claims shall be established as soon as possible after the close of the disaster operation. States may also follow their FNS-approved procedures and thresholds for establishing claims in SNAP for claims arising from D-SNAP, or may include any alternate procedures or thresholds in their D-SNAP request. However, if a claim is established against a household for an overpayment of SNAP benefits, this amount may not be collected from the D-SNAP issuance.

    § 280.8 D-SNAP reporting.

    (a) D-SNAP daily reports. States operating a D-SNAP shall report to FNS on a daily basis. States shall begin submitting reports on the day following the first day of D-SNAP operations and continue submitting the reports on a daily basis until all applications are processed. States shall use a daily reporting template provided by FNS. Data should be submitted by county, as indicated in the template. The daily reports must capture the new D-SNAP and SNAP issuance data listed in paragraphs (a)(1) through (13) of this section:

    (1) Number of D-SNAP applications received;

    (2) Number of new D-SNAP households approved;

    (3) Number of new D-SNAP persons approved;

    (4) Number of SNAP households receiving supplements;

    (5) Number of people previously certified for SNAP approved for supplements;

    (6) Number of new D-SNAP households denied;

    (7) Number of SNAP households receiving replacement issuance;

    (8) Value of new D-SNAP benefits approved;

    (9) Value of SNAP supplements approved;

    (10) Value of SNAP replacement issuance;

    (11) Average benefit per new D-SNAP household;

    (12) Average benefit per SNAP household; and

    (13) Any additional information the State believes FNS should be aware of.

    (b) FNS-292B, Report of Supplemental Nutrition Assistance Program Benefit Issuance for Disaster Relief. Within 45 days of the termination of a D-SNAP operation, the State agency shall submit the FNS-292B. This report shall be submitted electronically in the Food Programs Reporting System (FPRS). The FNS 292B shall contain the following issuance data for D-SNAP operations:

    (1) Number of new households issued D-SNAP benefits.

    (2) Total number of new persons issued D-SNAP benefits.

    (3) Number of households certified in SNAP that were issued supplements.

    (4) Total value of benefits issued to new households and supplements issued to previously certified SNAP households.

    (c) Form FNS-388, Monthly Issuance Report. The FNS-388 shall include issuance and participation figures for new D-SNAP households and previously certified SNAP households receiving disaster supplements and/or replacements. Replacement benefits shall be reported for the month for which they are intended.

    (d) Form FNS-209, Status of Claims Against Households Report. In the remarks section of the FNS-209, States shall indicate the number of claims established and collected against D-SNAP benefits. D-SNAP claims must be identified on backup documentation in the accounting systems for the FNS-209.

    (e) Form FNS-46, Issuance Reconciliation Report. The FNS-46 shall include issuance and participation figures for new D-SNAP households and SNAP households receiving disaster supplements and/or replacements. The FNS-46 and FNS-388 should reconcile with the reported net issuance.

    (f) Post-disaster Report. The post-disaster review report shall be comprised of four parts: The comprehensive review, individual reviews, problem analysis, and proposed improvements to the disaster plan. States shall submit the post-disaster report containing the reviews, the problem analysis, and proposed improvements within 6 months of the close of each D-SNAP operation.

    Dated: May 2, 2016. Telora T. Dean, Acting Administrator, Food and Nutrition Service.
    [FR Doc. 2016-10923 Filed 5-9-16; 8:45 am] BILLING CODE 3410-30-P
    DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service 7 CFR Part 319 [Docket No. APHIS-2014-0092] RIN 0579-AE17 Importation of Lemons From Northwest Argentina AGENCY:

    Animal and Plant Health Inspection Service, USDA.

    ACTION:

    Proposed rule.

    SUMMARY:

    We are proposing to amend the fruits and vegetables regulations to allow the importation of lemons from northwest Argentina into the continental United States. As a condition of entry, lemons from northwest Argentina would have to be produced in accordance with a systems approach that would include requirements for importation in commercial consignments; registration and monitoring of places of production and packinghouses; pest-free places of production; grove sanitation, monitoring, and pest control practices; treatment with a surface disinfectant; lot identification; and inspection for quarantine pests by the Argentine national plant protection organization. Additionally, lemons from northwest Argentina would have to be harvested green and within a certain time period, or treated for Medfly in accordance with an approved treatment schedule. Lemons from northwest Argentina would also be required to be accompanied by a phytosanitary certificate with an additional declaration stating that the lemons have been inspected and found to be free of quarantine pests and were produced in accordance with the proposed requirements. This action would allow for the importation of lemons from northwest Argentina into the United States while continuing to provide protection against the introduction of quarantine pests.

    DATES:

    We will consider all comments that we receive on or before July 11, 2016.

    ADDRESSES:

    You may submit comments by either of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov/#!docketDetail;D=APHIS-2014-0092.

    Postal Mail/Commercial Delivery: Send your comments to Docket No. APHIS-2014-0092, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Road Unit 118, Riverdale, MD 20737-1238.

    Supporting documents and any comments we receive on this docket may be viewed at http://www.regulations.gov/#!docketDetail;D=APHIS-2014-0092 or in our reading room, which is located in room 1141 of the USDA South Building, 14th Street and Independence Avenue SW., Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays. To be sure someone is there to help you, please call (202) 799-7039 before coming.

    FOR FURTHER INFORMATION CONTACT:

    Mr. Juan A. (Tony) Román, Senior Regulatory Policy Specialist, PPQ, APHIS, 4700 River Road Unit 133, Riverdale, MD 20737-1236; (301) 851-2242.

    SUPPLEMENTARY INFORMATION:

    Background

    The regulations in “Subpart-Fruits and Vegetables” (7 CFR 319.56-1 through 319.56-75, referred to below as the regulations) prohibit or restrict the importation of fruits and vegetables into the United States from certain parts of the world to prevent the introduction and dissemination of plant pests within the United States.

    The national plant protection organization (NPPO) of Argentina has requested that the Animal and Plant Health Inspection Service (APHIS) amend the regulations to allow lemons (Citrus limon L.) from the northwest region of Argentina (the Provinces of Catamarca, Jujuy, Salta, and Tucumán) to be imported into the continental United States. Northwest Argentina is the main lemon-producing region in Argentina, and different pests occur there than those that occur in other citrus-producing areas in Argentina.

    In evaluating Argentina's request, we prepared a pest risk assessment (PRA) and risk management document (RMD). Copies of the PRA and the RMD may be obtained from the person listed under FOR FURTHER INFORMATION CONTACT, viewed in the reading room listed above under ADDRESSES, or viewed on the Regulations.gov Web site (see ADDRESSES above for instructions for accessing Regulations.gov).

    The PRA, titled “Risk Assessment for the Importation of Fresh Lemon (Citrus limon (L.) Burm. f.) Fruit from Northwest Argentina into the Continental United States” analyzes the potential pest risk associated with the importation of fresh lemons into the continental United States from northwest Argentina.

    A quarantine pest is defined in § 319.56-2 of the regulations as a pest of potential economic significance to the area endangered thereby and not yet present there, or present but not widely distributed and being officially controlled. The PRA identifies nine pests of quarantine significance present in Argentina that could follow the pathway for lemons from northwest Argentina to the continental United States. They are:

    Brevipalpus californicus (Banks), the citrus flat mite; B. obovatus Donnadieu, the scarlet tea mite; and B. phoenicis (Geijskes), the false spider mite. These mites (referred to in this document as the Brevipalpus spp. mites) are potential vectors of citrus leprosis virus (CiLV), a quarantine pest present in Argentina;

    B. chilensis Baker, the Chilean false red mite;

    Ceratitis capitata (Wiedemann), the Mediterranean fruit fly (Medfly);

    Cryptoblabes gnidiella (Milliére), the honeydew moth;

    Elsinoë australis Bitanc. & Jenkins 1936, the causal agent of sweet orange scab disease (SOS);

    Gymnandrosoma aurantianum (Lima), the citrus borer; and

    Xanthomonas citri subsp. citri (ex Hasse) Gabriel et al. 1989, the causal agent of citrus canker disease (Xcc).

    The PRA derives plant pest risk potentials for these pests by estimating the likelihood of introduction of each pest into the continental United States through the importation of lemons from northwest Argentina. The PRA considers four of the pests to have a high pest risk potential (B. chilensis, C. capitata, C. gnidiella, and G. aurantianum), and five to have a medium risk potential (the Brevipalpus spp. mites, E. australis, and Xcc).

    Based on the findings of the PRA, APHIS has determined that measures beyond standard port-of-entry inspection are necessary in order to mitigate the risk associated with the importation of fresh lemons from northwest Argentina into the continental United States. These measures are listed in the RMD and are used as the basis for the requirements of this proposed rule.

    Therefore, we are proposing to amend the regulations to allow the importation of commercial consignments of fresh lemons from northwest Argentina into the continental United States, subject to a systems approach. Requirements of the systems approach, which would be added to the regulations as a new § 319.56-76, are discussed in the following sections.

    Proposed Systems Approach General Requirements

    Proposed paragraph (a) of § 319.56-76 would set out general requirements for fresh lemons from northwest Argentina destined for export to the continental United States.

    Proposed paragraph (a)(1) of § 319.56-76 would require the NPPO of Argentina to provide an operational workplan to APHIS that details the systems approach activities that the NPPO of Argentina and places of production and packinghouses registered with the NPPO of Argentina would, subject to APHIS approval of the workplan, implement to meet the proposed requirements. An operational workplan is an arrangement between APHIS' Plant Protection and Quarantine program and officials of the NPPO of a foreign government that specifies in detail the phytosanitary measures that will comply with U.S. regulations governing the import or export of a specific commodity. Operational workplans apply only to the signatories and establish detailed procedures and guidance for the day-to-day operations of specific import/export programs. Operational workplans also establish how specific phytosanitary issues are dealt with in the exporting country and make clear who is responsible for dealing with those issues. Operational workplans require APHIS approval.

    If the operational workplan is approved, APHIS would be directly involved with the NPPO of Argentina in monitoring and auditing the systems approach implementation. Such monitoring could involve site visits by APHIS personnel.

    Proposed paragraph (a)(2) of § 319.56-76 would require the lemons considered for export to the continental United States to be grown by places of production that are registered with the NPPO of Argentina and that have been determined to be free from B. chilensis in accordance with the proposed regulations. We discuss the proposed protocol for considering a production site free from B. chilensis later in this document.

    Proposed paragraph (a)(3) of § 319.56-76 would require the lemons to be packed for export to the continental United States in pest-exclusionary packinghouses that are registered with the NPPO of Argentina.

    Registration of places of production and packinghouses with the NPPO of Argentina would ensure that the NPPO exercises oversight of these locations and that the places of production and packinghouses continuously follow the provisions of the export program. It would also facilitate traceback in the event that lemons from Argentina are determined to be infested with quarantine pests.

    Proposed paragraph (a)(4) of § 319.56-76 would require the NPPO of Argentina to maintain all forms and documents pertaining to registered places of production and packinghouses for at least 1 year and, as requested, provide them to APHIS for review. Such forms and documents would include (but would not be limited to) records regarding fruit fly trapping in registered places of production and records regarding pest detections in registered places of production and registered packinghouses. Based on APHIS' review of the records, we may monitor places of production and packinghouses, as we deem warranted.

    Proposed paragraph (a)(5) of § 319.56-76 would require lemons from Argentina to be imported into the continental United States in commercial consignments only. Noncommercial shipments are more prone to infestations because the commodity is often ripe to overripe, could be of a variety with unknown susceptibility to pests, and is often grown with little or no pest control. Commercial consignments, as defined in § 319.56-2 of the regulations, are consignments that an inspector identifies as having been imported for sale and distribution. Such identification is based on a variety of indicators, including, but not limited to: Quantity of produce, type of packaging, identification of place of production or packinghouse on the packaging, and documents consigning the fruits or vegetables to a wholesaler or retailer. For purposes of the proposed regulations, in order for a consignment to be considered a commercial consignment, fruit in the consignment would have to be practically free of leaves, twigs, and other plant parts, except for stems less than 1 inch long and attached to the fruit. We currently require most other fruits and vegetables imported into the United States from foreign countries to be imported in commercial consignments as a mitigation against quarantine pests of those commodities.

    Proposed paragraph (a)(6) of § 319.56-76 would require the identity of each lemon from Argentina destined for export to the continental United States to be maintained throughout the export process, from the place of production to the arrival at the port of entry in the continental United States. The operational workplan would have to authorize the means of identification used that allows the lot to be traced back to its place of production. This requirement would facilitate traceback in the event that quarantine pests are discovered in a lot of lemons destined for export to the United States. This, in turn, would help ensure that timely remedial measures are taken to address the plant pest risk at the place of production and preclude the further export of infested fruit from that place of production.

    Proposed paragraph (a)(7) of § 319.56-76 would require lemons from Argentina to be harvested green and within the time period of April 1 and August 31. If the lemons are harvested yellow or harvested outside of that time period, they would have to be treated for Medfly in accordance with 7 CFR part 305 and the operational workplan. As documented in the RMD, lemons are a poor host of Medfly, and research has shown that harvesting them green during that time period, when Medfly populations are low in Argentina, is an effective mitigation against Medfly.

    Within part 305, § 305.2 provides that approved treatment schedules for Medfly and other quarantine pests are set forth in the Plant Protection and Quarantine Treatment Manual, found online at http://www.aphis.usda.gov/import_export/plants/manuals/ports/downloads/treatment.pdf. The manual currently specifies that cold treatment according to schedule T107-a is effective in neutralizing Medfly on citrus. If lemons from Argentina are harvested yellow, or outside of the prescribed time period, they would have to be treated according to this approved schedule.

    Proposed paragraph (a)(8) of § 319.56-76 would provide that lots of lemons destined for export to the continental United States must be safeguarded during movement from registered places of production to registered packinghouses as specified by the operational workplan. Such safeguarding could include the use of pest-proof screens or tarpaulins to cover the lots during transit, or other similar measures approved by APHIS and the NPPO of Argentina.

    Proposed paragraph (a)(9) of § 319.56-76 would require each consignment of lemons imported from Argentina into the continental United States to be accompanied by a phytosanitary certificate issued by the NPPO of Argentina with an additional declaration stating that the requirements in the proposed regulations have been met and consignments have been inspected and found free of Brevipalpus spp. mites, B. chilensis, C. capitata, C. gnidiella, and G. aurantianum.

    Place of Production Requirements

    The proposed systems approach would require places of production to meet certain requirements and take certain measures to prevent the introduction of quarantine pests to lemons destined for export to the continental United States. Proposed paragraph (b) of § 319.56-76 would contain these requirements and measures.

    Proposed paragraph (b)(1) of § 319.56-76 would require that, prior to each harvest season, registered places of production of lemons destined for export to the continental United States must be determined by APHIS and the NPPO of Argentina to be free from B. chilensis based on biometric sampling conducted in accordance with the operational workplan. If a single B. chilensis mite is discovered as a result of such sampling, the place of production would not be considered free from B. chilensis for that harvest season. Each place of production would have only one opportunity per harvest season to be considered free of B. chilensis, and certification of B. chilensis freedom would only last one harvest season.

    Currently, APHIS authorizes the importation of several commodities from Chile, including kiwi, clementines, mandarins, and tangerines, subject to confirmation, using a similar sampling method, that places of production for those commodities have a low prevalence for B. chilensis. The biometric sampling used to establish freedom from B. chilensis would be modeled on the sampling protocols currently used in Chile to establish places of production of low pest prevalence for B. chilensis.

    Under the proposed biometric sampling protocol, between 1 and 30 days before harvest, 100 random samples of fruit would have to be collected from each registered place of production. The samples would then have to washed, placed on a mesh sieve, sprinkled with liquid soap and water solution, washed with water at high pressure, and washed with water at lower pressure. Once this cleaning process is repeated twice, the contents of the sieves would have to be placed on a petri dish and examined for B. chilensis.

    Proposed paragraph (b)(2) of § 319.56-76 would require registered places of production to remove plant litter and fallen debris from groves in accordance with the operational workplan. It would also prohibit fallen fruit from being included in field containers of fruit brought to the packinghouse to be packed for export. Plant litter, fallen debris, and fallen fruit are especially susceptible to quarantine pests.

    Proposed paragraph (b)(3) of § 319.56-76 would require registered places of production to trap for Medfly in accordance with the operational workplan. The operational workplan would specify the types of traps and baits that must be used, the minimum number of traps per acre that must be deployed, the requisite distance between each trap, and the intervals at which the traps must be serviced. The NPPO would have to keep records regarding the placement and monitoring of all traps, as well as records of all pest detections in these traps, and provide the records to APHIS, as requested.

    Proposed paragraph (b)(4) of § 319.56-76 would require registered places of production to carry out any additional grove sanitation and phytosanitary measures specified for the place of production by the operational workplan. Depending on the location, size, and plant pest history of the grove, these could include surveying protocols, safeguarding of trees, application of pesticides and fungicides, or other measures.

    Proposed paragraph (b)(5) of § 319.56-76 would require the NPPO of Argentina to visit and inspect registered places of production regularly for signs of infestations and to allow APHIS to monitor these inspections. These inspections would have to start no more than 30 days before harvest and continue until the end of the export season.

    Proposed paragraph (b)(6) of § 319.56-76 would provide that if APHIS or the NPPO of Argentina determines that a registered place of production has failed to follow the requirements of the regulations, the place of production would be excluded from the export program until APHIS and the NPPO of Argentina jointly agree that the place of production has taken appropriate remedial measures to address the plant pest risk.

    Packinghouse Requirements

    Proposed paragraph (c) of § 319.56-76 would set forth requirements for mitigation measures that would have to occur at registered packinghouses.

    Proposed paragraph (c)(1) of § 319.56-76 would require that, while a registered packinghouse is in use for packing lemons for export to the continental United States, the packinghouses may only accept lemons that are from registered places of production and that have been produced in accordance with proposed § 319.56-76. Lemons from other places of production may be produced under conditions that are less stringent than those of this proposed rule, and may therefore be a pathway for the introduction of quarantine pests into the packinghouses.

    Proposed paragraph (c)(2) of § 319.56-76 would require lemons to be packed within 24 hours of harvest in a registered pest-exclusionary packinghouse or stored in a degreening chamber in the registered pest-exclusionary packinghouse. The lemons would have to be packed for shipment to the continental United States in insect-proof cartons or containers, or covered with insect-proof mesh or plastic tarpaulin. These safeguards would have to remain intact until the lemons arrive in the United States, or the consignment would not be allowed to enter the United States. These requirements collectively would aid in preventing the lemons from becoming infested with plant pests during or subsequent to packing.

    Proposed paragraph (c)(3) of § 319.56-76 would require the lemons to be washed, brushed, and surface disinfected for E. australis and Xcc in accordance with the operational workplan, treated with an APHIS-approved fungicide, and waxed. Section 301.75-7 requires citrus fruit from areas of the United States that are quarantined for Xcc to be treated at packinghouses for Xcc. Additionally, a December 2010 Federal Order for the interstate movement of citrus fruit from areas of the United States that are quarantined for E. australis requires the fruit to be washed, disinfected, treated, and waxed at packinghouses in order for a certificate to be issued authorizing the unrestricted interstate movement of the fruit within the United States.1 Accordingly, this requirement would be generally consistent with current domestic requirements.

    1 To view the Federal Order, go to http://www.aphis.usda.gov/plant_health/plant_pest_info/citrus/downloads/sweet_orange/2010-62.pdf.

    Proposed paragraph (c)(4) of § 319.56-76 would require the NPPO of Argentina or officials authorized by the NPPO of Argentina to visually inspect a biometric sample of each consignment for quarantine pests, wash the lemons in the sample, and inspect the filtrate for B. chilensis in accordance with the operational workplan. In addition to identifying lemons infested with B. chilensis, this method of visual inspection would be able to detect any signs or symptoms of Brevipalpus spp. mites on the lemons.

    A portion of the fruit would then have to be cut open and inspected for evidence of quarantine pests. Cutting the fruit open would allow inspectors to determine whether the fruit is infested with Medflies or C. gnidiella or G. aurantianum larvae.

    If a single C. gnidiella or G. aurantianum in any stage of development is found on the lemons, the entire consignment would be prohibited from export to the United States, and the registered place of production that produced the lemons would be suspended from the export program until APHIS and the NPPO of Argentina jointly agree that the place of production has taken appropriate remedial measures to address plant pest risk.

    If a single B. chilensis or Brevipalpus spp. mite in any stage of development is found on the lemons, the entire consignment would be prohibited from export, and the registered place of production that produced the lemons may be suspended from the export program, pending an investigation.

    If a single immature Medfly is found in or with the lemons, the lemons would have to be treated in accordance with 7 CFR part 305 and the operational workplan, and the registered place of production that produced the lemons in the consignment may be suspended from the export program, pending an investigation.

    We would not require remedial measures to be taken if fruit is determined to be symptomatic for E. australis or Xcc because we have determined that fruit that is symptomatic for these pathogens and that has been subject to the treatment and processing protocol specified in proposed paragraph (c)(3) of § 319.56-76 is not a pathway for the spread of the pathogens. This is reflected in our conditions for the interstate movement of citrus fruit that is symptomatic for E. australis or Xcc.

    Proposed paragraph (c)(5) of § 319.56-76 would provide that, if APHIS or the NPPO of Argentina determines that a registered packinghouse has failed to follow the requirements of the regulations, the packinghouse would be excluded from the export program until APHIS and the NPPO of Argentina jointly agree that the packinghouse has taken appropriate remedial measures to address the plant pest risk.

    Port of Entry Requirements

    Proposed paragraph (d) of § 319.56-76 would provide that consignments of lemons from Argentina will be inspected at the port of entry to the United States, and that, if any quarantine pests are discovered on the lemons during this inspection, the entire lot in which the quarantine pest was discovered would be subject to appropriate remedial measures to address this risk.

    Miscellaneous Amendments to § 319.28

    The regulations in § 319.28(a) prohibit the importation of citrus from Argentina, as well as from eastern and southeastern Asia, Japan, Brazil, Paraguay, and other designated areas. However, paragraphs (b) through (e) of § 319.28 set out various exceptions to this prohibition. To allow the importation of lemons from northwestern Argentina under § 319.56-76, we propose adding a new paragraph (e) to § 319.28 stating that the prohibition does not apply to lemons from northwest Argentina that meet the requirements of § 319.56-76. To accommodate the addition of the new paragraph (e) in § 319.28, we would redesignate current paragraphs (e) through (i) as (f) through (j), respectively.

    Paragraph (a)(1) of § 319.28 provides that importation of fruits and peels of the genera and varieties listed in that paragraph is allowed from the Provinces 2 of Catamarca, Jujuy, Salta, and Tucumán in Argentina because those Provinces are considered to be free of Xcc. However, we now consider Xcc to be present in those Provinces. Therefore, we would remove that statement.

    2 The paragraph currently refers to these administrative units as “States.” However, as noted within this document, administrative units within Argentina are Provinces, not States.

    Finally, paragraph (a)(2) of § 319.28 currently prohibits the importation of lemons from Argentina, among other countries, to prevent the introduction of SOS within the United States. We would remove this prohibition.

    Executive Order 12866 and Regulatory Flexibility Act

    This proposed rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget.

    We have prepared an economic analysis for this rule. The economic analysis provides a cost-benefit analysis, as required by Executive Order 12866, and an initial regulatory flexibility analysis that examines the potential economic effects of this proposed rule on small entities, as required by the Regulatory Flexibility Act. The economic analysis is summarized below. Copies of the full analysis are available by contacting the person listed under FOR FURTHER INFORMATION CONTACT, in the reading room (see ADDRESSES above for more information), or on the Regulations.gov Web site (see ADDRESSES above for instructions for accessing Regulations.gov).

    The analysis examines potential economic impacts on small domestic entities of allowing the importation of fresh lemons from northwest Argentina into the continental United States. A systems approach to pest risk mitigation would provide phytosanitary protection against pests of quarantine significance. Economic effects of the rule for both U.S. producers and consumers are not expected to be significant. While producers' welfare would be negatively affected, welfare gains for consumers would outweigh producer losses, resulting in a net benefit to the U.S. economy.

    In the United States, commercial lemon production takes place in California and Arizona. For the 2013/14 season, lemon-bearing acres totaled 54,500 (California 46,000, Arizona 8,500). In the same season, the value of U.S. production of lemons was $647 million, 92 percent earned by California's growers and 8 percent by Arizona's growers. Over the five seasons, 2008/09 to 2012/13, U.S. fresh lemon production averaged about 497,350 metric tons (MT) per year. Over the same period, annual imports averaged about 45,751 MT and exports averaged about 95,574 MT. Because of the provisions of the rule, we expect that most lemons will be exported from April 1 to August 31, a period that coincides roughly with the months in which U.S. lemon exports are declining and imports are increasing.

    Effects of the proposed rule are estimated using a partial equilibrium model of the U.S. lemon sector. Annual imports of fresh lemon from Argentina are expected to range between 15,000 and 20,000 MT, with volumes averaging 18,000 MT. Quantity, price, and welfare changes are estimated for these three import scenarios.

    If the United States were to import 18,000 MT of fresh lemon from Argentina and there were no displacement of lemon imports from other countries, the price would decrease by an estimated 4 percent. Consumer welfare gains of about $25 million would outweigh producer welfare losses of about $22 million, resulting in a net welfare gain of about $3 million. The 15,000 MT and 20,000 MT scenarios show similar effects.

    More reasonably, partial import displacement would occur, and price and welfare effects would be proportional to the net increase in U.S. lemon imports. If one-half of the quantity of fresh lemon imported from Argentina were to displace U.S. fresh lemon imports from elsewhere, then for the 18,000 MT scenario the price decline would be about 2 percent; consumer welfare gains and producer welfare losses would be about $12.2 million and $10.9 million, respectively, yielding a net welfare benefit of about $1.3 million.

    The majority of businesses that may be affected by the proposed rule are small entities, including lemon producers, packers, wholesalers, and related establishments. APHIS welcomes public comment in order to better determine the extent to which U.S. small entities may be affected by this proposed rule.

    Executive Order 12988

    This proposed rule would allow lemons to be imported into the continental United States from northwest Argentina. If this proposed rule is adopted, State and local laws and regulations regarding lemons imported under this rule would be preempted while the fruit is in foreign commerce. Fresh lemons are generally imported for immediate distribution and sale to the consuming public and would remain in foreign commerce until sold to the ultimate consumer. The question of when foreign commerce ceases in other cases must be addressed on a case-by-case basis. If this proposed rule is adopted, no retroactive effect will be given to this rule, and this rule will not require administrative proceedings before parties may file suit in court challenging this rule.

    Paperwork Reduction Act

    In accordance with section 3507(d) of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the information collection or recordkeeping requirements included in this proposed rule have been submitted for approval to the Office of Management and Budget (OMB). Please send written comments to the Office of Information and Regulatory Affairs, OMB, Attention: Desk Officer for APHIS, Washington, DC 20503. Please state that your comments refer to Docket No. APHIS-2014-0092. Please send a copy of your comments to: (1) Docket No. APHIS-2014-0092, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Road Unit 118, Riverdale, MD 20737-1238, and (2) Clearance Officer, OCIO, USDA, Room 404-W, 14th Street and Independence Avenue SW., Washington, DC 20250.

    This proposed rule would allow the importation of lemons from northwest Argentina that have been produced in accordance with the requirements of a systems approach. This action would require information collection activities, such as an operational workplan, production site and packinghouse registration and recertification, pest-free determination, recordkeeping, monitoring of traps, NPPO inspection, identification, treatment records, and a phytosanitary certificate.

    We are soliciting comments from the public (as well as affected agencies) concerning our proposed information collection and recordkeeping requirements. These comments will help us:

    (1) Evaluate whether the proposed information collection is necessary for the proper performance of our agency's functions, including whether the information will have practical utility;

    (2) Evaluate the accuracy of our estimate of the burden of the proposed information collection, including the validity of the methodology and assumptions used;

    (3) Enhance the quality, utility, and clarity of the information to be collected; and

    (4) Minimize the burden of the information collection on those who are to respond (such as through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology; e.g., permitting electronic submission of responses).

    Estimate of burden: Public reporting burden for this collection of information is estimated to average 0.07356 hours per response.

    Respondents: Producers, importers of lemons, the NPPO of Argentina.

    Estimated annual number of respondents: 76.

    Estimated annual number of responses per respondent: 52.40.

    Estimated annual number of responses: 3,983.

    Estimated total annual burden on respondents: 293 hours. (Due to averaging, the total annual burden hours may not equal the product of the annual number of responses multiplied by the reporting burden per response.)

    Copies of this information collection can be obtained from Ms. Kimberly Hardy, APHIS' Information Collection Coordinator, at (301) 851-2727.

    E-Government Act Compliance

    The Animal and Plant Health Inspection Service is committed to compliance with the EGovernment Act to promote the use of the Internet and other information technologies, to provide increased opportunities for citizen access to Government information and services, and for other purposes. For information pertinent to E-Government Act compliance related to this proposed rule, please contact Ms. Kimberly Hardy, APHIS' Information Collection Coordinator, at (301) 851-2727.

    List of Subjects for 7 CFR Part 319

    Coffee, Cotton, Fruits, Imports, Logs, Nursery stock, Plant diseases and pests, Quarantine, Reporting and recordkeeping requirements, Rice, Vegetables.

    Accordingly, we propose to amend 7 CFR part 319 as follows:

    PART 319—FOREIGN QUARANTINE NOTICES 1. The authority citation for part 319 continues to read as follows: Authority:

    7 U.S.C. 450, 7701-7772, and 7781-7786; 21 U.S.C. 136 and 136a; 7 CFR 2.22, 2.80, and 371.3.

    2. Section 319.28 is amended as follows: a. In paragraph (a)(1), by removing the words “(except for the States of Catamarca, Jujuy, Salta, and Tucumán, which are considered free of citrus canker)”. b. In paragraph (a)(2), by removing the word “Argentina,”. c. By redesignating paragraphs (e) through (i) as paragraphs (f) through (j), respectively, and adding a new paragraph (e).

    The addition reads as follows:

    § 319.28 Notice of quarantine.

    (e) The prohibition does not apply to lemons (Citrus limon (L.) Burm. f.) from northwest Argentina that meet the requirements of § 319.56-76.

    5. Section 319.56-76 is added to read as follows:
    § 319.56-76 Lemons from northwest Argentina.

    Fresh lemons (Citrus limon (L.) Burm. f.) may be imported into the continental United States from northwest Argentina (the Provinces of Catamarca, Jujuy, Salta, and Tucumán) only under the conditions described in this section. These conditions are designed to prevent the introduction of the following quarantine pests: Brevipalpus chilensis, the Chilean false red mite; B. californicus, the citrus flat mite, B. obovatus, the scarlet tea mite, and B. phoenicis, the false spider mite (referred to in this section as “Brevipalpus spp. mites”); Ceratitis capitata, the Mediterranean fruit fly; Cryptoblabes gnidiella, the honeydew moth; Elsinoë australis, the causal agent of sweet orange scab disease; Gymnandrosoma aurantianum (Lima), the citrus borer; and Xanthomonas citri subsp. citri (ex Hasse) Gabriel et al., the causal agent of citrus canker disease.

    (a) General requirements—(1) Operational workplan. The national plant protection organization (NPPO) of Argentina must provide an operational workplan to APHIS that details the activities that the NPPO of Argentina and places of production and packinghouses registered with the NPPO of Argentina will, subject to APHIS' approval of the workplan, carry out to meet the requirements of this section. The operational workplan must include and describe the specific requirements as set forth in this section. APHIS will be directly involved with the NPPO of Argentina in monitoring and auditing implementation of the systems approach.

    (2) Registered places of production. The fresh lemons considered for export to the continental United States must be grown by places of production that are registered with the NPPO of Argentina and that have been determined to be free from B. chilensis in accordance with this section.

    (3) Registered packinghouses. The lemons must be packed for export to the continental United States in pest-exclusionary packinghouses that are registered with the NPPO of Argentina.

    (4) Recordkeeping. The NPPO of Argentina must maintain all forms and documents pertaining to registered places of production and packinghouses for at least 1 year and, as requested, provide them to APHIS for review. Based on APHIS' review of records, APHIS may monitor places of production and packinghouses, as APHIS deems warranted.

    (5) Commercial consignments. Lemons from Argentina can be imported to the continental United States in commercial consignments only. For purposes of this section, fruit in a commercial consignment must be practically free of leaves, twigs, and other plant parts, except for stems less than 1 inch long and attached to the fruit.

    (6) Identification. The identity of the each lot of lemons from Argentina must be maintained throughout the export process, from the place of production to the arrival of the lemons at the port of entry into the continental United States. The means of identification that allows the lot to be traced back to its place of production must be authorized by the operational workplan.

    (7) Harvesting restrictions or treatment for fruit flies. Lemons from Argentina must be harvested green and within the time period of April 1 and August 31. If they are harvested yellow or harvested outside of this time period, they must be treated for C. capitata in accordance with part 305 of this chapter and the operational workplan.

    (8) Safeguarding. Lots of lemons destined for export to the continental United States must be safeguarded during movement from registered places of production to registered packinghouses as specified by the operational workplan.

    (9) Phytosanitary certificate. Each consignment of lemons imported from Argentina into the continental United States must be accompanied by a phytosanitary certificate issued by the NPPO of Argentina with an additional declaration stating that the requirements of this section have been met and that the consignments have been inspected and found free of Brevipalpus spp. mites, B. chilensis, C. capitata, C. gnidiella, and G. aurantianum.

    (b) Place of production requirements. (1) Prior to each harvest season, registered places of production of lemons destined for export to the continental United States must be determined by APHIS and the NPPO of Argentina to be free from B. chilensis based on biometric sampling conducted in accordance with the operational workplan. If a single live B. chilensis mite is discovered as a result of such sampling, the place of production will not be considered free from B. chilensis. Each place of production will have only one opportunity per harvest season to be considered free of B. chilensis, and certification of B. chilensis freedom will only last one harvest season.

    (2) Places of production must remove plant litter and fallen debris from groves in accordance with the operational workplan. Fallen fruit may not be included in field containers of fruit brought to the packinghouse to be packed for export.

    (3) Places of production must trap for C. capitata in accordance with the operational workplan. The NPPO must keep records regarding the placement and monitoring of all traps, as well as records of all pest detections in these traps, and provide the records to APHIS, as requested.

    (4) Places of production must carry out any additional grove sanitation and phytosanitary measures specified for the place of production by the operational workplan.

    (5) The NPPO of Argentina must visit and inspect registered places of production regularly throughout the exporting season for signs of infestations. These inspections must start no more than 30 days before harvest and continuing until the end of the export season. The NPPO of Argentina must allow APHIS to monitor these inspections. The NPPO of Argentina must also provide records of pest detections and pest detection practices to APHIS. Before any place of production may export lemons to the continental United States pursuant to this section, APHIS must review and approve of these practices.

    (6) If APHIS or the NPPO of Argentina determines that a registered place of production has failed to follow the requirements in this paragraph (b), the place of production will be excluded from the export program until APHIS and the NPPO of Argentina jointly agree that the place of production has taken appropriate remedial measures to address the plant pest risk.

    (c) Packinghouse requirements. (1) During the time registered packinghouses are in use for packing lemons for export to the continental United States, the packinghouses may only accept lemons that are from registered places of production and that have been produced in accordance with the requirements of this section.

    (2) Lemons destined for export to the continental United States must be packed within 24 hours of harvest in a registered pest-exclusionary packinghouse or stored in a degreening chamber in the registered pest-exclusionary packinghouse. Lemons must be packed for shipment to the continental United States in insect-proof cartons or containers, or covered with insect-proof mesh or plastic tarpaulin. These safeguards must remain intact until the lemons arrive in the United States, or the consignment will not be allowed to enter the United States.

    (3) Prior to packing, the lemons must be washed, brushed, and surface disinfected for E. australis and X. citri and in accordance with the operational workplan, treated with an APHIS-approved fungicide, and waxed.

    (4) After treatment, the NPPO of Argentina or officials authorized by the NPPO of Argentina must visually inspect a biometric sample of each consignment for quarantine pests, wash the lemons in this sample, and inspect the filtrate for B. chilensis in accordance with the operational workplan. A portion of the lemons must then be cut open and inspected for evidence of quarantine pests.

    (i) If a single C. gnidiella or G. aurantianum in any stage of development is found on the lemons, the entire consignment is prohibited from export to the United States, and the registered place of production that produced the lemons is suspended from the export program until APHIS and the NPPO of Argentina jointly agree that the place of production has taken appropriate remedial measures to address plant pest risk.

    (ii) If a single B. chilensis or Brevipalpus spp. mite in any stage of development is found on the lemons, the entire consignment is prohibited from export, and the registered place of production that that produced the lemons may be suspended from the export program, pending an investigation.

    (iii) If a single immature Medfly is found in or with the lemons, the lemons must be treated in accordance with part 305 of this chapter and the operational workplan. Additionally, the registered place of production that produced the lemons in the consignment may be suspended from the export program, pending an investigation.

    (5) If APHIS or the NPPO of Argentina determines that a registered packinghouse has failed to follow the requirements in this paragraph (c), the packinghouse will be excluded from the export program until APHIS and the NPPO of Argentina jointly agree that the packinghouse has taken appropriate remedial measures to address the plant pest risk.

    (d) Port of entry requirements. Consignments of lemons from Argentina will be inspected at the port of entry into the United States. If any quarantine pests are discovered on the lemons during inspection, the entire lot in which the quarantine pest was discovered will be subject to appropriate remedial measures to address this risk.

    Done in Washington, DC, this 4th day of May 2016. Michael L. Gregoire, Acting Administrator, Animal and Plant Health Inspection Service.
    [FR Doc. 2016-10957 Filed 5-9-16; 8:45 am] BILLING CODE 3410-34-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-6414; Directorate Identifier 2015-NM-175-AD] RIN 2120-AA64 Airworthiness Directives; Bombardier, Inc. Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for certain Bombardier, Inc. Model CL-600-2B19 (Regional Jet Series 100 & 440) airplanes. This proposed AD was prompted by two in-service incidents of a loss of all air data information in the flight deck. This proposed AD would require a revision of the airplane flight manual (AFM) emergency procedures section to provide procedures to guide the crew on how to stabilize the airplane airspeed and attitude for continued safe flight when a loss of all air data information has occurred in the flight deck. We are proposing this AD to prevent loss of control when a loss of all air data information has occurred in the flight deck.

    DATES:

    We must receive comments on this proposed AD by June 24, 2016.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: 202-493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this NPRM, contact Bombardier, Inc., 400 Côte-Vertu Road West, Dorval, Québec H4S 1Y9, Canada; telephone 514-855-5000; fax 514-855-7401; email [email protected]; Internet http://www.bombardier.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-6414; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Assata Dessaline, Aerospace Engineer, Avionics and Services Branch, ANE-172, FAA, New York Aircraft Certification Office (ACO), 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7301; fax 516-794-5531.

    SUPPLEMENTARY INFORMATION:

    Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2016-6414; Directorate Identifier 2015-NM-175-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments.

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

    Discussion

    Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF-2015-12, dated June 23, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc. Model CL-600-2B19 (Regional Jet Series 100 & 440) airplanes. The MCAI states:

    Two in-service incidents have been reported on CL-600-2C10 aeroplanes regarding a loss of all air data information in the cockpit. The air data information was recovered as the aeroplane descended to lower altitudes. An investigation determined that the root cause in both events was high altitude icing (ice crystal contamination). If not addressed, this condition may affect continued safe flight.

    Due to similarities in the air data systems, such events could happen on all Bombardier CRJ models, CL-600-2B19, CL-600-2C10, CL-600-2D15, CL-600-2D24 and CL-600-2E25. Therefore, the corrective actions for these models will be mandated once their respective Airplane Flight Manual (AFM) revisions become available.

    This [Canadian] AD mandates the incorporation of AFM procedures to guide the crew to stabilize the aeroplane's airspeed and attitude for continued safe flight.

    You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-6414.

    Related Service Information Under 1 CFR Part 51

    We reviewed Section 03-19, Unreliable Airspeed, Revision 63, dated February 13, 2015, of Chapter 3, Emergency Procedures, in the Bombardier CRJ Series Regional Jet Model CL-600-2B19 Airplane Flight Manual CSP A-012, Revision 64B, dated December 8, 2015. The service information describes procedures to guide the crew to stabilize the airplane's airspeed and attitude for continued safe flight when a loss of all air data information has occurred in the flight deck. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

    FAA's Determination and Requirements of This Proposed AD

    This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type designs.

    Costs of Compliance

    We estimate that this proposed AD affects 500 airplanes of U.S. registry.

    We also estimate that it would take about 1 work-hour per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $42,500, or $85 per product.

    Authority for This Rulemaking

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

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

    Regulatory Findings

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

    For the reasons discussed above, I certify this proposed regulation:

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

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

    3. Will not affect intrastate aviation in Alaska; and

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Bombardier, Inc.: Docket No. FAA-2016-6414; Directorate Identifier 2015-NM-175-AD. (a) Comments Due Date

    We must receive comments by June 24, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to Bombardier, Inc. Model CL-600-2B19 (Regional Jet Series 100 & 440) airplanes, certificated in any category, serial numbers 7003 and subsequent.

    (d) Subject

    Air Transport Association (ATA) of America Code 34, Navigation.

    (e) Reason

    This AD was prompted by two in-service incidents of a loss of all air data information in the flight deck. We are issuing this AD to prevent loss of control when a loss of all air data information has occurred in the flight deck.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Airplane Flight Manual Revision

    Within 30 days after the effective date of this AD, revise the emergency procedures section of the airplane flight manual (AFM) by incorporating Section 03-19, Unreliable Airspeed, Revision 63, dated February 13, 2015, of Chapter 3, Emergency Procedures, in the Bombardier CRJ Series Regional Jet Model CL-600-2B19 Airplane Flight Manual CSP A-012, Revision 64B, dated December 8, 2015.

    (h) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, New York Aircraft Certification Office (ACO), ANE-170, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the ACO, send it to ATTN: Program Manager, Continuing Operational Safety, FAA, New York ACO, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7300; fax 516-794-5531. Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office. The AMOC approval letter must specifically reference this AD.

    (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished using a method approved by the Manager, New York ACO, ANE-170, FAA; or Transport Canada Civil Aviation (TCCA); or Bombardier, Inc.'s TCCA Design Approval Organization (DAO). If approved by the DAO, the approval must include the DAO-authorized signature.

    (i) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian Airworthiness Directive CF-2015-12, dated June 23, 2015, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-6414.

    (2) For service information identified in this AD, contact Bombardier, Inc., 400 Côte-Vertu Road West, Dorval, Québec H4S 1Y9, Canada; telephone 514-855-5000; fax 514-855-7401; email [email protected]; Internet http://www.bombardier.com. You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, Washington, on April 28, 2016. Dionne Palermo, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-10732 Filed 5-9-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-6551; Directorate Identifier 2013-SW-070-AD] RIN 2120-AA64 Airworthiness Directives; Bell Helicopter Textron Helicopters AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for certain Bell Helicopter Textron (Bell) Model 430 helicopters. This proposed AD would require establishing a life limit for a certain main rotor hub attachment bolt (bolt) and removing from service each bolt that has met or exceeded its life limit. This proposed AD is prompted by a documentation error that omitted the life limit of a certain part-numbered bolt from the Airworthiness Limitations section of the maintenance manual. The proposed actions are intended to establish a life limit for a certain part-numbered bolt to prevent failure of a bolt, failure of a main rotor hub, and subsequent loss of control of a helicopter.

    DATES:

    We must receive comments on this proposed AD by July 11, 2016.

    ADDRESSES:

    You may send comments by any of the following methods:

    Federal eRulemaking Docket: Go to http://www.regulations.gov. Follow the online instructions for sending your comments electronically.

    Fax: 202-493-2251.

    Mail: Send comments to the U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590-0001.

    Hand Delivery: Deliver to the “Mail” address between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-6551; or in person at the Docket Operations Office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the economic evaluation, any comments received, and other information. The street address for the Docket Operations Office (telephone 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    For service information identified in this proposed rule, contact Bell Helicopter Textron Canada Limited, 12,800 Rue de l'Avenir, Mirabel, Quebec J7J1R4; telephone (450) 437-2862 or (800) 363-8023; fax (450) 433-0272; or at http://www.bellcustomer.com/files/. You may review the referenced service information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy, Room 6N-321, Fort Worth, TX 76177.

    FOR FURTHER INFORMATION CONTACT:

    Matt Fuller, Senior Aviation Safety Engineer, Safety Management Group, Rotorcraft Directorate, FAA, 10101 Hillwood Pkwy, Fort Worth, TX 76177; telephone (817) 222-5110; email [email protected]

    SUPPLEMENTARY INFORMATION: Comments Invited

    We invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.

    We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.

    Discussion

    Transport Canada, which is the aviation authority for Canada, has issued AD No. CF-2013-26, dated September 24, 2013, to correct an unsafe condition for certain serial-numbered Bell Model 430 helicopters. Transport Canada advises that bolt part number (P/N) MS21250-08083, which replaced bolt P/N 20-065-08083 in 2009, has a retirement life of 5,000 hours. However, the retirement life for the replacement bolt was inadvertently omitted from the limitations section of the Bell 430 maintenance manual. Transport Canada advises that this situation, if not corrected, could result in failure of a bolt and loss of control of the helicopter. Transport Canada AD No. CF-2013-26 requires reviewing the helicopter records to determine if bolt P/N MS21250-08083 is installed, creating a historical service record, and establishing an airworthiness life of 5,000 hours air time.

    FAA's Determination

    This helicopter has been approved by the aviation authority of Canada and is approved for operation in the United States. Pursuant to our bilateral agreement with Canada, Transport Canada, its technical representative, has notified us of the unsafe condition described in its AD. We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition is likely to exist or develop on other products of the same type design.

    Related Service Information

    We reviewed Bell Helicopter Alert Service Bulletin 430-12-47, dated November 14, 2012 (ASB). The ASB states that original bolt P/N 20-065-08083 has a retirement life of 5,000 hours but has been replaced by standard bolt P/N MS21250-08083, which does not have a life limit listed in the maintenance manual. The purpose of the ASB is to establish a life limit of 5,000 hours for the replacement bolt. Bell specifies reviewing the aircraft records back to January 2009 to determine which part-numbered bolts are installed. If a replacement bolt P/N MS21250-08083 is installed, the ASB specifies using data from aircraft records to create a historical service record for the replacement bolts and reflecting the 5,000 hours life limit. The ASB also specifies updating the Bell 430 maintenance manual.

    Proposed AD Requirements

    This proposed AD would require within 10 hours time-in-service (TIS), revising the Airworthiness Limitations section of the applicable maintenance manual or Instructions for Continued Airworthiness (ICA) by establishing a life limit of 5,000 hours TIS for each bolt P/N MS21250-08083. This proposed AD would also require determining the number of hours TIS for each bolt and using the helicopter's hours if the hours TIS of a bolt is unknown. This proposed AD would also require removing from service each bolt that has reached or exceeded its life limit.

    Differences Between This Proposed AD and the Transport Canada AD

    The proposed AD would require compliance within 10 hours TIS, while the Transport Canada AD requires compliance within 60 days.

    Costs of Compliance

    We estimate that this proposed AD would affect 43 helicopters of U.S. Registry. We estimate that operators may incur the following costs in order to comply with this AD. At an average labor cost of $85 per work-hour, we estimate reviewing and revising the records would require 1 work-hour for a cost of about $85 per helicopter and $3,655 for the U.S. fleet. We estimate replacing a bolt that has exceeded its life limit would require 0.5 work-hour plus $290 for a replacement bolt, for a total cost of $333 per bolt.

    Authority for This Rulemaking

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

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

    Regulatory Findings

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

    For the reasons discussed, I certify this proposed regulation:

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

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

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

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

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Bell Helicopter Textron: Docket No. FAA-2016-6551; Directorate Identifier 2013-SW-070-AD. (a) Applicability

    This AD applies to Model 430 helicopters, serial number 49001 through 49129, with a main rotor head attachment bolt (bolt) part number MS21250-08083 installed, certificated in any category.

    (b) Unsafe Condition

    This AD defines the unsafe condition as a bolt remaining in service beyond its fatigue life. This condition could result in failure of a bolt, failure of the main rotor hub and subsequent loss of control of a helicopter.

    (c) Comments Due Date

    We must receive comments by July 11, 2016.

    (d) Compliance

    You are responsible for performing each action required by this AD within the specified compliance time unless it has already been accomplished prior to that time.

    (e) Required Actions

    Within 10 hours time-in-service (TIS):

    (1) Revise the Airworthiness Limitations section of the applicable maintenance manual or Instructions for Continued Airworthiness (ICA) to establish a life limit of 5,000 hours TIS for each bolt P/N MS21250-08083.

    (2) Determine the number of hours TIS for each bolt and update the helicopter's historical records. If the hours TIS is unknown, calculate the number of hours TIS by counting the helicopter's hours TIS beginning January 1, 2009.

    (3) Remove from service each bolt that has reached or exceeded its life limit.

    (f) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Safety Management Group, FAA, may approve AMOCs for this AD. Send your proposal to: Matt Fuller, Senior Aviation Safety Engineer, Safety Management Group, Rotorcraft Directorate, FAA, 10101 Hillwood Pkwy, Fort Worth, TX 76177; telephone (817) 222-5110; email [email protected]

    (2) For operations conducted under a 14 CFR part 119 operating certificate or under 14 CFR part 91, subpart K, we suggest that you notify your principal inspector, or lacking a principal inspector, the manager of the local flight standards district office or certificate holding district office before operating any aircraft complying with this AD through an AMOC.

    (g) Additional Information

    (1) Bell Helicopter Alert Service Bulletin 430-12-47, dated November 14, 2012, which is not incorporated by reference, contains additional information about the subject of this proposed rule. For service information identified in this proposed rule, contact Bell Helicopter Textron Canada Limited, 12,800 Rue de l'Avenir, Mirabel, Quebec J7J1R4; telephone (450) 437-2862 or (800) 363-8023; fax (450) 433-0272; or at http://www.bellcustomer.com/files/. You may review the referenced service information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy, Room 6N-321, Fort Worth, TX 76177.

    (2) The subject of this AD is addressed in Transport Canada AD No. CF-2013-26, dated September 24, 2013. You may view the Transport Canada AD on the Internet at http://www.regulations.gov in the AD Docket.

    (h) Subject

    Joint Aircraft Service Component (JASC) Code: 6220 Main Rotor Head.

    Issued in Fort Worth, Texas, on April 27, 2016. James A. Grigg, Acting Manager, Rotorcraft Directorate, Aircraft Certification Service.
    [FR Doc. 2016-10860 Filed 5-9-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-6415; Directorate Identifier 2015-NM-178-AD] RIN 2120-AA64 Airworthiness Directives; Bombardier, Inc. Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for certain Bombardier, Inc. Model CL-600-2C10 (Regional Jet Series 700, 701, & 702) airplanes. This proposed AD was prompted by two in-service incidents of a loss of all air data information in the flight deck. This proposed AD would require a revision of the airplane flight manual (AFM) emergency procedures section to provide procedures to guide the crew on how to stabilize the airplane airspeed and attitude for continued safe flight when a loss of all air data information has occurred in the flight deck. We are proposing this AD to prevent loss of control when a loss of all air data information has occurred in the flight deck.

    DATES:

    We must receive comments on this proposed AD by June 24, 2016.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: 202-493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this NPRM, contact Bombardier, Inc., 400 Côte-Vertu Road West, Dorval, Québec H4S 1Y9, Canada; telephone 514-855-5000; fax 514-855-7401; email [email protected]; Internet http://www.bombardier.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-6415; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Assata Dessaline, Aerospace Engineer, Avionics and Services Branch, ANE-172, FAA, New York Aircraft Certification Office (ACO), 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7301; fax 516-794-5531.

    SUPPLEMENTARY INFORMATION:

    Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2016-6415; Directorate Identifier 2015-NM-178-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments.

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

    Discussion

    Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF-2015-20, dated July 21, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc. Model CL-600-2C10 (Regional Jet Series 700, 701, & 702) airplanes. The MCAI states:

    Two in-service incidents have been reported on CL-600-2C10 aeroplanes regarding a loss of all air data information in the cockpit. The air data information was recovered as the aeroplane descended to lower altitudes. An investigation determined that the root cause in both events was high altitude icing (ice crystal contamination). If not addressed, this condition may affect continued safe flight.

    Due to similarities in the air data systems, such events could happen on all Bombardier CRJ models, CL-600-2B19, CL-600-2C10, CL-600-2D15, CL-600-2D24 and CL-600-2E25. Therefore, the corrective actions for these models will be mandated once their respective Airplane Flight Manual (AFM) revisions become available.

    This [Canadian] AD mandates the incorporation of AFM procedures to guide the crew to stabilize the aeroplane's airspeed and attitude for continued safe flight.

    You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-6415.

    Related Service Information Under 1 CFR Part 51

    We reviewed Section 03-19, Unreliable Airspeed, Revision 15, dated March 16, 2015, of Chapter 3, Emergency Procedures, in the Bombardier CRJ Series Regional Jet Model CL-600-2C10 Airplane Flight Manual CSP B-012, Revision 16A, dated November 6, 2015. The service information describes procedures to guide the crew to stabilize the airplane's airspeed and attitude for continued safe flight when a loss of all air data information has occurred in the flight deck. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

    FAA's Determination and Requirements of This Proposed AD

    This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type designs.

    Costs of Compliance

    We estimate that this proposed AD affects 269 airplanes of U.S. registry.

    We also estimate that it would take about 1 work-hour per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $22,865, or $85 per product.

    Authority for This Rulemaking

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

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

    Regulatory Findings

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

    For the reasons discussed above, I certify this proposed regulation:

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

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

    3. Will not affect intrastate aviation in Alaska; and

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Bombardier, Inc.: Docket No. FAA-2016-6415; Directorate Identifier 2015-NM-178-AD. (a) Comments Due Date

    We must receive comments by June 24, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to Bombardier, Inc. Model CL-600-2C10 (Regional Jet Series 700, 701, & 702) airplanes, certificated in any category, serial numbers 10002 and subsequent.

    (d) Subject

    Air Transport Association (ATA) of America Code 34, Navigation.

    (e) Reason

    This AD was prompted by two in-service incidents of a loss of all air data information in the flight deck. We are issuing this AD to prevent loss of control when a loss of all air data information has occurred in the flight deck.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Airplane Flight Manual Revision

    Within 30 days after the effective date of this AD, revise the emergency procedures section of the airplane flight manual (AFM) by incorporating Section 03-19, Unreliable Airspeed, Revision 15, dated March 16, 2015, of Chapter 3, Emergency Procedures, in the Bombardier CRJ Series Regional Jet Model CL-600-2C10 Airplane Flight Manual CSP B-012, Revision 16A, dated November 6, 2015.

    (h) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, New York Aircraft Certification Office (ACO), ANE-170, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the ACO, send it to ATTN: Program Manager, Continuing Operational Safety, FAA, New York ACO, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7300; fax 516-794-5531. Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office. The AMOC approval letter must specifically reference this AD.

    (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished using a method approved by the Manager, New York ACO, ANE-170, FAA; or Transport Canada Civil Aviation (TCCA); or Bombardier, Inc.'s TCCA Design Approval Organization (DAO). If approved by the DAO, the approval must include the DAO-authorized signature.

    (i) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian Airworthiness Directive CF-2015-20, dated July 21, 2015, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-6415.

    (2) For service information identified in this AD, contact Bombardier, Inc., 400 Côte-Vertu Road West, Dorval, Québec H4S 1Y9, Canada; telephone 514-855-5000; fax 514-855-7401; email [email protected]; Internet http://www.bombardier.com. You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, Washington, on April 28, 2016. Dionne Palermo, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-10734 Filed 5-9-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-6417; Directorate Identifier 2015-NM-134-AD] RIN 2120-AA64 Airworthiness Directives; The Boeing Company Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for all The Boeing Company Model DC-10-10 and DC-10-10F airplanes, Model DC-10-15 airplanes, Model DC-10-30 and DC-10-30F (KC-10A and KDC-10) airplanes, Model DC-10-40 and DC-10-40F airplanes, Model MD-10-10F and MD-10-30F airplanes, and Model MD-11 and MD-11F airplanes. This proposed AD was prompted by results from fuel system reviews conducted by the manufacturer and multiple reports of fuel pump housing electrical connector failures related to ingress of airplane fluids. This proposed AD would require replacement of the fuel pump housing electrical connector or replacement of the fuel pump housing; repetitive inspections for proper operation and corrective actions if necessary; and revising the maintenance or inspection program to incorporate new airworthiness limitations. This proposed AD would also require, for certain airplanes, a general visual inspection of the protective cap and replacement if necessary. We are proposing this AD to prevent failure of the fuel pump housing electrical connector, which could result in a potential ignition source in a fuel tank and consequent fire or explosion.

    DATES:

    We must receive comments on this proposed AD by June 24, 2016.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: 202-493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For The Boeing Company service information identified in this NPRM, contact Boeing Commercial Airplanes, Attention: Data & Services Management, 3855 Lakewood Boulevard, MC D800-0019, Long Beach, CA 90846-0001; phone: 206-544-5000, extension 2; fax: 206-766-5683; Internet https://www.myboeingfleet.com.

    For Crane Aerospace & Electronics, Hydro-Aire, Inc. service information identified in this NPRM, contact Crane Aerospace & Electronics, Hydro-Aire, Inc.: 3000 Winona Avenue, Burbank, CA 91510-7722; phone: 818-526-2500; fax: 818-526-5658; email: [email protected]

    You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221. Boeing Service Bulletin DC10-28-264, dated May 15, 2015; and Boeing Service Bulletin MD11-28-146, dated May 15, 2015; are also available on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-6417.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-6417; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (phone: 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Philip Kush, Aerospace Engineer, Propulsion Branch, ANM-140L, FAA, Los Angeles Aircraft Certification Office (ACO), 3960 Paramount Boulevard, Lakewood, CA 90712-4137; phone: 562-627-5263; fax: 562-627-5210; email: [email protected]

    SUPPLEMENTARY INFORMATION:

    Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2016-6417; Directorate Identifier 2015-NM-134-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

    Discussion

    The FAA has examined the underlying safety issues involved in fuel tank explosions on several large transport airplanes, including the adequacy of existing regulations, the service history of airplanes subject to those regulations, and existing maintenance practices for fuel tank systems. As a result of those findings, we issued a regulation titled “Transport Airplane Fuel Tank System Design Review, Flammability Reduction and Maintenance and Inspection Requirements” (66 FR 23086, May 7, 2001). In addition to new airworthiness standards for transport airplanes and new maintenance requirements, this rule included Special Federal Aviation Regulation No. 88 (“SFAR 88,” Amendment 21-78, and subsequent Amendments 21-82 and 21-83).

    Among other actions, SFAR 88 requires certain type design (i.e., type certificate (TC) and supplemental type certificate (STC)) holders to substantiate that their fuel tank systems can prevent ignition sources in the fuel tanks. This requirement applies to type design holders for large turbine-powered transport airplanes and for subsequent modifications to those airplanes. It requires them to perform design reviews and to develop design changes and maintenance procedures if their designs do not meet the new fuel tank safety standards. As explained in the preamble to the rule, we intended to adopt airworthiness directives to mandate any changes found necessary to address unsafe conditions identified as a result of these reviews.

    In evaluating these design reviews, we have established four criteria intended to define the unsafe conditions associated with fuel tank systems that require corrective actions. The percentage of operating time during which fuel tanks are exposed to flammable conditions is one of these criteria. The other three criteria address the failure types under evaluation: single failures, combination of failures, and unacceptable (failure) experience. For all three failure criteria, the evaluations included consideration of previous actions taken that may mitigate the need for further action.

    We have determined that the actions identified in this AD are necessary to reduce the potential of ignition sources inside fuel tanks, which, in combination with flammable fuel vapors, could result in fuel tank explosions and consequent loss of the airplane.

    We have received multiple reports of fuel pump housing electrical connector failures related to ingress of airplane fluids. Currently installed fuel pump housing electrical connectors have 18 month repetitive inspection requirements related to AD 2011-11-05, Amendment 39-16704 (76 FR 31462, dated June 1, 2011) (“AD 2011-11-05”), and AD 2002-13-10, Amendment 39-12798 (67 FR 45053, dated July 8, 2002) (“AD 2002-13-10”). An improved fuel pump housing electrical connector has been developed to supersede the currently installed fuel pump housing electrical connector. Additionally, a secondary option has been developed that allows the operator to replace the fuel pump housing. In addition to the new fuel pump housing electrical connector, the use of environmentally sealed terminal lugs will help to prevent the wicking of airplane fluids into the fuel pump wires and the fuel pump housing electrical connector. This condition, if not corrected, could result in failure of the fuel pump housing electrical connector, causing a potential ignition source in a fuel tank and consequent fire or explosion.

    Related Service Information Under 1 CFR Part 51

    We reviewed the following service information.

    • Boeing Service Bulletin DC10-28-264, dated May 15, 2015. The service information describes procedures for replacement of the fuel pump housing electrical connector with a new fuel pump housing electrical connector or replacement of the fuel pump housing. The service information also describes procedures for inspections for proper operation and corrective actions if necessary.

    • Boeing Service Bulletin MD11-28-146, dated May 15, 2015. The service information describes procedures for replacement of the fuel pump housing electrical connector with a new fuel pump housing electrical connector or replacement of the fuel pump housing. The service information also describes procedures for inspections for proper operation and corrective actions if necessary.

    • Crane Aerospace & Electronics, Hydro-Aire, Inc. Service Bulletin 60-843/845-28-2, dated October 1, 2014. The service information describes procedures for a general visual inspection of the protective cap and replacement if necessary.

    • Appendixes B, C, and D of Boeing Trijet Special Compliance Item Report MDC-02K1003, Revision O, dated April 15, 2015, which include Critical Design Configuration Control Limitations (CDCCLs), Airworthiness Limitation Instructions (ALIs), and short-term extensions.

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

    Other Relevant Rulemaking

    AD 2000-22-21, Amendment 39-11969 (65 FR 69658, dated November 20, 2000) (“AD 2000-22-21”), applies to all The Boeing Company Model DC-10, Model MD-10, and Model MD-11 series airplanes. AD 2000-22-21 requires revising the Airplane Flight Manual (AFM) to ensure that the flight crew is advised of appropriate procedures for disabling certain fuel pump electrical circuits following failure of a fuel pump electrical connector. For certain airplanes, AD 2000-22-21 also requires revising the AFM to prohibit resetting of tripped fuel pump circuit breakers. AD 2000-22-21 was prompted by reports of four incidents on McDonnell Douglas Model DC-10 and MD-11 series airplanes, in which a short circuit occurred in the electrical connector between the power lead and the housing of a fuel pump. The circuit breaker did not trip in any of these incidents because the electrical arcing that occurred was shorter in duration than necessary for the circuit breaker to detect the arcing and open the circuit. We issued AD 2000-22-21 to prevent continued arcing following a short circuit of the fuel pump electrical connector, which could damage the conduit that protects the power lead inside the fuel tank, and result in the creation of a potential ignition source in the fuel tank.

    AD 2002-13-10 applies to certain The Boeing Company Model DC-10-10, -10F, -15, -30, -30F, -30F (KC-10A and KDC-10), -40, and -40F airplanes; Model MD-10-10F and -30F airplanes; and Model MD-11 and -11F airplanes. AD 2002-13-10 requires repetitive tests for electrical continuity and resistance and repetitive inspections to detect discrepancies of the fuel boost/transfer pump connectors; and corrective actions, if necessary. AD 2002-13-10 was prompted by reports of five instances of failed connectors in the fuel boost/transfer pump circuit on The Boeing Company Model DC-10 and MD-11 series airplanes. We issued AD 2002-13-10 to prevent arcing of connectors in the fuel boost/transfer pump circuit, which could result in a fire or explosion of the fuel tank.

    AD 2003-07-14, Amendment 39-13110 (68 FR 17544, dated April 10, 2003), applies to a single The Boeing Company Model DC-10-30 airplane. AD 2003-07-14 requires repetitive tests for electrical continuity and resistance and repetitive inspections to detect discrepancies of the fuel boost/transfer pump connectors; and corrective actions, if necessary. AD 2003-07-14 was prompted by reports of five instances of failed connectors in the fuel boost/transfer pump circuit on certain McDonnell Douglas Model DC-10 and MD-11 series airplanes. We issued AD 2003-07-14 to prevent arcing of connectors in the fuel boost/transfer pump circuit, which could result in a fire or explosion of the fuel tank.

    AD 2008-06-21 R1, Amendment 39-16100 (74 FR 61504, November 25, 2009), applies to all McDonnell Douglas Corporation Model DC-10-10 and DC-10-10F airplanes, Model DC-10-15 airplanes, Model DC-10-30 and DC-10-30F (KC-10A and KDC-10) airplanes, Model DC-10-40 and DC-10-40F airplanes, Model MD-10-10F and MD-10-30F airplanes, and Model MD-11 and MD-11F airplanes. AD 2008-06-21 R1 requires revising the FAA-approved maintenance program, or the Airworthiness Limitations (AWLs) section of the Instructions for Continued Airworthiness, as applicable, to incorporate new AWLs for fuel tank systems to satisfy Special Federal Aviation Regulation No. 88 requirements. For certain airplanes, AD 2008-06-21 R1 also requires the initial accomplishment of a certain repetitive AWL inspection to phase in that inspection, and repair if necessary. AD 2008-06-21 R1 clarifies the intended effect of the AD on spare and on-airplane fuel tank system components. AD 2008-06-21 R1 was prompted by a design review of the fuel tank system. We issued AD 2008-06-21 R1 to prevent the potential for ignition sources inside fuel tanks caused by latent failures, alterations, repairs, or maintenance actions, which, in combination with flammable fuel vapors, could result in a fuel tank explosion and consequent loss of the airplane.

    AD 2011-11-05 applies to all The Boeing Company Model DC-10-10, DC-10-10F, DC-10-15, DC-10-30, DC-10-30F (KC-10A and KDC-10), DC-10-40, DC-10-40F; Model MD-10-10F, MD-10-30F, MD-11, and MD-11F airplanes. AD 2011-11-05 requires replacing the fuel pump housing electrical connector assembly with a new part and doing repetitive inspections for continuity, resistance, and insulation resistance, and doing corrective actions if necessary. AD 2011-11-05 was prompted by reports of failures of a certain fuel pump housing electrical connector. We issued AD 2011-11-05 to detect and correct insulation resistance degradation and arcing in the potted backside of the electrical connector assembly of the fuel boost/transfer pump housing, which could compromise its performance and cause an ignition source in the fuel tank, resulting in a fuel tank explosion and consequent loss of the airplane.

    FAA's Determination

    We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of these same type designs.

    Proposed AD Requirements

    This proposed AD would require replacement of the fuel pump housing electrical connector or replacement of the fuel pump housing. This proposed AD would also require, for certain airplanes, a general visual inspection of the protective cap and replacement if necessary. This proposed AD would also require repetitive inspections for proper operation of the fuel pump and corrective actions if necessary. This proposed AD would also require revising the maintenance or inspection program to incorporate new airworthiness limitations.

    This proposed AD requires revisions to certain operator maintenance documents to include new actions (e.g., inspections) and CDCCLs. Compliance with these actions and CDCCLs is required by 14 CFR 91.403(c). For airplanes that have been previously modified, altered, or repaired in the areas addressed by this AD, the operator may not be able to accomplish the actions described in the revisions. In this situation, to comply with 14 CFR 91.403(c), the operator must request approval for an alternative method of compliance according to paragraph (l) of this AD. The request should include a description of changes to the required inspections that will ensure the continued operational safety of the airplane.

    Notwithstanding any other maintenance or operational requirements, components that have been identified as airworthy or installed on the affected airplanes before accomplishing the revision of the airplane maintenance or inspection program specified in this proposed AD, do not need to be reworked in accordance with the CDCCLs. However, once the airplane maintenance or inspection program has been revised as required by this proposed AD, future maintenance actions on these components must be done in accordance with the CDCCLs.

    The phrase “corrective actions” is used in this proposed AD. “Corrective actions” correct or address any condition found. Corrective actions in an AD could include, for example, repairs.

    Costs of Compliance

    We estimate that this proposed AD affects 246 airplanes of U.S. registry.

    We estimate the following costs to comply with this proposed AD:

    Estimated Costs Action Labor cost Parts cost Cost per product Cost on U.S.
  • operators
  • Option 1: Replace connectors (including inspection) (122 Model DC-10, and MD-10 airplanes.) 68 work-hours × $85 per hour = $5,780 $54,842 $60,622 $7,395,884. Option 1: Replace connectors (including inspection) (124 Model MD-11 airplanes.) 59 work-hours × $85 per hour = $5,015 $67,031 $72,046 $8,933,704. Option 2: Replace fuel pump housings (122 Model DC-10, and MD-10 airplanes.) Up to 81 work-hours × $85 per hour = $6,885 Up to $54,842 Up to $61,727 Up to $7,530,694. Option 2: Replace fuel pump housings (124 Model MD-11 airplanes.) 77 work-hours × $85 per hour = $6,545 $67,031 $73,576 $9,123,424. Maintenance or inspection program revision 1 work-hour × $85 per hour = $85 $0 $85 $20,910. Inspection for proper operation Up to 130 work-hours × $85 per hour = $11,050 $0 Up to $11,050 Up to $2,718,300.

    We have received no definitive data that would enable us to provide cost estimates for the on-condition replacement and corrective actions specified in this proposed AD.

    Authority for This Rulemaking

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

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

    Regulatory Findings

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

    For the reasons discussed above, I certify this proposed regulation:

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

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

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

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): The Boeing Company: Docket No. FAA-2016-6417; Directorate Identifier 2015-NM-134-AD. (a) Comments Due Date

    We must receive comments by June 24, 2016.

    (b) Affected ADs

    This AD affects AD 2000-22-21, Amendment 39-11969 (65 FR 69658, dated November 20, 2000); AD 2002-13-10, Amendment 39-12798 (67 FR 45053, dated July 8, 2002); AD 2003-07-14, Amendment 39-13110 (68 FR 17544, dated April 10, 2003); AD 2008-06-21 R1, Amendment 39-16100 (74 FR 61504, November 25, 2009); and AD 2011-11-05, Amendment 39-16704 (76 FR 31462, dated June 1, 2011).

    (c) Applicability

    This AD applies to all The Boeing Company Model DC-10-10 and DC-10-10F airplanes, Model DC-10-15 airplanes, Model DC-10-30 and DC-10-30F (KC-10A and KDC-10) airplanes, Model DC-10-40 and DC-10-40F airplanes, Model MD-10-10F and MD-10-30F airplanes, and Model MD-11 and MD-11F airplanes, certificated in any category.

    (d) Subject

    Air Transport Association (ATA) of America Code 28, Fuel.

    (e) Unsafe Condition

    This AD was prompted by multiple reports of fuel pump housing electrical connector failures related to ingress of airplane fluids. We are issuing this AD to prevent failure of the fuel pump housing electrical connector, which could result in a potential ignition source in a fuel tank and consequent fire or explosion.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Replacement

    Within 36 months after the effective date of this AD, do the actions required by paragraph (g)(1) or (g)(2) of this AD.

    (1) Do a replacement of the fuel pump housing electrical connector with a new fuel pump housing electrical connector, including doing a general visual inspection of the protective cap for a spring and applicable replacement of the protective cap, in accordance with the Accomplishment Instructions of Boeing Service Bulletin DC10-28-264, dated May 15, 2015; or Boeing Service Bulletin MD11-28-145, dated May 15, 2015, as applicable; and Crane Aerospace & Electronics, Hydro-Aire, Inc. Service Bulletin 60-843/845-28-2, dated October 1, 2014.

    (2) Do a replacement of the fuel boost pump housing with a new fuel boost pump housing, in accordance with the Accomplishment Instructions of Boeing Service Bulletin DC10-28-264, dated May 15, 2015; or Boeing Service Bulletin MD11-28-146, dated May 15, 2015, as applicable.

    (h) Repetitive Inspections

    Within 24 months after accomplishing the replacement required by paragraph (g) of this AD, do an inspection for proper operation of the fuel pump and all applicable corrective actions, in accordance with Appendix A, “24 Month Repetitive Inspection,” of Boeing Service Bulletin DC10-28-264, dated May 15, 2015; or Boeing Service Bulletin MD11-28-146, dated May 15, 2015; as applicable. Do all applicable corrective actions before further flight. Repeat the inspection thereafter at intervals not to exceed 24 months.

    (i) Maintenance or Inspection Program Revision

    Within 30 days after accomplishing the replacement required by paragraph (g) of this AD, or within 30 days after the effective date of this AD, whichever occurs later, revise the maintenance or inspection program, as applicable, to incorporate the Critical Design Configuration Control Limitations (CDCCLs), Airworthiness Limitation Instructions (ALIs), and short-term extensions specified in Appendices B, C, and D of Boeing Trijet Special Compliance Item (SCI) Report MDC-02K1003, Revision O, dated April 15, 2015. The initial compliance time for accomplishing the actions specified in the ALIs is at the later of the times specified in paragraphs (i)(1) and (i)(2) of this AD. Revising the maintenance or inspection program required by this paragraph terminates the requirements in paragraphs (g) and (h) of AD 2008-06-21 R1, Amendment 39-16100 (74 FR 61504, November 25, 2009).

    (1) At the applicable time specified in Appendix C of Boeing Trijet SCI Report MDC-02K1003, Revision O, dated April 15, 2015, except as provided by Appendix D of Boeing Trijet SCI Report MDC-02K1003, Revision O, dated April 15, 2015.

    (2) Within 30 days after accomplishing the actions required by paragraph (g) of this AD, or within 30 days after the effective date of this AD, whichever occurs later.

    (j) No Alternative Actions, Intervals, or CDCCLs

    After the maintenance or inspection program has been revised as required by paragraph (i) of this AD, no alternative actions (e.g., inspections), intervals, or CDCCLs may be used unless the actions, intervals, or CDCCLs are approved as an alternative method of compliance (AMOC) in accordance with the procedures specified in paragraph (l) of this AD.

    (k) Terminating Action for Certain Paragraphs of Other ADs

    Accomplishing the actions required by paragraph (g) of this AD terminates the requirements specified in paragraphs (k)(1), (k)(2), (k)(3), and (k)(4) of this AD for that airplane only.

    (1) The actions required by paragraph (a) of AD 2000-22-21, Amendment 39-11969 (65 FR 69658, dated November 20, 2000).

    (2) The actions required by paragraphs (a) and (b) of AD 2002-13-10, Amendment 39-12798 (67 FR 45053, dated July 8, 2002).

    (3) The actions required by paragraphs (a) and (b) of AD 2003-07-14, Amendment 39-13110 (68 FR 17544, dated April 10, 2003).

    (4) The actions required by paragraph (j) of AD 2011-11-05, Amendment 39-16704 (76 FR 31462, dated June 1, 2011).

    (l) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Los Angeles Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ACO, send it to the attention of the person identified in paragraph (m)(1) of this AD. Information may be emailed to: [email protected]

    (2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.

    (3) An AMOC that provides an acceptable level of safety may be used for any repair, modification, or alteration required by this AD if it is approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) that has been authorized by the Manager, Los Angeles ACO to make those findings. To be approved, the repair method, modification deviation, or alteration deviation must meet the certification basis of the airplane, and the approval must specifically refer to this AD.

    (4) For service information that contains steps that are labeled as Required for Compliance (RC), the provisions of paragraphs (l)(4)(i) and (l)(4)(ii) of this AD apply.

    (i) The steps labeled as RC, including substeps under an RC step and any figures identified in an RC step, must be done to comply with the AD. An AMOC is required for any deviations to RC steps, including substeps and identified figures.

    (ii) Steps not labeled as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the RC steps, including substeps and identified figures, can still be done as specified, and the airplane can be put back in an airworthy condition.

    (m) Related Information

    (1) For more information about this AD, contact Philip Kush, Aerospace Engineer, Propulsion Branch, ANM-140L, FAA, Los Angeles Aircraft Certification Office (ACO), 3960 Paramount Boulevard, Lakewood, CA 90712-4137; phone: 562-627-5263; fax: 562-627-5210; email: [email protected]

    (2) For The Boeing Company service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, 3855 Lakewood Boulevard, MC D800-0019, Long Beach, CA 90846-0001; phone: 206-544-5000, extension 2; fax: 206-766-5683; Internet https://www.myboeingfleet.com.

    (3) For Crane Aerospace & Electronics, Hydro-Aire, Inc. service information identified in this AD, contact Crane Aerospace & Electronics, Hydro-Aire, Inc.: 3000 Winona Avenue, Burbank, CA 91510-7722; phone: 818-526-2500; fax: 818-526-5658; email: [email protected]

    (4) You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, WA, on April 27, 2016. Dionne Palermo, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-10735 Filed 5-9-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-6426; Directorate Identifier 2016-NM-023-AD] RIN 2120-AA64 Airworthiness Directives; The Boeing Company Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for all The Boeing Company Model 737-300, -400, and -500 series airplanes. This proposed AD was prompted by reports of intergranular cracks on the front spar chord lugs of the outboard horizontal stabilizer. This proposed AD would require repetitive inspections of the front spar chord lugs and lug bores of the horizontal stabilizer, and repair if necessary. We are proposing this AD to detect and correct cracking of the front spar chord lugs of the horizontal stabilizer. Such cracking could cause stabilizer instability, adversely affect controllability of the airplane, and adversely affect the structural integrity of the airplane.

    DATES:

    We must receive comments on this proposed AD by June 24, 2016.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

    • Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: 202-493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this NPRM, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P.O. Box 3707, MC 2H-65, Seattle, WA 98124-2207; telephone 206-544-5000, extension 1; fax 206-766-5680; Internet https://www.myboeingfleet.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221. It is also available on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-6426.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-6426; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (phone: 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Gaetano Settineri, Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office (ACO), 1601 Lind Avenue SW., Renton, WA 98057-3356; phone: 425-917-6577; fax: 425-917-6590; email: [email protected]

    SUPPLEMENTARY INFORMATION: Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2016-6426; Directorate Identifier 2016-NM-023-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

    Discussion

    We have received reports of intergranular cracks on the front spar chord lugs of the outboard horizontal stabilizer. The cracks have been found along the axis of the front spar chord and in the lug faces, lug bores, and lug spot-face surfaces. The stabilizer front spar chords are an extrusion made from 7075-T6511 aluminum. This material is susceptible to stress corrosion in a corrosive environment where residual machining stresses are present and where the material finish and sealant have degraded. A single joint failure will significantly reduce the remaining fatigue life in the rear spar. A dual failure of the upper and lower front spar joints of the horizontal stabilizer could cause stabilizer instability, adversely affect controllability of the airplane, and adversely affect the structural integrity of the airplane.

    Related Service Information Under 1 CFR Part 51

    We reviewed Boeing Alert Service Bulletin 737-55A1092, dated August 7, 2015. The service information describes procedures for doing inspections for corrosion and cracking of the front spar chord lugs of the horizontal stabilizer, and inspections for corrosion of the lug bores. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

    FAA's Determination

    We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

    Proposed AD Requirements

    This proposed AD would require accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between this Proposed AD and the Service Information. For information on the procedures and compliance times, see this service information at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-6426.

    Differences Between This Proposed AD and the Service Information

    Boeing Alert Service Bulletin 737-55A1092, dated August 7, 2015, specifies to contact the manufacturer for instructions on how to repair certain conditions, but this AD would require repairing those conditions in one of the following ways:

    • In accordance with a method that we approve; or

    • Using data that meet the certification basis of the airplane, and that have been approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) whom we have authorized to make those findings.

    Costs of Compliance

    We estimate that this proposed AD affects 346 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:

    Estimated Costs Action Labor cost Parts cost Cost per product Cost on U.S. operators Inspections 14 work-hours × $85 per hour = $1,190 per inspection cycle $0 $1,190 per inspection cycle $411,740 per inspection cycle

    We have received no definitive data that would enable us to provide cost estimates for the on-condition actions specified in this proposed AD.

    Authority for This Rulemaking

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

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

    Regulatory Findings

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

    For the reasons discussed above, I certify this proposed regulation:

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

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

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

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): The Boeing Company: Docket No. FAA-2016-6426; Directorate Identifier 2016-NM-023-AD. (a) Comments Due Date

    We must receive comments by June 14, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to all The Boeing Company Model 737-300, -400, and -500 series airplanes, certificated in any category.

    (d) Subject

    Air Transport Association (ATA) of America Code 55, Stabilizers.

    (e) Unsafe Condition

    This AD was prompted by reports of intergranular cracks on the front spar chord lugs of the outboard horizontal stabilizer. We are issuing this AD to detect and correct cracking of the front spar chord lugs of the horizontal stabilizer. Such cracking could cause stabilizer instability, adversely affect controllability of the airplane, and adversely affect the structural integrity of the airplane.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Repetitive Inspections and Repairs

    Within 27 months after the effective date of this AD: Do the actions required by paragraphs (g)(1) and (g)(2) of this AD, and do all applicable repairs, in accordance with the Accomplishment Instructions of Boeing Alert Service Bulletin 737-55A1092, dated August 7, 2015, except as required by paragraph (h) of this AD. Do all applicable repairs before further flight. Repeat the inspections specified in paragraphs (g)(1) and (g)(2) of this AD thereafter at the applicable intervals specified in paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 737-55A1092, dated August 7, 2015.

    (1) Do a detailed inspection for corrosion and an ultrasonic inspection for cracking of the front spar chord lugs of the left and right horizontal stabilizers.

    (2) Do a detailed inspection for corrosion of the lug bores of the front spar chord of the left and right horizontal stabilizers.

    (h) Service Information Exception

    Where Boeing Alert Service Bulletin 737-55A1092, dated August 7, 2015, specifies to contact Boeing for appropriate action, and specifies that action as “RC” (Required for Compliance): Before further flight, repair using a method approved in accordance with the procedures specified in paragraph (j) of this AD.

    (i) Parts Installation Limitation

    As of the effective date of this AD: No person may install a replacement horizontal stabilizer on any airplane, unless the actions required by paragraphs (g)(1) and (g)(2) of this AD, and all applicable repairs are done prior to installation in accordance with the Accomplishment Instructions of Boeing Alert Service Bulletin 737-55A1092, dated August 7, 2015, except as required by paragraph (h) of this AD. Repeat the inspections specified in paragraph (g)(1) and (g)(2) of this AD thereafter at the applicable intervals specified in paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 737-55A1092, dated August 7, 2015.

    (j) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Seattle Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ACO, send it to the attention of the person identified in paragraph (k)(1) of this AD. Information may be emailed to: [email protected]

    (2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.

    (3) An AMOC that provides an acceptable level of safety may be used for any repair, modification, or alteration required by this AD if it is approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) that has been authorized by the Manager, Seattle ACO, to make those findings. To be approved, the repair method, modification deviation, or alteration deviation must meet the certification basis of the airplane, and the approval must specifically refer to this AD.

    (4) Except as required by paragraph (h) of this AD: For service information that contains steps that are labeled as RC, the provisions of paragraphs (j)(4)(i) and (j)(4)(ii) of this AD apply.

    (i) The steps labeled as RC, including substeps under an RC step and any figures identified in an RC step, must be done to comply with the AD. An AMOC is required for any deviations to RC steps, including substeps and identified figures.

    (ii) Steps not labeled as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the RC steps, including substeps and identified figures, can still be done as specified, and the airplane can be put back in an airworthy condition.

    (k) Related Information

    (1) For more information about this AD, contact Gaetano Settineri, Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office (ACO), 1601 Lind Avenue SW., Renton, WA 98057-3356; phone: 425-917-6577; fax: 425-917-6590; email: [email protected]

    (2) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P.O. Box 3707, MC 2H-65, Seattle, WA 98124-2207; telephone 206-544-5000, extension 1; fax 206-766-5680; Internet https://www.myboeingfleet.com. You may view this referenced service information at the FAA, the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, Washington, on April 28, 2016. Dionne Palermo, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-10634 Filed 5-9-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-5872; Directorate Identifier 2016-NE-11-AD] RIN 2120-AA64 Airworthiness Directives; General Electric Company Turbofan Engines AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for all General Electric Company (GE) GEnx-1B64/P2, -1B67/P2, -1B70/P2, -1B70C/P2, -1B70/75/P2, and -1B74/75/P2 turbofan engines with engine assembly, part number (P/N) 2447M10G01 or P/N 2447M10G02, installed. This proposed AD was prompted by a report of a significant fan rub event. This proposed AD would require rework of the engine fan stator module assembly. We are proposing this AD to prevent failure of the fan blades and the load reduction device, loss of power to one or more engines, loss of thrust control, and loss of the airplane.

    DATES:

    We must receive comments on this proposed AD by July 11, 2016.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: 202-493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this NPRM, contact General Electric Company, GE Aviation, Room 285, 1 Neumann Way, Cincinnati, OH 45215; phone: 513-552-3272; email: [email protected] You may view this service information at the FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA 01803. For information on the availability of this material at the FAA, call 781-238-7125.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-5872; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (phone: 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Christopher McGuire, Aerospace Engineer, Engine Certification Office, FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA 01803; phone: 781-238-7120; fax: 781-238-7199; email: [email protected]

    SUPPLEMENTARY INFORMATION: Comments Invited

    We invite you to send any written relevant data, views, or arguments about this NPRM. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2016-5872; Directorate Identifier 2016-NE-11-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this NPRM. We will consider all comments received by the closing date and may amend this NPRM because of those comments.

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

    Discussion

    We received a report of a significant fan rub event involving a GE GEnx-1B Performance Improvement Program 2 (PIP2) engine. The fan rub was caused by partial fan ice shedding. Asymmetric ice shedding can cause large fan imbalances leading to heavy tip rubs. The fan case geometry on PIP2 engines makes these engines susceptible to heavy fan tip rubs. This can cause substantial damage to the engine and an in-flight non-restartable power loss. We are using calendar time for compliance in this AD because the failure mode is caused by exposure to specific environmental and operational conditions. This defines the overall fleet risk in terms of calendar time, rather than engine cycles or hours.

    This condition, if not corrected, could result in failure of the fan blades and the load reduction device, loss of power to one or more engines, loss of thrust control, and loss of the airplane.

    Related Service Information Under 1 CFR Part 51

    We reviewed GE GEnx-1B Service Bulletin (SB) 72-0314 R00, dated April 1, 2016. The SB describes procedures for increasing the clearance of the fan stator module assembly. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

    FAA's Determination

    We are proposing this NPRM because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

    Proposed AD Requirements

    This NPRM would require accomplishing the actions specified in the service information described previously.

    Costs of Compliance

    We estimate that this proposed AD will affect 89 engines installed on airplanes of U.S. registry. We also estimate that it will take about 40 hours per engine to comply with this proposed AD. The average labor rate is $85 per hour. Based on these figures, we estimate the total cost of this proposed AD to U.S. operators to be $302,600.

    Authority for This Rulemaking

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

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

    Regulatory Findings

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

    For the reasons discussed above, I certify this proposed regulation:

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

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

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

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): General Electric Company: Docket No. FAA-2016-5872; Directorate Identifier 2016-NE-11-AD. (a) Comments Due Date

    We must receive comments by July 11, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to all General Electric Company (GE) GEnx-1B64/P2, -1B67/P2, -1B70/P2, -1B70C/P2, -1B70/75/P2, and -1B74/75/P2 turbofan engines with engine assembly, part number (P/N) 2447M10G01 or P/N 2447M10G02, installed.

    (d) Unsafe Condition

    This AD was prompted by a report of a significant fan rub event. We are issuing this AD to prevent failure of the fan blades and the load reduction device, loss of power to one or more engines, loss of thrust control, and loss of the airplane.

    (e) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (1) Modify the fan stator module assembly before December 31, 2016.

    (2) Use paragraphs 3.B.(1) through 3.B.(6) or 3.C.(1) through 3.C.(6) of the Accomplishment Instructions of GE GEnx-1B Service Bulletin (SB) 72-0314 R00, dated April 1, 2016, to do the modification.

    (f) Credit for Previous Action

    You may take credit for the fan stator module assembly modification that is required by paragraph (e) of this AD if you performed the modification before the effective date of this AD using the Accomplishment Instructions, paragraphs 3.B. or 3.C., of GE GEnx-1B SB 72-0309 R00, dated March 11, 2016.

    (g) Alternative Methods of Compliance (AMOCs)

    The Manager, Engine Certification Office, FAA, may approve AMOCs to this AD. Use the procedures found in 14 CFR 39.19 to make your request. You may email your request to: [email protected]

    (h) Related Information

    (1) For more information about this AD, contact Christopher McGuire, Aerospace Engineer, Engine Certification Office, FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA 01803; phone: 781-238-7120; fax: 781-238-7199; email: [email protected]

    (2) AD 2016-06-08 (81 FR 14704, March 18, 2016) and AD 2016-08-12 (81 FR 23581, April 22, 2016) pertain to the subject of this proposed AD.

    (3) GE GEnx-1B SB 72-0314 R00, dated April 1, 2016 can be obtained from GE using the contact information in paragraph (h)(4) of this proposed AD.

    (4) For service information identified in this proposed AD, contact General Electric Company, GE Aviation, Room 285, 1 Neumann Way, Cincinnati, OH 45215; phone: 513-552-3272; email: [email protected]

    (5) You may view this service information at the FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA. For information on the availability of this material at the FAA, call 781-238-7125.

    Issued in Burlington, Massachusetts, on May 3, 2016. Colleen M. D'Alessandro, Manager, Engine & Propeller Directorate, Aircraft Certification Service.
    [FR Doc. 2016-10781 Filed 5-9-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Parts 1100, 1140, and 1143 [Docket No. FDA-2015-D-2325] Tobacco Product Master Files; Guidance for Industry; Availability AGENCY:

    Food and Drug Administration, HHS.

    ACTION:

    Notification of availability.

    SUMMARY:

    The Food and Drug Administration (FDA) is announcing the availability of a guidance for industry entitled “Tobacco Product Master Files.” This guidance provides recommendations to industry on tobacco product master files (TPMFs). TPMFs are voluntary submissions used to permit the person that owns the TPMF to authorize other parties to rely on information in the TPMF to support a submission to FDA without the TPMF owner having to disclose that information to the authorized parties. Parties that obtain a right of reference from a TPMF owner may reference information in a TPMF that the TPMF owner does not want to make public, but that the other party would otherwise need to develop on its own to make a complete submission to FDA.

    DATES:

    Submit either electronic or written comments on Agency guidances at any time.

    ADDRESSES:

    You may submit comments as follows:

    Electronic Submissions

    Submit electronic comments in the following way:

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Comments submitted electronically, including attachments, to http://www.regulations.gov will be posted to the docket unchanged. Because your comment will be made public, you are solely responsible for ensuring that your comment does not include any confidential information that you or a third party may not wish to be posted, such as medical information, your or anyone else's Social Security number, or confidential business information, such as a manufacturing process. Please note that if you include your name, contact information, or other information that identifies you in the body of your comments, that information will be posted on http://www.regulations.gov.

    • If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).

    Written/Paper Submissions

    Submit written/paper submissions as follows:

    Mail/Hand delivery/Courier (for written/paper submissions): Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    • For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”

    Instructions: All submissions received must include the Docket No. FDA-2015-D-2325 for “Tobacco Product Master Files; Guidance for Industry.” Received comments will be placed in the docket and, except for those submitted as “Confidential Submissions,” publicly viewable at http://www.regulations.gov or at the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

    Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION”. The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on http://www.regulations.gov. Submit both copies to the Division of Dockets Management. If you do not wish your name and contact information to be made publicly available, you can provide this information on the cover sheet and not in the body of your comments and you must identify this information as “confidential.” Any information marked as “confidential” will not be disclosed except in accordance with 21 CFR 10.20 and other applicable disclosure law. For more information about FDA”s posting of comments to public dockets, see 80 FR 56469, September 18, 2015, or access the information at: http://www.fda.gov/regulatoryinformation/dockets/default.htm.

    Docket: For access to the docket to read background documents or the electronic and written/paper comments received, go to http://www.regulations.gov and insert the docket number, found in brackets in the heading of this document, into the “Search” box and follow the prompts and/or go to the Division of Dockets Management, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    Submit written requests for single copies of this guidance to the Center for Tobacco Products, Food and Drug Administration, Document Control Center, Bldg. 71, Rm. G335, 10903 New Hampshire Ave., Silver Spring, MD 20993-2000. Send one self-addressed adhesive label to assist that office in processing your request or include a fax number to which the guidance document may be sent. See the SUPPLEMENTARY INFORMATION section for information on electronic access to the guidance.

    FOR FURTHER INFORMATION CONTACT:

    Annette Marthaler or Nathan Mease, Center for Tobacco Products, Food and Drug Administration, Document Control Center, Bldg. 71, Rm. G335, 10903 New Hampshire Ave., Silver Spring, MD 20993-2000, 1-877-287-1373, email: [email protected]

    SUPPLEMENTARY INFORMATION:

    I. Background

    FDA is announcing the availability of a guidance for industry entitled “Tobacco Product Master Files.” This guidance is being issued consistent with FDA's good guidance practices (GGP) regulation (§ 10.115 (21 CFR 10.115)). This guidance is being implemented without prior public comment because the Agency has determined that prior public participation is not feasible or appropriate (§ 10.115(g)(2)). The Agency made this determination because immediate implementation of the guidance is needed to assist in addressing a public health issue. Although this guidance document is immediately in effect, it remains subject to comment in accordance with the Agency's GGP regulation.

    The guidance document provides recommendations to industry on TPMFs. TPMFs are voluntary submissions to FDA that contain information about a tobacco product. TPMFs are used to permit the person who owns the TPMF (TPMF owner) to authorize other persons to rely on information in the TPMF to support a submission to FDA without the TPMF owner having to disclose that information to other persons. Authorization to reference a TPMF may be especially useful to manufacturers or applicants preparing premarket submissions, such as substantial equivalence reports, for new tobacco products. Other parties who obtain a right of reference from a TPMF owner can reference information in a TPMF that the TPMF owner does not want to make public, but that the other party would otherwise need to develop on its own to make a complete submission to FDA. The guidance provides information on how to establish a TPMF, including what to submit and where to submit the TPMF.

    The guidance represents the current thinking of FDA on TPMFs. It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.

    II. Paperwork Reduction Act of 1995

    This guidance refers to collections of information described in FDA's final rule on Deeming Tobacco Products To Be Subject to the Federal Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Restrictions on the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco Products. The collections of information in the final rule are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520). As required by the PRA, FDA has published an analysis of the information collection provisions elsewhere in this issue of the Federal Register and has submitted them for OMB approval.

    This guidance also refers to previously approved collections of information. These collections of information are subject to review by the Office of Management and Budget (OMB) under the PRA (44 U.S.C. 3501-3520). The collections of information in section 905(j) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) have been approved under OMB control number 0910-0673; the collections of information in sections 904(a)(1), (c) and 905(b), (c), (d), (h), (i) of the FD&C Act have been approved under OMB control number 0910-0650; the collections of information in section 904(a)(4) of the FD&C Act have been approved under OMB control number 0910-0654; the collections of information in 21 CFR 1107.1(b) and (c), 21 CFR 25.40, and section 905(j)(1)(A)(ii) of the FD&C Act have been approved under OMB control number 0910-0684; the collections of information in sections 904(a)(3) and 904(c)(1) of the FD&C Act have been approved under OMB control number 0910-0732; and the collections of information in section 910 have been approved under OMB control number 0910-0775.

    III. Electronic Access

    Persons with access to the Internet may obtain an electronic version of the guidance at either http://www.regulations.gov or http://www.fda.gov/TobaccoProducts/Labeling/RulesRegulationsGuidance/default.htm.

    Dated: May 3, 2016. Leslie Kux, Associate Commissioner for Policy.
    [FR Doc. 2016-10690 Filed 5-5-16; 8:45 am] BILLING CODE 4164-01-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Parts 1100, 1140, and 1143 [Docket No. FDA-2014-N-0189] The Food and Drug Administration Deems Certain Tobacco Products Subject to FDA Authority, Sales and Distribution Restrictions, and Health Warning Requirements for Packages and Advertisements; Small Entity Compliance Guide; Availability AGENCY:

    Food and Drug Administration, HHS.

    ACTION:

    Notification of availability.

    SUMMARY:

    The Food and Drug Administration (FDA) is announcing the availability of a guidance for industry entitled “FDA Deems Certain Tobacco Products Subject to FDA Authority, Sales and Distribution Restrictions, and Health Warning Requirements for Packages and Advertisements; Small Entity Compliance Guide.” This small entity compliance guide (SECG) is intended to set forth in plain language the requirements of the deeming regulation and to help small businesses understand and comply with the regulation.

    DATES:

    Submit either electronic or written comments on Agency guidances at any time.

    ADDRESSES:

    You may submit comments as follows:

    Electronic Submissions

    Submit electronic comments in the following way:

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Comments submitted electronically, including attachments, to http://www.regulations.gov will be posted to the docket unchanged. Because your comment will be made public, you are solely responsible for ensuring that your comment does not include any confidential information that you or a third party may not wish to be posted, such as medical information, your or anyone else's Social Security number, or confidential business information, such as a manufacturing process. Please note that if you include your name, contact information, or other information that identifies you in the body of your comments, that information will be posted on http://www.regulations.gov.

    • If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).

    Written/Paper Submissions

    Submit written/paper submissions as follows:

    Mail/Hand delivery/Courier (for written/paper submissions): Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    • For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”

    Instructions: All submissions received must include the Docket No. FDA-2014-N-0189 for “FDA Deems Certain Tobacco Products Subject to FDA Authority, Sales and Distribution Restrictions, and Health Warning Requirements for Packages and Advertisements; Small Entity Compliance Guide.” Received comments will be placed in the docket and, except for those submitted as “Confidential Submissions,” publicly viewable at http://www.regulations.gov or at the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

    • Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION”. The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on http://www.regulations.gov. Submit both copies to the Division of Dockets Management. If you do not wish your name and contact information to be made publicly available, you can provide this information on the cover sheet and not in the body of your comments and you must identify this information as “confidential.” Any information marked as “confidential” will not be disclosed except in accordance with 21 CFR 10.20 and other applicable disclosure law. For more information about FDA's posting of comments to public dockets, see 80 FR 56469, September 18, 2015, or access the information at: http://www.fda.gov/regulatoryinformation/dockets/default.htm.

    Docket: For access to the docket to read background documents or the electronic and written/paper comments received, go to http://www.regulations.gov and insert the docket number, found in brackets in the heading of this document, into the “Search” box and follow the prompts and/or go to the Division of Dockets Management, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    Submit written requests for single copies of this guidance to the Center for Tobacco Products, Food and Drug Administration, Document Control Center, Bldg. 71, Rm. G335, 10903 New Hampshire Ave., Silver Spring, MD 20993-0002. Send one self-addressed adhesive label to assist that office in processing your request or include a fax number to which the guidance document may be sent. See the SUPPLEMENTARY INFORMATION section for information on electronic access to the guidance.

    FOR FURTHER INFORMATION CONTACT:

    Katherine Collins, Center for Tobacco Products, Food and Drug Administration, Document Control Center, Bldg. 71, Rm. G335, 10903 New Hampshire Ave., Silver Spring, MD 20993-2000, 1-877-287-1373, email: [email protected]

    SUPPLEMENTARY INFORMATION: I. Background

    FDA is announcing the availability of a guidance for industry entitled “FDA Deems Certain Tobacco Products Subject to FDA Authority, Sales and Distribution Restrictions, and Health Warning Requirements for Packages and Advertisements, Small Entity Compliance Guide.” This guidance is intended to help small businesses understand and comply with FDA's implementation of the final rule entitled “Deeming Tobacco Products To Be Subject to the Federal Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Restrictions on the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco Products” (Deeming rule), which is published elsewhere in this edition of the Federal Register. Specifically, this guidance is intended to help small businesses understand how to comply with FDA's final rule deeming tobacco products to be subject to the Federal Food, Drug, and Cosmetic Act (“FD&C Act”), as amended by the Family Smoking Prevention and Tobacco Control Act (“Tobacco Control Act”). The Deeming rule extends FDA's authority in Chapter IX of the FD&C Act to include all tobacco products, except accessories of newly deemed tobacco products. The Deeming rule also prohibits the sale of covered tobacco products to individuals under the age of 18, prohibits vending machine sales unless sold in adult-only facilities, and requires the display of health warning statements on cigarette tobacco, roll-your-own tobacco, and covered tobacco product packages and in advertisements.

    In compliance with section 212 of the Small Business Regulatory Enforcement Fairness Act (Pub. L. 104-121), FDA is making available this SECG stating in plain language the legal requirements of the Deeming final rule, set forth in 21 CFR parts 1100, 1140, and 1143.

    II. Significance of Guidance

    FDA is issuing this SECG as a level 2 guidance, consistent with FDA's good guidance practices regulation (21 CFR 10.115). The guidance represents the current thinking of FDA on this topic. It does not establish any rights for any person and is not binding on FDA or the public unless specific regulatory or statutory requirements are cited. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.

    III. Electronic Access

    Persons with access to the Internet may obtain an electronic version of the guidance at either http://www.regulations.gov or http://www.fda.gov/TobaccoProducts/Labeling/RulesRegulationsGuidance/default.htm.

    Dated: May 3, 2016. Leslie Kux, Associate Commissioner for Policy.
    [FR Doc. 2016-10684 Filed 5-5-16; 8:45 am] BILLING CODE 4164-01-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Parts 1100, 1140, and 1143 [Docket No. FDA-2015-D-2496] Premarket Tobacco Product Applications for Electronic Nicotine Delivery Systems; Draft Guidance for Industry; Availability; Agency Information Collection Activities; Proposed Collection; Comment Request AGENCY:

    Food and Drug Administration, HHS.

    ACTION:

    Notification of availability.

    SUMMARY:

    The Food and Drug Administration (FDA) is announcing the availability of a draft guidance for industry entitled “Premarket Tobacco Product Applications for Electronic Nicotine Delivery Systems.” Given the relatively new presence of electronic nicotine delivery systems (ENDS) on the U.S. market and FDA's final rule deeming these products to be subject to the tobacco product authorities in the Federal Food, Drug, and Cosmetic Act (FD&C Act), FDA expects to receive premarket tobacco product application (PMTA) submissions from manufacturers of ENDS. This draft guidance is intended to assist persons with their PMTA submissions for ENDS products.

    DATES:

    Although you can comment on any guidance at any time (see 21 CFR 10.115(g)(5)), to ensure that the Agency considers your comment on this draft guidance before it begins work on the final version of the guidance, submit either electronic or written comments on the draft guidance by July 11, 2016.

    ADDRESSES:

    You may submit comments as follows:

    Electronic Submissions

    Submit electronic comments in the following way:

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Comments submitted electronically, including attachments, to http://www.regulations.gov will be posted to the docket unchanged. Because your comment will be made public, you are solely responsible for ensuring that your comment does not include any confidential information that you or a third party may not wish to be posted, such as medical information, your or anyone else's Social Security number, or confidential business information, such as a manufacturing process. Please note that if you include your name, contact information, or other information that identifies you in the body of your comments, that information will be posted on http://www.regulations.gov.

    • If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).

    Written/Paper Submissions

    Submit written/paper submissions as follows:

    Mail/Hand delivery/Courier (for written/paper submissions): Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    • For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”

    Instructions: All submissions received must include the Docket No. FDA-2015-D-2496 for “Premarket Tobacco Product Application for Electronic Nicotine Delivery Systems.” Received comments will be placed in the docket and, except for those submitted as “Confidential Submissions,” publicly viewable at http://www.regulations.gov or at the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

    • Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on http://www.regulations.gov. Submit both copies to the Division of Dockets Management. If you do not wish your name and contact information to be made publicly available, you can provide this information on the cover sheet and not in the body of your comments and you must identify this information as “confidential.” Any information marked as “confidential” will not be disclosed except in accordance with 21 CFR 10.20 and other applicable disclosure law. For more information about FDA's posting of comments to public dockets, see 80 FR 56469, September 18, 2015, or access the information at: http://www.fda.gov/regulatoryinformation/dockets/default.htm.

    Docket: For access to the docket to read background documents or the electronic and written/paper comments received, go to http://www.regulations.gov and insert the docket number, found in brackets in the heading of this document, into the “Search” box and follow the prompts and/or go to the Division of Dockets Management, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    Submit written requests for single copies of this draft guidance to the Center for Tobacco Products, Food and Drug Administration, Document Control Center, Bldg. 71, Rm. G335, 10903 New Hampshire Ave., Silver Spring, MD 20993-2000. Send one self-addressed adhesive label to assist that office in processing your request or include a fax number to which the draft guidance may be sent. See the SUPPLEMENTARY INFORMATION section for information on electronic access to the draft guidance.

    FOR FURTHER INFORMATION CONTACT:

    With regard to the draft guidance: Colleen Lee, Center for Tobacco Products, Food and Drug Administration, Document Control Center, Bldg. 71, Rm. G335, 10903 New Hampshire Ave., Silver Spring, MD 20993-2000, 1-877-287-1373, [email protected]

    With regard to the proposed collection of information: FDA PRA Staff, Office of Operations, Food and Drug Administration, 8455 Colesville Rd., COLE-14526, Silver Spring, MD 20993-0002, [email protected]

    SUPPLEMENTARY INFORMATION:

    I. Background

    FDA is announcing the availability of a draft guidance for industry entitled “Premarket Tobacco Product Applications for Electronic Nicotine Delivery Systems.”

    On June 22, 2009, the President signed the Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act) (Pub. L. 111-31) into law. The Tobacco Control Act amended the Federal Food, Drug, and Cosmetic Act (the FD&C Act) and granted FDA authority to regulate the manufacture, marketing, and distribution of tobacco products to protect public health generally and to reduce tobacco use by minors. Under section 901(b) of the FD&C Act (21 U.S.C. 387a(b)), FDA's tobacco product authorities in chapter IX of the FD&C Act apply to all cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco and to any other tobacco products that the Secretary of Health and Human Services by regulation deems to be subject to chapter IX. Concurrently with issuing this draft guidance, FDA is publishing elsewhere in this issue of the Federal Register, its final rule, “Deeming Tobacco Products To Be Subject to the Federal Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Restrictions on the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco Products” (Deeming rule) to deem all products meeting the statutory definition of “tobacco product” in section 201(rr) of the FD&C Act (21 U.S.C. 321(rr)), except accessories to newly deemed tobacco products, to be subject to chapter IX of the FD&C Act (21 U.S.C. 387 through 387u).

    Under section 910 of the FD&C Act (21 U.S.C. 387j), persons seeking to market a new tobacco product (as defined in section 910(a)(1) of the FD&C Act) must first submit a PMTA to FDA and obtain a marketing authorization order, unless FDA has issued an order that the new tobacco product is substantially equivalent to a tobacco product commercially marketed in the United States as of February 15, 2007, or the new tobacco product is exempt from demonstrating substantial equivalence pursuant to the reasons outlined in section 905(j)(3) of the FD&C Act (21 U.S.C. 387e(j)(3)). The ENDS products that are the subject of this draft guidance likely would be considered new tobacco products.

    Given the relatively new presence of ENDS on the U.S. market, FDA anticipates that many manufacturers of these new tobacco products will seek a marketing authorization order by filing a PMTA. This draft guidance explains, among other things, products to which the guidance applies, when a PMTA is required, general procedures for review of an ENDS PMTA, what information the FD&C Act requires applicants to submit in a PMTA, and what information FDA recommends applicants submit in an ENDS PMTA to show whether permitting such new tobacco product to be marketed is appropriate for the protection of the public health.

    II. Significance of Draft Guidance

    FDA is issuing this draft guidance consistent with FDA's good guidance practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent the current thinking of FDA on PMTAs for ENDS. It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.

    III. Paperwork Reduction Act of 1995

    This draft guidance refers to collections of information described in FDA's Deeming rule, which this draft guidance is intended to interpret. The collections of information in the Deeming rule are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520). As required by the PRA, FDA has published an analysis of the information collection provisions elsewhere in this issue of the Federal Register and has submitted them for OMB approval.

    IV. Electronic Access

    Persons with access to the Internet may obtain an electronic version of the draft guidance at either http://www.regulations.gov or http://www.fda.gov/TobaccoProducts/Labeling/RulesRegulationsGuidance/default.htm.

    Dated: May 3, 2016. Leslie Kux, Associate Commissioner for Policy.
    [FR Doc. 2016-10687 Filed 5-5-16; 8:45 am] BILLING CODE 4164-01-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 1150 [Docket No. FDA-2014-D-0917] Requirements for the Submission of Data Needed To Calculate User Fees for Domestic Manufacturers and Importers of Tobacco Products; Small Entity Compliance Guide; Availability AGENCY:

    Food and Drug Administration, HHS.

    ACTION:

    Notification of availability.

    SUMMARY:

    The Food and Drug Administration (FDA) is announcing the availability of a revised guidance for industry entitled “Requirements for the Submission of Data Needed to Calculate User Fees for Domestic Manufacturers and Importers of Tobacco Products; Small Entity Compliance Guide” for the final user fees rule published July 10, 2014, and for the new user fees regulation. This revised guidance, a small entity compliance guide (SECG), replaces the SECG of the same name published on July 16, 2014. The revised SECG is intended to set forth in plain language the requirements of the user fee regulations and to help small businesses understand and comply with the regulations.

    DATES:

    Submit either electronic or written comments on Agency guidances at any time.

    ADDRESSES:

    You may submit comments as follows:

    Electronic Submissions

    Submit electronic comments in the following way:

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Comments submitted electronically, including attachments, to http://www.regulations.gov will be posted to the docket unchanged. Because your comment will be made public, you are solely responsible for ensuring that your comment does not include any confidential information that you or a third party may not wish to be posted, such as medical information, your or anyone else's Social Security number, or confidential business information, such as a manufacturing process. Please note that if you include your name, contact information, or other information that identifies you in the body of your comments, that information will be posted on http://www.regulations.gov.

    • If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).

    Written/Paper Submissions

    Submit written/paper submissions as follows:

    Mail/Hand delivery/Courier (for written/paper submissions): Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    • For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”

    Instructions: All submissions received must include the Docket No. FDA-2014-D-0917 for “Small Entity Compliance Guide: Requirements for the Submission of Data Needed To Calculate User Fees for Domestic Manufacturers and Importers of Tobacco Products.” Received comments will be placed in the docket and, except for those submitted as “Confidential Submissions,” publicly viewable at http://www.regulations.gov or at the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

    • Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on http://www.regulations.gov. Submit both copies to the Division of Dockets Management. If you do not wish your name and contact information to be made publicly available, you can provide this information on the cover sheet and not in the body of your comments and you must identify this information as “confidential.” Any information marked as “confidential” will not be disclosed except in accordance with 21 CFR 10.20 and other applicable disclosure law. For more information about FDA's posting of comments to public dockets, see 80 FR 56469, September 18, 2015, or access the information at: http://www.fda.gov/regulatoryinformation/dockets/default.htm.

    Docket: For access to the docket to read background documents or the electronic and written/paper comments received, go to http://www.regulations.gov and insert the docket number, found in brackets in the heading of this document, into the “Search” box and follow the prompts and/or go to the Division of Dockets Management, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    Submit written requests for single copies of this guidance to the Center for Tobacco Products, Food and Drug Administration, Document Control Center, Bldg. 71, Rm. G335, 10903 New Hampshire Ave., Silver Spring, MD 20993-0002. Send one self-addressed adhesive label to assist that office in processing your request or include a fax number to which the guidance document may be sent. See the SUPPLEMENTARY INFORMATION section for information on electronic access to the guidance.

    FOR FURTHER INFORMATION CONTACT:

    Paul Hart, Center for Tobacco Products, Food and Drug Administration, Bldg. 71, Rm. G335, 10903 New Hampshire Ave., Silver Spring, MD 20993, 1-877-287-1373, email: [email protected]

    SUPPLEMENTARY INFORMATION:

    I. Background

    FDA is announcing the availability of a revised guidance for industry entitled “Requirements for the Submission of Data Needed to Calculate User Fees for Domestic Manufacturers and Importers of Tobacco Products; Small Entity Compliance Guide” for the final user fee rules published July 10, 2014 (79 FR 39302). Also, published elsewhere in this edition of the Federal Register, FDA issued a final rule to amend 21 CFR part 1150 (part 1150) to require domestic manufacturers and importers of cigars and pipe tobacco to submit to FDA information needed to calculate the amount of user fees assessed under the Federal Food, Drug, and Cosmetic Act (FD&C Act). FDA issued this user fee final rule together with the final rule, “Deeming Tobacco Products To Be Subject to the Federal Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Restrictions on the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco Products” (Deeming rule), which deems all products that meet the statutory definition of “tobacco product,” except accessories of the newly deemed tobacco products, to be subject to the FD&C Act. The Deeming rule, among other things, subjects domestic manufacturers and importers of cigars and pipe tobacco to the FD&C Act's user fee requirements. Consistent with the Deeming rule and the requirements of the FD&C Act, this user fee final rule requires the submission of the information needed to calculate user fee assessments for each manufacturer and importer of cigars and pipe tobacco to FDA. In compliance with section 212 of the Small Business Regulatory Enforcement Fairness Act (Pub. L. 104-121), FDA is making available this revised SECG stating in plain language the legal requirements of the user fee final regulations set forth in part 1150.

    II. Significance of Guidance

    FDA is issuing this revised SECG as a level 2 guidance, consistent with FDA's good guidance practices regulation (21 CFR 10.115). The guidance represents the current thinking of FDA on this topic. It does not establish any rights for any person and is not binding on FDA or the public unless specific regulatory or statutory requirements are cited. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.

    III. Electronic Access

    Persons with access to the Internet may obtain an electronic version of the guidance at either http://www.regulations.gov or http://www.fda.gov/TobaccoProducts/Labeling/RulesRegulationsGuidance/default.htm.

    Dated: May 3, 2016. Leslie Kux, Associate Commissioner for Policy.
    [FR Doc. 2016-10689 Filed 5-5-16; 8:45 am] BILLING CODE 4164-01-P
    DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Parts 1 and 301 [REG-127199-15] RIN 1545-BM94 Treatment of Certain Domestic Entities Disregarded as Separate From Their Owners as Corporations for Purposes of Section 6038A AGENCY:

    Internal Revenue Service (IRS), Treasury.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    This document contains proposed regulations that would treat a domestic disregarded entity wholly owned by a foreign person as a domestic corporation separate from its owner for the limited purposes of the reporting, record maintenance and associated compliance requirements that apply to 25 percent foreign-owned domestic corporations under section 6038A of the Internal Revenue Code. These changes are intended to provide the IRS with improved access to information that it needs to satisfy its obligations under U.S. tax treaties, tax information exchange agreements and similar international agreements, as well as to strengthen the enforcement of U.S. tax laws.

    DATES:

    Written or electronic comments and requests for a public hearing must be received by August 8, 2016.

    ADDRESSES:

    Send submissions to: CC:PA:LPD:PR (REG-127199-15), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-127199-15), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC., or sent electronically, via the Federal eRulemaking Portal at http://www.regulations.gov (IRS REG-127199-15).

    FOR FURTHER INFORMATION CONTACT:

    Concerning the proposed regulations, Ronald M. Gootzeit, (202) 317-6937; concerning submissions of comments and/or requests for a hearing, Regina Johnson, (202) 317-6901 (not toll-free numbers).

    SUPPLEMENTARY INFORMATION:

    Paperwork Reduction Act

    The collection of information contained in this notice of proposed rulemaking has been previously reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number 1545-1191. The estimated average annual recordkeeping burden per recordkeeper is 10 hours. The estimated reporting burden is being reported under Form 5472 (OMB # 1545-0123).

    The collection of information in this proposed regulation is in sections 1.6038A-1 through 1.6038A-3 and 1.6038A-5. This information is required in order to provide the IRS with improved access to information that it needs to satisfy its obligations under U.S. tax treaties, tax information exchange agreements, and similar international agreements, as well as to strengthen the enforcement of U.S. tax laws. The likely respondents are foreign-owned domestic entities that are disregarded as separate from their owners.

    An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget.

    Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

    Background

    Sections 301.7701-1 through 301.7701-3 (“the entity classification regulations”) classify a business entity with two or more members as either a corporation or a partnership, and a business entity with a single owner as either a corporation or an entity disregarded as separate from its owner (“disregarded entity”). Certain domestic business entities, such as limited liability companies (“LLCs”), are classified by default as partnerships (if they have more than one member) or as disregarded entities (if they have only one owner) but are eligible to elect for federal tax purposes to be classified as corporations. Under special rules, an entity that is otherwise disregarded is not disregarded for certain excise and employment tax purposes. Section 301.7701-2(c)(2)(iv) and (v).

    Some disregarded entities are not obligated to file a return or obtain an employer identification number (“EIN”). In the absence of a return filing obligation (and associated record maintenance requirements) or the identification of a responsible party as required in applying for an EIN, it is difficult for the United States to carry out the obligations it has undertaken in its tax treaties, tax information exchange agreements and similar international agreements to provide other jurisdictions with relevant information on U.S. entities with owners that are tax resident in the partner jurisdiction or otherwise have a tax nexus with respect to the partner jurisdiction.

    Section 6001 of the Internal Revenue Code (“Code”) provides that every person liable for any tax imposed by the Code, or for the collection thereof, shall keep such records, render such statements, make such returns and comply with such rules and regulations as the Secretary may from time to time prescribe, and that whenever in the judgment of the Secretary it is necessary, he may require any person, by notice served upon such person or by regulations, to make such returns, render such statements, or keep such records, as the Secretary deems sufficient to show whether or not such person is liable for tax. Thus, the Treasury Department and the IRS have broad authority under section 6001 of the Code to promulgate regulations to require the keeping of records and the reporting of information by persons who may be liable for any tax. The Code also requires many categories of persons to file returns, even if no tax is owed in a particular year. For example, all corporations organized in the United States must file annual income tax returns, which may include schedules requiring the identification of owners exceeding specified ownership thresholds. Moreover, foreign corporations engaged in a trade or business in the United States (“U.S. trade or business”) must file annual income tax returns. Section 6012(a)(2); section 1.6012-2. Domestic partnerships must file information returns with schedules identifying each partner. Section 6031; section 1.6031(a)-1. In addition, domestic corporations that are at least 25% foreign-owned are subject to specific information reporting and record maintenance requirements. Section 6038A.

    All entities, including disregarded entities, must have an EIN to file a required return. Section 6109(a)(1); see section 301.6109-1(a)(1)(ii)(C) and (b). An entity must also have an EIN in order to elect to change its classification. An entity that accepts its default classification and is not required to file a return need not obtain an EIN. Because a domestic single-member LLC is classified as a disregarded entity by default rather than by election and has no separate federal tax return filing requirements, there is typically no federal tax requirement for it to obtain an EIN. Other applicable federal or state laws may require an entity to obtain an EIN. For example, pursuant to federal law, financial institutions in the United States generally require an entity to have an EIN to open an account. See 31 CFR 1020.220(a)(1)(i)(A)(4).

    An entity obtains an EIN by filing Form SS-4, Application for Employer Identification Number, in which the entity must identify a responsible party. The instructions to Form SS-4 define “responsible party” for an entity (including a disregarded entity) that is not traded on a public exchange or registered with the Securities and Exchange Commission as “the individual who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage, or direct the entity and the disposition of its funds and assets.” The entity must also report any subsequent change in the responsible party. See section 301.6109-1(d)(2)(ii).

    When an entity, such as an LLC, is classified as a corporation or a partnership for tax purposes, general ownership and accounting information is available to the IRS through the return filing and EIN application requirements. However, a disregarded entity is not subject to a separate income or information return filing requirement. Its owner is treated as owning directly the entity's assets and liabilities, and the information available with respect to the disregarded entity depends on the owner's own return filings, if any are required. For a disregarded entity that is formed in the United States and wholly owned by a foreign corporation, foreign partnership, or nonresident alien individual, generally no U.S. income or information return must be filed if neither the disregarded entity nor its owner received any U.S. source income or was engaged in a U.S. trade or business during the taxable year. Moreover, if a disregarded entity only receives certain types of U.S. source income, such as portfolio interest or U.S. source income that is fully withheld upon at source, its owner may not have a U.S. return filing requirement. Even in cases when the disregarded entity has an EIN, as well as in cases when income earned through a disregarded entity must be reported on its owner's return (for example, income from a U.S. trade or business), it may be difficult to associate the income with the disregarded entity based solely on the owner's return.

    Although ownership and accounting information is generally available under the reporting requirements established by the U.S. federal tax system with respect to many types of domestic entities, the absence of specific return filing and associated recordkeeping requirements for foreign-owned, single-member domestic entities hinders law enforcement efforts and compliance with international standards of transparency and cooperation in the area of tax information exchange. These difficulties have been noted in reviews of the U.S. legal system by international organizations, including the Financial Action Task Force and the Global Forum on Transparency and Exchange of Information for Tax Purposes, which is affiliated with the Organisation for Economic Co-operation and Development. The lack of ready access to information on ownership of, and transactions involving, these entities also makes it difficult for the IRS to ascertain whether the entity or its owner is liable for any federal tax.

    In general, section 6038A imposes reporting and recordkeeping requirements (together with certain procedural compliance requirements) on domestic corporations that are 25-percent foreign-owned. They are required to file an annual return on Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business (Under Sections 6038A and 6038C of the Internal Revenue Code), with respect to each related party with which the reporting corporation has had any “reportable transactions.” See section 1.6038A-2. These corporations must keep the permanent books of account or records as required by section 6001 that are sufficient to establish the accuracy of the federal income tax return of the corporation, including information, documents, or records to the extent they may be relevant to determine the correct U.S. tax treatment of transactions with related parties. See section 1.6038A-3.

    Explanation of Provisions

    These proposed regulations would amend section 301.7701-2(c) to treat a domestic disregarded entity that is wholly owned by one foreign person as a domestic corporation separate from its owner for the limited purposes of the reporting and record maintenance requirements (including the associated procedural compliance requirements) under section 6038A. As with the existing special rules with respect to employment and excise taxes, these proposed regulations would not alter the framework of the existing entity classification regulations, including the treatment of certain entities as disregarded. These regulations are intended to provide the IRS with improved access to information that it needs to satisfy its obligations under U.S. tax treaties, tax information exchange agreements and similar international agreements, as well as to strengthen the enforcement of U.S. tax laws.

    Because the proposed regulations would treat the affected domestic entities as foreign-owned domestic corporations for the specific purposes of section 6038A under the proposed regulations, and because such entities are foreign-owned, they would be reporting corporations within the meaning of section 6038A. Consequently, they would be required to file the Form 5472 information return with respect to reportable transactions between the entity and its foreign owner or other foreign related parties (transactions that would have been regarded under general U.S. tax principles if the entity had been, in fact, a corporation for U.S. tax purposes) and would also be required to maintain records sufficient to establish the accuracy of the information return and the correct U.S. tax treatment of such transactions. In addition, because these entities would have a filing obligation, they would be required to obtain an EIN by filing a Form SS-4 that includes responsible party information.

    To ensure that such entities are required to report all transactions with foreign related parties, these regulations would specify as an additional reportable category of transaction for these purposes any transaction within the meaning of section 1.482-1(i)(7) (with such entities being treated as separate taxpayers for the purpose of identifying transactions and being subject to requirements under section 6038A) to the extent not already covered by another reportable category. The term “transaction” is defined in section 1.482-1(i)(7) to include any sale, assignment, lease, license, loan, advance, contribution, or other transfer of any interest in or a right to use any property or money, as well as the performance of any services for the benefit of, or on behalf of, another taxpayer. For example, under these proposed regulations, contributions and distributions would be considered reportable transactions with respect to such entities. Accordingly, a transaction between such an entity and its foreign owner (or another disregarded entity of the same owner) would be considered a reportable transaction for purposes of the section 6038A reporting and record maintenance requirements, even though, because it involves a disregarded entity, it generally would not be considered a transaction for other purposes, such as making an adjustment under section 482. The penalty provisions associated with failure to file the Form 5472 and failure to maintain records would apply to these entities as well.

    The proposed regulations would also provide that the exceptions to the record maintenance requirements in section 1.6038A-1(h) and (i) for small corporations and de minimis transactions will not apply to these entities.

    Consistent with the changes contemplated by these proposed regulations, the IRS is also considering modifications to corporate, partnership, and other tax or information returns (or their instructions) to require the filer of these returns to identify all the foreign and domestic disregarded entities it owns.

    The proposed regulations would impose a filing obligation on a foreign-owned disregarded entity for reportable transactions it engages in even if its foreign owner already has an obligation to report the income resulting from those transactions—for example, transactions resulting in income effectively connected with the conduct of a U.S. trade or business. The Treasury Department and the IRS request comments on possible alternative methods for reporting the disregarded entity's transactions in such cases.

    Proposed Effective/Applicability Date

    The regulations are proposed to be applicable for taxable years ending on or after the date that is 12 months after the date these regulations are published as final regulations in the Federal Register.

    Special Analyses

    Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) and (d) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified that this regulation will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not required. This certification is based on the fact that these regulations will primarily affect a small number of foreign-owned domestic entities that do not themselves otherwise have a U.S. return filing requirement, and that the requirement to file a return for these entities will not impose a significant burden on them. Pursuant to section 7805(f), this notice of proposed rulemaking has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small entities.

    Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under the Addresses heading. The Treasury Department and the IRS request comments on aspects of the proposed rules for which additional guidance is desired. All comments will be available at www.regulations.gov or upon request. A public hearing will be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, then notice of the date, time, and place for the public hearing will be published in the Federal Register.

    Drafting Information

    The principal author of these regulations is Ronald M. Gootzeit, Office of Associate Chief Counsel (International). However, other personnel from the Treasury Department and the IRS participated in their development.

    List of Subjects 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

    26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Penalties, Reporting and recordkeeping requirements.

    Proposed Amendments to the Regulations

    Accordingly, 26 CFR parts 1 and part 301 are proposed to be amended as follows:

    PART 1—INCOME TAXES Paragraph 1. The authority citation for part 1 is amended by revising the entries for §§ 1.6038A-1 and 1.6038A-2 to read in part as follows: Authority:

    26 U.S.C. 7805 * * *

    Section 1.6038A-1 also issued under 26 U.S.C. 6001.

    Section 1.6038A-2 also issued under 26 U.S.C. 6001.

    Par. 2. Section 1.6038A-1 is amended as follows: 1. Paragraph (c)(1) is amended by adding a sentence at the end of the paragraph. 2. The first sentence of paragraph (h) is revised. 3. The first sentence of paragraph (i)(1) is revised. 4. Paragraph (n)(1) is amended by adding a sentence at the end of the paragraph. 5. Paragraph (n)(2) is amended by adding a sentence at the end of the paragraph.

    The additions and revisions read as follows:

    § 1.6038A-1 General requirements and definitions.

    (c) * * *

    (1) * * * A domestic business entity that is wholly owned by one foreign person and that is otherwise classified under § 301.7701-3(b)(1)(ii) of this chapter as disregarded as an entity separate from its owner is treated as an entity separate from its owner and classified as a domestic corporation for purposes of section 6038A. See § 301.7701-2(c)(2)(vi) of this chapter.

    (h) Small corporation exception. A reporting corporation (other than an entity that is treated as a reporting corporation by reason of § 301.7701-2(c)(2)(vi) of this chapter) that has less than $10,000,000 in U.S. gross receipts for a taxable year is not subject to §§ 1.6038A-3 and 1.6038A-5 for that taxable year.* * *

    (i) Safe harbor for reporting corporations with related party transactions of de minimis value—(1) In general. A reporting corporation (other than an entity that is treated as a reporting corporation by reason of § 301.7701-2(c)(2)(vi) of this chapter) is not subject to §§ 1.6038A-3 and 1.6038A-5 for any taxable year in which the aggregate value of all gross payments it makes to and receives from foreign related parties with respect to related party transactions (including monetary, nonmonetary consideration, and the value of transactions involving less than full consideration) is not more than $5,000,000 and is less than 10 percent of its U.S. gross income.* * *

    (n) * * *

    (1) * * * The last sentence of paragraph (c)(1) of this section (relating to certain domestic business entities), the parenthetical language in paragraph (h) of this section (relating to entities that are treated as reporting corporations by reason of § 301.7701-2(c)(2)(vi) of this chapter), and the parenthetical language in paragraph (i)(1) of this section (relating to entities that are treated as reporting corporations by reason § 301.7701-2(c)(2)(vi) of this chapter) apply to taxable years of such entities ending on or after the date that is 12 months after the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register.

    (2) * * * Paragraphs (b)(3)(xi) and (b)(9) of this section and the last sentence of paragraph (d) of § 1.6038A-2 apply to taxable years of the entities described in § 301.7701-2(c)(2)(vi) of this chapter ending on or after the date that is 12 months after the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register.

    Par. 3. Section 1.6038A-2 is amended as follows: 1. In paragraph (b)(3)(ix), remove the word “and”. 2. In paragraph (b)(3)(x), remove the period at the end of the paragraph and add “; and” in its place. 3. Add paragraph (b)(3)(xi). 4. Add paragraph (b)(9). 5. Add a sentence at the end of paragraph (d).

    The additions and revisions read as follows:

    § 1.6038A-2 Requirements of return.

    (b) * * *

    (3) * * *

    (xi) With respect to an entity that is treated as a reporting corporation by reason of § 301.7701-2(c)(2)(vi) of this chapter, any other transaction as defined by § 1.482-1(i)(7), such as amounts paid or received in connection with the formation, dissolution, acquisition and disposition of the entity, including contributions to and distributions from the entity.

    (9) Examples. The application of paragraph (b)(3) of this section may be illustrated by the following examples:

    Example 1.

    (i) In year 1, W, a foreign corporation, forms and contributes assets to X, a domestic limited liability company that does not elect to be treated as a corporation under § 301.7701-3(c) of this chapter. In year 2, W contributes funds to X. In year 3, X makes a payment to W. In year 4, X, in liquidation, distributes its assets to W.

    (ii) In accordance with § 301.7701-3(b)(1)(ii) of this chapter, X is disregarded as an entity separate from W. In accordance with § 301.7701-2(c)(2)(vi) of this chapter, X is treated as an entity separate from W and classified as a domestic corporation for purposes of section 6038A. In accordance with paragraphs (a)(2) and (b)(3) of this section, each of the transactions in years 1 through 4 is a reportable transaction with respect to X. Therefore, X has a section 6038A reporting and record maintenance requirement for each of those years.

    Example 2.

    (i) The facts are the same as in Example 1 of this paragraph (b)(9) except that in year 1 W also forms and contributes assets to Y, another domestic limited liability company that does not elect to be treated as a corporation under § 301.7701-3(c) of this chapter. In year 1, X and Y form and contribute assets to Z, another domestic limited liability company that does not elect to be treated as a corporation under § 301.7701-3(c) of this chapter. In year 2, X transfers funds to Z. In year 3, Z makes a payment to Y. In year 4, Z distributes its assets to X and Y in liquidation.

    (ii) In accordance with § 301.7701-3(b)(1)(ii) of this chapter, Y and Z are disregarded as entities separate from each other, W, and X. In accordance with § 301.7701-2(c)(2)(vi) of this chapter, Y, Z and X are treated as entities separate from each other and W, and are classified as domestic corporations for purposes of section 6038A. In accordance with paragraph (b)(3) of this section, each of the transactions in years 1 through 4 involving Z is a reportable transaction with respect to Z. Similarly, the contribution to Y in year 1, the payment to Y in year 3, and the distribution to Y in year 4 are reportable transactions with respect to Y. Moreover, X's funds transfer to Z in year 2 is a reportable transaction. Therefore, Z has a section 6038A reporting and record maintenance requirement for years 1 through 4, Y has a section 6038A reporting and record maintenance requirement for years 1, 3 and 4, and X has a section 6038A reporting and record maintenance requirement in year 2 in addition to its section 6038A reporting and record maintenance described in Example 1 of this paragraph (b)(9).

    (d) * * * In the case of an entity that is treated as a reporting corporation by reason of § 301.7701-2(c)(2)(vi) of this chapter, Form 5472 must be filed at such time and in such manner as the Commissioner may prescribe in forms or instructions.

    PART 301—PROCEDURE AND ADMINISTRATION Par. 4. The authority citation for part 301 continues in part to read as follows: Authority:

    26 U.S.C. 7805 * * *

    Par. 5. Section 301.7701-2 is amended by revising the last sentence of paragraph (a) and adding paragraphs (c)(2)(vi) and (e)(9) to read as follows:
    § 301.7701-2 Business entities; definitions.

    (a) * * * But see paragraphs (c)(2)(iii) through (vi) of this section for special rules that apply to an eligible entity that is otherwise disregarded as an entity separate from its owner.

    (c) * * *

    (2) * * *

    (vi) Special rule for reporting under section 6038A—(A) In general. An entity that is disregarded as separate from its owner for any purpose under this section is treated as an entity separate from its owner and classified as a corporation for purposes of section 6038A if—

    (1) The entity is a domestic entity; and

    (2) One foreign person has direct or indirect sole ownership of the entity.

    (B) Definitions—(1) Indirect sole ownership. For purposes of paragraph (c)(2)(vi)(A)(2) of this section, indirect sole ownership means ownership by one person entirely through one or more entities disregarded as separate from their owners or through grantor trusts, regardless of whether any such disregarded entity or grantor trust is domestic or foreign.

    (2) Entity disregarded as separate from its owner. For purposes of this paragraph (c)(2)(vi)(B), an entity disregarded as separate from its owner is an entity described in paragraph (c)(2)(i) of this section, without regard to the exceptions provided in paragraphs (c)(2)(ii) though (vi) of this section.

    (3) Grantor trust. For purposes of this paragraph (c)(2)(vi)(B), a grantor trust is any portion of a trust that is treated as owned by the grantor or another person under subpart E of subchapter J of chapter 1 of the Code.

    (e) * * *

    (9) Reporting required under section 6038A. Paragraph (c)(2)(vi) of this section applies to taxable years ending on or after the date that is 12 months after the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register.

    John Dalrymple, Deputy Commissioner for Services and Enforcement.
    [FR Doc. 2016-10852 Filed 5-6-16; 8:45 am] BILLING CODE 4830-01-P
    DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 110 [Docket Number USCG-2015-0729] RIN 1625-AA01 Port of Miami Anchorage Area; Atlantic Ocean, Miami Beach, FL AGENCY:

    Coast Guard, DHS.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    The Coast Guard proposes to revise the Miami Anchorage. Under the proposal, the Miami Anchorage would be divided into two separate anchorage areas. This action is necessary to reduce potential damage to threatened coral posed by anchoring vessels. This proposed revision would update the regulation to clarify the regulatory text and to reflect the establishment of two anchorage areas instead of one area currently in place. We invite your comments on this proposed rulemaking.

    DATES:

    Comments and related material must be received by the Coast Guard on or before July 11, 2016.

    ADDRESSES:

    You may submit comments identified by docket number USCG-2015-0729 using the Federal eRulemaking Portal at http://www.regulations.gov. See the “Public Participation and Request for Comments” portion of the SUPPLEMENTARY INFORMATION section for further instructions on submitting comments.

    FOR FURTHER INFORMATION CONTACT:

    If you have questions about this proposed rulemaking, call or email LT Ruth Sadowitz, Sector Miami Waterways Management Division, U.S. Coast Guard; telephone 305-535-4307, email [email protected]

    SUPPLEMENTARY INFORMATION:

    I. Table of Abbreviations CFR Code of Federal Regulations DHS Department of Homeland Security FDEP Florida Department of Environmental Protection FR Federal Register NMFS National Marine Fisheries Service NPRM Notice of proposed rulemaking § Section SEFCRI South East Florida Coral Reef Initiative U.S.C. United States Code II. Background, Purpose, and Legal Basis

    On December 1, 2015, the Coast Guard published a Notice of Study and request for comments (80 FR 75020) advising that we were evaluating an amendment to the Miami Anchorage (33 CFR 110.188) that would divide the anchorage into two separate anchorage areas. The possible modification of the anchorage area was designed in coordination with local stakeholders in an effort to mitigate damage to coral that may be caused by vessels anchoring. Comments provided by these stakeholders, academic research, and environmental reports addressed a number of options to potentially reduce the likelihood of damage to the Florida Reef in the Miami Anchorage. Those documents, which may be found in the docket, influenced this Coast Guard's selection of the anchorage modification proposed in this notice.

    In response to the Notice of Study, the Coast Guard received four comments. The first comment was from the non-profit organization, Miami Waterkeeper. Miami Waterkeeper supports the modifications to the anchorage area as those modifications would both better protect threatened species and critical coral habitat and still allow for safe navigation.

    The second comment came from the National Marine Fisheries Service—Habitat Conservation Division (NFMS). NMFS stated that they support relocating the anchorage area in order to reduce continued degradation of the coral reef and, ultimately, allow for restoration of the reef.

    The third comment was from NOAA. On December 1, 2015, NOAA submitted a comment to verify the coordinates of the possible amended anchorage area listed in the notice. The coordinates for the location of the amended anchorage areas were published incorrectly. The latitudinal coordinates were inadvertently published in the longitude column and vice versa. However, the numerical coordinates published in the chart was correct. The error has been corrected in this notice of proposed rulemaking (NPRM).

    The final comment came from Florida Department of Environmental Protection (FDEP). FDEP commented that the Coast Guard erred when it stated the genesis for the division of the anchorages was a SEFCRI report. While the SEFCRI report was instrumental to the evaluation of the current Miami Anchorage, the two anchorage solution was originally discussed in an academic paper authored by Lauren Waters, a FDEP employee. This paper can be found in the docket.

    The comments received in response to the notice were positive or addressed non-substantive errors in the notice. The Coast Guard is therefore proceeding with a proposal to revise the Miami Anchorage under the authority of 33 U.S.C. 471, 1221 through 1236, 2071, 33 CFR 1.05-1 and Department of Homeland Security Delegation No. 0170.1.

    III. Discussion of Proposed Rule

    The Coast Guard proposes to revise the Miami Anchorage by dividing the anchorage into two separate anchorage areas and clarifying text throughout the regulation. This revision is intended to reduce threats to protected coral without compromising the ability of vessels to anchor safely. Although the two separate anchorages encompass a smaller area, they allow for the facilitation of safe anchorage of both shallow and deep draft vessels. The amended coordinates would establish two anchorages with a combined area of approximately 1.5 square miles thereby reducing the total anchorage area by approximately 3 square nautical miles. The amended anchorage areas would be established with the following coordinates:

    Small Western Anchorage [Approximate water depths: 45 ft] Latitude Longitude NW Corner 25°47′57.687″ N 080°05′37.225″ W. NE Corner 25°47′57.341″ N 080°05′26.466″ W. SE Corner 25°46′31.443″ N 080°05′27.069″ W. SW Corner 25°46′31.557″ N 080°05′37.868″ W. Large Eastern Anchorage [Approximate water depths: 120 ft] Latitude Longitude NW Corner 25°48′13.841″ N 080°04′59.155″ W. NE Corner 25°48′04.617″ N 080°04′04.582″ W. SE Corner 25°46′32.712″ N 080°04′28.387″ W. SW Corner 25°46′32.767″ N 080°04′59.775″ W.

    Additional minor revisions to the Miami Anchorage regulation are also proposed to pluralize the anchorage grounds that would be established and to clarify existing regulation text.

    IV. Regulatory Analyses

    We developed this proposed rule after considering numerous statutes and Executive Orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders.

    A. Regulatory Planning and Review

    Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This NPRM has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget.

    This regulatory action determination is based on relatively minor changes to the existing Miami Anchorage regulation. This proposed regulation would create two separate anchorage areas with a combined total of 1.5 square miles of anchorage; while this does reduce the total anchorage area, the ability of shallow and deep draft vessels to safely anchor should not be impacted. This proposed regulation would clarify other regulatory text, but no other substantive changes are proposed.

    B. Impact on Small Entities

    The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.

    While some owners or operators of vessels intending to use the anchorage may be small entities, for the reasons stated in section IV.A above, this proposed rule would not have a significant economic impact on any vessel owner or operator.

    If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

    Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we want to assist small entities in understanding this proposed rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

    C. Collection of Information

    This proposed rule would not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

    D. Federalism and Indian Tribal Governments

    A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

    Also, this proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

    E. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

    F. Environment

    We have analyzed this proposed rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves reducing an anchorage. Normally such actions are categorically excluded from further review under paragraph 34(f) of Figure 2-1 of Commandant Instruction M16475.lD. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

    V. Public Participation and Request for Comments

    We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

    We encourage you to submit comments through the Federal eRulemaking Portal at http://www.regulations.gov. If your material cannot be submitted using http://www.regulations.gov, contact the person in the FOR FURTHER INFORMATION CONTACT section of this document for alternate instructions.

    We accept anonymous comments. All comments received will be posted without change to http://www.regulations.gov and will include any personal information you have provided. For more about privacy and the docket, you may review a Privacy Act notice regarding the Federal Docket Management System in the March 24, 2005, issue of the Federal Register (70 FR 15086).

    Documents mentioned in this NPRM as being available in the docket, and all public comments, will be in our online docket at http://www.regulations.gov and can be viewed by following that Web site's instructions. Additionally, if you go to the online docket and sign up for email alerts, you will be notified when comments are posted or a final rule is published.

    List of Subjects in 33 CFR Part 110

    Anchorage grounds.

    For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 110 as follows:

    PART 110—ANCHORAGES 1. The authority citation for part 110 continues to read as follows: Authority:

    33 U.S.C. 471, 1221 through 1236, 2071; 33 CFR 1.05-1; Department of Homeland Security Delegation No. 0170.1.

    2. Revise § 110.188 to read as follows:
    § 110.188 Atlantic Ocean off Miami and Miami Beach, FL.

    (a) The anchorage grounds. (1) Anchorage A. All area of the Atlantic Ocean, encompassed by a line beginning at 25°47′57.687″ N., 080°05′37.225″ W., thence east to 25°47′57.341″ N., 080°05′26.466″ W., thence south to 25°46′31.443″ N., 080°05′27.069″ W., thence west to 25°46′31.557″ N., 080°05′37.868″ W., thence back to origin.

    (2) Anchorage B. All area of the Atlantic Ocean, encompassed by a line beginning at 25°48′13.841″ N., 080°04′59.155″ W., thence east to 25°48′04.617″ N., 080°04′04.582″ W., thence south to 25°46′32.712″ N., 080°04′28.387″ W., thence west to 25°46′32.767″ N., 080°04′59.775″ W., thence back to origin.

    (b) The rules and regulations. (1) Except in cases of emergency, no vessel shall be anchored in the Atlantic Ocean in the vicinity of the entrances to the approach channels leading to the cities of Miami Beach and Miami, Fl., outside of the anchorage grounds defined and established.

    (2) Any vessel anchoring under circumstances of emergency outside of either anchorage ground shall be shifted to a new berth within the grounds immediately after the emergency ceases.

    (3) All vessels seeking to anchor shall lie at anchor with as short a cable as conditions will permit.

    (4) A vessel, upon being notified to move into the anchorage limits or to shift its position on an anchorage ground, must get underway at once or signal for a tug and must change position as directed with reasonable promptness.

    (5) Whenever the maritime or commercial interests of the United States so require, the Captain of the Port, U.S. Coast Guard, Miami, Florida, is hereby empowered to shift the position of any vessel anchored on an anchorage ground or outside thereof, or any vessel moored or anchored so as to impede or obstruct vessel movements or obstruct or interfere with range lights.

    (6) Vessels carrying explosives shall be anchored only under a written permit issued by the Captain of the Port and at such point as she or he may direct.

    (7) Vessels carrying explosives shall be at all times under the charge or command of a competent person and must display by day a red flag, of not less than 16 square feet, at the masthead or not less than 10 feet above the upper deck if the vessel has no mast; at night a red light shall be displayed in the positions specified for the red flag.

    (8) Nothing in this paragraph shall be construed as relieving the owner or person in charge of any vessel from penalties for obstructing navigation, or for obstructing or interfering with range lights, or for not complying with navigation laws in regard to lights, fog signals, or other aids to navigation, or for otherwise violating the law.

    (9) All vessels desiring to use an Anchorage must notify the Coast Guard Captain of the Port, via the Biscayne Bay Pilots on VHF-FM Channel 12 or 16.

    (10) All vessels anchored within the anchorage grounds shall maintain a 24-hour bridge watch by an English speaking licensed or credentialed deck officer monitoring VHF-FM Channel 16. This individual shall perform frequent checks of the vessel's position to ensure the vessel is not dragging anchor.

    (11) Vessels experiencing casualties such as a main propulsion, main steering, or anchoring equipment malfunction or which are planning to perform main propulsion engine repairs or maintenance, shall immediately notify the Coast Guard Captain of the Port via the Coast Guard Sector Miami on VHF-FM Channel 16.

    (12) The Coast Guard Captain of the Port may close the anchorage grounds and direct vessels to depart an anchorage during periods of adverse weather or at other times as deemed necessary in the interest of port safety.

    Dated: May 4, 2016. S.A. Buschman, Rear Admiral, U.S. Coast Guard, Commander, Seventh Coast Guard District.
    [FR Doc. 2016-10850 Filed 5-9-16; 8:45 am] BILLING CODE 9110-04-P
    DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 117 [Docket No. USCG-2016-0205] RIN 1625-AA09 Drawbridge Operation Regulation; Atlantic Intracoastal Waterway, New Smyrna Beach, FL AGENCY:

    Coast Guard, DHS.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    The Coast Guard proposes to modify the operating schedule that governs the Coronado Beach (George Musson) Bridge across the Atlantic Intracoastal Waterway, mile 845, at New Smyrna Beach, FL. This proposed rule would change the existing 20 minute opening schedule to a 30 minute opening schedule between 7 a.m. and 7 p.m. This modification would provide some relief to vehicle traffic congestion and would have little to no effect on navigation. The proposed rule will also add the local bridge name to the regulation published in the Code of Federal Regulations, George Musson/Coronado Beach (SR44). We invite your comments on this proposed rulemaking.

    DATES:

    Comments and related material must reach the Coast Guard on or before July 11, 2016.

    ADDRESSES:

    You may submit comments identified by docket number USCG-2016-0205 using Federal eRulemaking Portal at http://www.regulations.gov. See the “Public Participation and Request for Comments” portion of the SUPPLEMENTARY INFORMATION section below for instructions on submitting comments.

    FOR FURTHER INFORMATION CONTACT:

    If you have questions on this proposed rule, call or email LT Allan Storm with the Coast Guard; telephone 904-714-7616, email [email protected]

    SUPPLEMENTARY INFORMATION:

    I. Table of Abbreviations CFR Code of Federal Regulations DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking § Section U.S.C. United States Code II. Background, Purpose and Legal Basis

    On April 25, 2015, the City of New Smyrna Beach requested that the Coast Guard review the current operating schedule for the Coronado Beach (George Musson) Bridge (SR 44) to determine whether a change could be made to improve vehicle traffic flow in the area. The bridge owner, Florida Department of Transportation, was also consulted on this issue and it concurred with the recommendation to change the current schedule requiring an opening every 20 minutes to a schedule requiring an opening every 30 minutes all days of the week.

    The George Musson Bridge across the Atlantic Intracoastal Waterway, mile 845, at New Smyrna Beach, FL is a double leaf bascule bridge. It has a vertical clearance of 24 feet in the closed position at mean high water and a horizontal clearance of 90 feet.

    Presently, in accordance with 33 CFR 117.261(h), the Coronado Beach bridge (SR 44), also known as the George Musson Bridge, at mile 845 at New Smyrna Beach, FL shall open on signal, except that from 7 a.m. until 7 p.m., each day of the week, the draw need only open on the hour, twenty minutes past the hour and forty minutes past the hour. The Coast Guard proposes this rulemaking under authority in 33 U.S.C. 499.

    III. Discussion of Proposed Rule

    The Coast Guard proposes to amend 33 CFR 117.261, paragraph h, regarding the operation of the George Musson/Coronado Beach (SR 44) Bridge, Atlantic Intracoastal Waterway, mile 845, at New Smyrna Beach, FL. The proposed regulation would allow the bridge to open twice an hour rather than three times an hour to reduce vehicle traffic backups. In addition to changing the operating schedule, this regulation would add the local name of this bridge, George Musson, to the CFR. This regulation change will not have a significant impact on navigation in this area.

    As per, 33 CFR 117.261(a) General: Public vessels of the United States and tugs with tows must be passed through the drawspan of each drawbridge listed in this section at anytime. These proposed changes will meet the reasonable needs of vessel traffic passing through the Bridge while taking into account the reasonable needs of other modes of transportation. Vessels not requiring an opening may pass at any time.

    IV. Regulatory Analyses

    We developed this proposed rule after considering numerous statutes and Executive Orders related to rulemaking. Below we summarize our analyses based on these statutes and Executive Orders and we also discuss First Amendment rights of protestors.

    A. Regulatory Planning and Review

    Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This NPRM has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget.

    This regulatory action determination is based on the limited impact that it is anticipated to have on vessel traffic on the Atlantic Intracoastal Waterway. This proposed rule will change the opening schedule from three times an hour to two times an hour. Currently, bridge logs show that the Bridge generally opens twice an hour because vessel traffic volumes do not require three openings per hour. Therefore, there should be no actual change to the number of bridge openings per hour. Also, vessels that can transit under the bridge without an opening may do so. Emergency vessels and tugs with tows can still request openings at any time.

    B. Impact on Small Entities

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.

    While some owners or operators of vessels intending to transit the bridge may be small entities, for the reasons stated in section IV.A above this proposed rule would not have a significant economic impact on any vessel owner or operator.

    If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

    Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we want to assist small entities in understanding this proposed rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

    C. Collection of Information

    This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.).

    D. Federalism and Indian Tribal Government

    A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in E.O. 13132.

    Also, this proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

    E. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule will not result in such an expenditure, we do discuss the effects of this proposed rule elsewhere in this preamble.

    F. Environment

    We have analyzed this proposed rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves the operating regulations or procedures for drawbridges. Normally such actions are categorically excluded from further review, under figure 2-1, paragraph (32)(e), of the Instruction.

    Under figure 2-1, paragraph (32)(e), of the Instruction, an environmental analysis checklist and a categorical exclusion determination are not required for this rule. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

    G. Protest Activities

    The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

    V. Public Participation and Request for Comments

    We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

    We encourage you to submit comments through the Federal eRulemaking Portal at http://www.regulations.gov. If your material cannot be submitted using http://www.regulations.gov, contact the person in the FOR FURTHER INFORMATION CONTACT section of this document for alternate instructions.

    We accept anonymous comments. All comments received will be posted without change to http://www.regulations.gov and will include any personal information you have provided. For more about privacy and the docket, you may review a Privacy Act notice regarding the Federal Docket Management System in the March 24, 2005, issue of the Federal Register (70 FR 15086).

    Documents mentioned in this NPRM as being available in the docket, and all public comments, will be in our online docket at http://www.regulations.gov and can be viewed by following that Web site's instructions. Additionally, if you go to the online docket and sign up for email alerts, you will be notified when comments are posted or a final rule is published.

    List of Subjects in 33 CFR Part 117

    Bridges.

    For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 117 as follows:

    PART 117—DRAWBRIDGE OPERATION REGULATIONS 1. The authority citation for part 117 continues to read as follows: Authority:

    33 U.S.C. 499; 33 CFR 1.05-1; and Department of Homeland Security Delegation No. 0170.1.

    2. Revise § 117.261(h) to read as follows:
    § 117.261 Atlantic Intracoastal Waterway from St. Marys River to Key Largo.

    (h) George Musson/Coronado Beach (SR 44) bridge, mile 845 at New Smyrna Beach. The George Musson/Coronado Beach (SR 44) bridge, mile 845, shall open on signal, except that from 7 a.m. to 7 p.m., the draw shall open on the hour and half-hour, seven days a week.

    Dated: May 4, 2016. S.A. Buschman, Rear Admiral, U.S. Coast Guard, Commander, Seventh Coast Guard District.
    [FR Doc. 2016-10919 Filed 5-9-16; 8:45 am] BILLING CODE 9110-04-P
    DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 117 [Docket No. USCG-2015-0343] RIN 1625-AA09 Drawbridge Operation Regulation; Atlantic Intracoastal Waterway, Little River to Savannah River AGENCY:

    Coast Guard, DHS.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    The Coast Guard proposes to modify the operating schedule that governs the Lady's Island Bridge, across the Beaufort River, Mile 536.0 at Beaufort, SC. This modification would allow Lady's Island Bridge to remain closed during peak vehicular traffic times. The bridge owner, South Carolina Department of Transportation, requested this action to assist in reducing traffic caused by bridge openings.

    DATES:

    Comments and related material must reach the Coast Guard on or before July 11, 2016.

    ADDRESSES:

    You may submit comments identified by docket number USCG-2015-0343 using Federal eRulemaking Portal at http://www.regulations.gov.

    See the “Public Participation and Request for Comments” portion of the SUPPLEMENTARY INFORMATION section below for instructions on submitting comments.

    FOR FURTHER INFORMATION CONTACT:

    If you have questions on this proposed rule, call or email Lieutenant John Z. Downing at telephone 843-740-3184, email [email protected]

    SUPPLEMENTARY INFORMATION:

    I. Table of Abbreviations CFR Code of Federal Regulations DHS Department of Homeland Security E.O. Executive order FR Federal Register NPRM Notice of proposed rulemaking SNPRM Supplemental notice of proposed rulemaking Pub. L. Public Law § Section U.S.C. United States Code II. Background, Purpose and Legal Basis

    The City of Beaufort, South Carolina requested that the bridge owner and the U.S. Coast Guard modify the operating schedule for Lady's Island Bridge to reduce vehicular traffic in the City of Beaufort and surrounding communities. On February 17th, 2015, Coast Guard Sector Charleston Waterways Management (WWM) staff observed the Lady's Island Bridge operations between the hours of 6 a.m. and 10 a.m. During the observation period, the staff discussed potential changes with the Bridge owner, South Carolina Department of Transportation. Additionally, WWM met with the Beaufort County South Carolina traffic manager to discuss bridge opening impacts.

    On August 5th, 2015, a Temporary Deviation, entitled, “Drawbridge Operation Regulations: Atlantic Intracoastal Waterway, Little River to Savannah River,” was published in the Federal Register [USCG-2015-0343] [80 FR 46492] to evaluate whether changing the bridge opening schedule would assist in reducing traffic congestion. This deviation was in effect through November 3rd, 2015.

    During the deviation period the Coast Guard received six comments, five of which recommended retaining the operating schedule currently found at 33 CFR 117.911(f). One comment proposed a bridge opening during the morning and afternoon vehicular traffic rush hours. Based on the Coast Guard's observation of bridge use during peak traffic hours, the existing schedule would continue to create an unreasonable amount of vehicle traffic during morning and afternoon commutes and generally during daylight hours. One comment further suggested not changing the existing schedule during certain times of the year when increased vessel traffic is expected. The Coast Guard adopted this proposal because would meet the reasonable needs of navigation.

    The Lady's Island Bridge in Beaufort, South Carolina has a vertical clearance of 30 feet at Mean High Water in the closed position. The existing drawbridge schedule can be found in 33 CFR 117.911(f).

    III. Discussion of Proposed Rule

    The Coast Guard proposes to amend 33 CFR 117.911(f). This proposed regulation would modify timeframes the bridge may remain closed. It would extend the morning closure period, when the bridge is authorized to remain closed, by an additional half hour and the afternoon closure period by an additional hour. It would also set an hourly opening schedule between 9 a.m. and 3 p.m. when the Bridge will open on the hour, thereby reducing hourly openings from twice an hour to once an hour during daytime hours, Monday through Friday, except Federal holidays. This proposed regulation would reduce vehicle backups without unreasonably restricting vessel traffic, thereby balancing the needs of both modes of transportation. No changes to the existing regulation will be implemented during the months of April, May, October and November because higher vessel traffic volumes exist during these time periods. At all other times, this bridge will open on signal.

    The South Carolina Department of Transportation, the bridge owner, has no objections to this proposed schedule.

    IV. Regulatory Analyses

    We developed this proposed rule after considering numerous statutes and executive orders (E.O.s) related to rulemaking. Below we summarize our analyses based on these statutes and E.O.s and we discuss First Amendment rights of protestors.

    A. Regulatory Planning and Review

    E.O.s 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This NPRM has not been designated a “significant regulatory action,” under E.O. 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget.

    This regulatory action determination is based on vessels being able to plan voyages that require transiting the bridge during the scheduled opening periods or, when capable of doing so, vessels may transit under the bridge at any time.

    B. Impact on Small Entities

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.

    While some owners or operators of vessels intending to transit the bridge may be small entities, for the reasons stated in section IV.A above this proposed rule would not have a significant economic impact on any vessel owner or operator.

    If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

    Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section above. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

    C. Collection of Information

    This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.).

    D. Federalism and Indian Tribal Government

    A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in E.O. 13132.

    Also, this proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section above.

    E. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule will not result in such an expenditure, we do discuss the effects of this proposed rule elsewhere in this preamble.

    F. Environment

    We have analyzed this proposed rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This proposed rule simply promulgates the operating regulations or procedures for drawbridges. Normally such actions are categorically excluded from further review, under figure 2-1, paragraph (32)(e), of the Instruction.

    Under figure 2-1, paragraph (32)(e), of the Instruction, an environmental analysis checklist and a categorical exclusion determination are not required for this rule. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

    G. Protest Activities

    The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

    V. Public Participation and Request for Comments

    We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

    We encourage you to submit comments through the Federal eRulemaking Portal at http://www.regulations.gov. If your material cannot be submitted using http://www.regulations.gov, contact the person in the FOR FURTHER INFORMATION CONTACT section of this document for alternate instructions.

    We accept anonymous comments. All comments received will be posted without change to http://www.regulations.gov and will include any personal information you have provided. For more about privacy and the docket, you may review a Privacy Act notice regarding the Federal Docket Management System in the March 24, 2005, issue of the Federal Register (70 FR 15086).

    Documents mentioned in this notice, and all public comments, are in our online docket at http://www.regulations.gov and can be viewed by following that Web site's instructions. Additionally, if you go to the online docket and sign up for email alerts, you will be notified when comments are posted or a final rule is published.

    List of Subjects in 33 CFR Part 117

    Bridges.

    For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 117 as follows:

    PART 117—DRAWBRIDGE OPERATION REGULATIONS 1. The authority citation for part 117 continues to read as follows: Authority:

    33 U.S.C. 499; 33 CFR 1.05-1; Department of Homeland Security Delegation No. 0170.1.

    2. In § 117.911, revise paragraph (f) to read as follows:

    (f) The Lady's Island Bridge (Woods Memorial), across the Beaufort River, Mile 536.0 at Beaufort. The draw shall operate as follows:

    (1) On Monday through Friday, except Federal holidays:

    (i) From 6:30 a.m. to 9 a.m. and 3 p.m. to 6 p.m., the draw need not open to navigation; and,

    (ii) Between 9 a.m. to 3 p.m., the draw need open only on the hour.

    (2) During the months of April, May, October, and November from Monday through Friday, except Federal holidays, the Lady's Island Bridge (Woods Memorial) shall operate as follows:

    (i) From 7 a.m. to 9 a.m. and 4 p.m. to 6 p.m., the draw need not open to navigation; and,

    (ii) Between 9 a.m. to 4 p.m., the draw need open only on the hour and half-hour.

    (3) At all other times the draw shall open on signal.

    Dated: May 4, 2016. S.A. Buschman, Rear Admiral, U.S. Coast Guard, Commander, Seventh Coast Guard District.
    [FR Doc. 2016-10920 Filed 5-9-16; 8:45 am] BILLING CODE 9110-04-P
    DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 117 [Docket No. USCG-2015-0768] RIN 1625-AA09 Drawbridge Operation Regulation; Atlantic Intracoastal Waterway and Indian Creek, Miami, FL. AGENCY:

    Coast Guard, DHS.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    The Coast Guard proposes modifying the operating schedule that governs the West 79th Street Bridge across the Atlantic Intracoastal Waterway mile 1084.6, Miami, FL and the operating schedule that governs the East 79th Street Bridge across Miami Beach Channel, Miami, FL. This action will place the East and West 79th Street Bridges across Miami Beach Channel and Atlantic Intracoastal Waterway, Miami, FL on a twice an hour opening schedule between 7 a.m. and 7 p.m., Monday through Friday, except Federal holidays. This action is intended to reduce vehicular traffic caused by these bridges opening on demand.

    DATES:

    Comments and related material must reach the Coast Guard on or before July 11, 2016.

    ADDRESSES:

    You may submit comments identified by docket number USCG-2015-0768 using the Federal eRulemaking Portal at http://www.regulations.gov. See the “Public Participation and Request for Comments” portion of the SUPPLEMENTARY INFORMATION section for further instructions on submitting comments.

    FOR FURTHER INFORMATION CONTACT:

    If you have questions on this proposed rule, call or email Mr. Michael Lieberum of the Coast Guard; telephone 305-415-6744, email [email protected]

    SUPPLEMENTARY INFORMATION:

    I. Table of Abbreviations CFR Code of Federal Regulations DHS Department of Homeland Security FR Federal Register NPRM Notice of Proposed Rulemaking § Section Symbol U.S.C. United States Code FDOT Florida Department of Transportation AICW Atlantic Intracoastal Waterway II. Background, Purpose and Legal Basis

    The East and West 79th Street Bridges currently open on signal, pursuant to 33 CFR 117.5, which results in frequent openings that restrict vehicle traffic during the day, especially during morning and afternoon rush hour traffic. The Florida Department of Transportation (FDOT), the bridge owner, and the City of North Bay Village requested a change to the current operating schedule for both bridges to allow for scheduled openings twice an hour during peak traffic times. Bridge logs indicate these bridges open up to four times an hour or more during peak travel times, which results in frequent vehicular traffic disruptions.

    This proposed regulation would reduce vehicle traffic backups without unreasonably restricting vessel traffic by scheduling two openings per hour during peak traffic times, thereby balancing the needs of both modes of transportation.

    Additionally, other bridges on this section of the Intracoastal Waterway and Miami Channel open two times per hour. The proposed scheduled openings will align the 79th Street bridge openings with other bridges on the Intracoastal, namely, the Broad Causeway Bridge to the North (33 CFR 117.261(mm)) and The Venetian Causeway Bridge to the South (33 CFR 117.261(nn)), thereby allowing vessels to plan voyages during opening times and vehicles to schedule commutes around these openings.

    The East 79th Street Bridge across Miami Beach Channel, Miami, FL has a vertical clearance of 25 feet at MHW in the closed to navigation position and a horizontal clearance of 60 feet between fenders.

    The West 79th Street Bridge across the Atlantic Intracoastal Waterway mile 1084.6, Miami, FL has a vertical clearance of 25 feet at MHW in the closed to navigation position and a horizontal clearance of 90 feet between fenders.

    III. Discussion of Proposed Rule

    The Coast Guard proposes to amend 33 CFR 117.261. The Coast Guard will add paragraph (mm1) to this section. Under this proposed regulation, the draw of the West 79th Street Bridges, at Miami, Florida would open twice an hour, once on the hour and once on the half-hour, Monday through Friday between the hours of 7 a.m. and 7 p.m. During nights and weekends and on Federal holidays, the Bridge would open on signal.

    The Coast Guard further proposes to add section 117.304 to title 33 of the CFR. This section will be entitled “Miami Beach Channel” and would add the schedule for the East 79th Street Bridge that will be identical to the proposed schedule for the West 79th Street Bridge stated above.

    IV. Regulatory Analyses

    We developed this proposed rule after considering numerous statutes and executive orders (E.O.s) related to rulemaking. Below we summarize our analyses based on these statutes and E.O.s and we discuss First Amendment rights of protestors.

    A. Regulatory Planning and Review

    E.O.s 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This NPRM has not been designated a “significant regulatory action,” under E.O. 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget.

    This regulatory action determination is based on vessels being able to plan voyages that require transiting the bridge during the scheduled opening periods or, when capable of doing so, vessels may transit under the bridge at any time. This rule will further meet the reasonable needs of navigation while taking into consideration the reasonable needs of vehicular traffic.

    B. Impact on Small Entities

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.

    While some owners or operators of vessels intending to transit the bridge may be small entities, for the reasons stated in section IV.A above this proposed rule would not have a significant economic impact on any vessel owner or operator.

    If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

    Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we want to assist small entities in understanding this proposed rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section above. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

    C. Collection of Information

    This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.).

    D. Federalism and Indian Tribal Government

    A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in E.O. 13132.

    Also, this proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section above.

    E. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule will not result in such an expenditure, we do discuss the effects of this proposed rule elsewhere in this preamble.

    F. Environment

    We have analyzed this proposed rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This proposed rule simply promulgates the operating regulations or procedures for drawbridges. Normally such actions are categorically excluded from further review, under figure 2-1, paragraph (32)(e), of the Instruction.

    Under figure 2-1, paragraph (32)(e), of the Instruction, an environmental analysis checklist and a categorical exclusion determination are not required for this rule. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

    G. Protest Activities

    The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

    V. Public Participation and Request for Comments

    We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

    We encourage you to submit comments through the Federal eRulemaking Portal at http://www.regulations.gov. If your material cannot be submitted using http://www.regulations.gov, contact the person in the FOR FURTHER INFORMATION CONTACT section of this document for alternate instructions.

    We accept anonymous comments. All comments received will be posted without change to http://www.regulations.gov and will include any personal information you have provided. For more about privacy and the docket, you may review a Privacy Act notice regarding the Federal Docket Management System in the March 24, 2005, issue of the Federal Register (70 FR 15086).

    Documents mentioned in this notice, and all public comments, are in our online docket at http://www.regulations.gov and can be viewed by following that Web site's instructions. Additionally, if you go to the online docket and sign up for email alerts, you will be notified when comments are posted or a final rule is published.

    List of Subjects in 33 CFR Part 117

    Bridges.

    For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 117 as follows:

    PART 117—DRAWBRIDGE OPERATION REGULATIONS 1. The authority citation for part 117 continues to read as follows: Authority:

    33 U.S.C. 499; 33 CFR 1.05-1; Department of Homeland Security Delegation No. 0170.1.

    2. In § 117.261, add paragraph (mm1) to read as follows:
    § 117.261 Atlantic Intracoastal Waterway from St. Marys River to Key Largo.

    (mm1) West 79th Street Bridge. The draw of the West 79th Street Bridge, at Miami, Florida will open on signal, except that from 7 a.m. to 7 p.m. Monday through Friday, except Federal holidays, the draw need only open on the hour and half hour.

    3. Add § 117.304 to read as follows:
    § 117.304 Miami Beach Channel.

    The draw of the East 79th Street bridge, at Miami, Florida will open on signal, except that from 7 a.m. to 7 p.m. Monday through Friday, except Federal holidays, the draw need only open on the hour and half hour.

    Dated: May 4, 2016. S.A. Buschman, Rear Admiral, U.S. Coast Guard, Commander, Seventh Coast Guard District.
    [FR Doc. 2016-10921 Filed 5-9-16; 8:45 am] BILLING CODE 9110-04-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R04-OAR-2015-0501; FRL-9946-14-Region 4] Air Plan Approval and Disapproval; North Carolina: New Source Review for Fine Particulate Matter (PM2.5) AGENCY:

    Environmental Protection Agency.

    ACTION:

    Proposed rule.

    SUMMARY:

    The Environmental Protection Agency (EPA) is proposing to approve, in part, and disapprove, in part, changes to the North Carolina State Implementation Plan (SIP), provided by the North Carolina Department of Environmental Quality (NC DEQ) through the Division of Air Quality, to EPA in submittals dated May 16, 2011 (two separate submittals), and September 5, 2013. These SIP submittals modify North Carolina's New Source Review (NSR)—Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR)—permitting regulations and include the adoption of some federal requirements regarding implementation of the fine particulate matter (PM2.5) national ambient air quality standards (NAAQS) through the NSR permitting program. As a result of the proposed disapproval of a portion of the State's NSR requirements, EPA is also proposing to approve, in part, and disapprove, in part, the PSD elements of North Carolina's infrastructure SIP submittals for the 2008 lead, 2008 8-hour ozone, 2010 sulfur dioxide (SO2), 2010 nitrogen dioxide (NO2) and the 2012 PM2.5 NAAQS, and to convert the Agency's previous conditional approvals of the PSD elements of North Carolina's infrastructure SIP submittals for the 1997 Annual PM2.5 and 2006 24-hour PM2.5 NAAQS to partial approvals and partial disapprovals. This proposed partial disapproval, if finalized, will trigger the requirements for EPA to promulgate a Federal Implementation Plan (FIP) no later than two years from the date of the disapproval unless the State corrects the deficiencies through a SIP revision and EPA approves the SIP revision before EPA promulgates such a FIP.

    DATES:

    Comments must be received on or before June 9, 2016.

    ADDRESSES:

    Submit your comments, identified by Docket ID No EPA-R04-OAR-2015-0501 at http://www.regulations.gov. Follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov. EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. EPA will generally not consider comments or comment contents located outside of the primary submission (i.e., on the Web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit http://www2.epa.gov/dockets/commenting-epa-dockets.

    FOR FURTHER INFORMATION CONTACT:

    Joel Huey of the Air Planning and Implementation Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303-8960. Mr. Huey can be reached by telephone at (404) 562-9104 or via electronic mail at [email protected]

    SUPPLEMENTARY INFORMATION:

    I. What are the actions EPA is proposing? II. Fine Particulate Matter and the NAAQS III. What is EPA's analysis of North Carolina's May 16, 2011, and September 5, 2013, SIP submittals addressing NSR requirements? A. North Carolina's SIP Submittal Changes Regarding the 2008 NSR PM2.5 Implementation Rule B. North Carolina's SIP Submittal Changes Regarding the 2010 PSD PM2.5 Rule C. North Carolina's Miscellaneous SIP Submittal Changes Regarding the NSR Program IV. What is EPA's analysis of the PSD elements for North Carolina's infrastructure SIP submittals? A. PSD Elements for Infrastructure Submittals for the 2008 Lead, 2008 8-Hour Ozone, 2010 NO2, 2010 SO2 and 2012 PM2.5 NAAQS B. PSD Elements for Infrastructure Submittals for the 1997 and 2006 PM2.5 NAAQS V. Incorporation by Reference VI. Proposed Actions VII. Statutory and Executive Order Reviews I. What are the actions EPA is proposing?

    EPA is proposing four actions, some with multiple parts, with regard to North Carolina's SIP submittals updating the State's PSD and NNSR regulations found at 15A North Carolina Administrative Code (NCAC) 02D .0530 and 15A NCAC 02D .0531.1 First, EPA is proposing to approve a May 16, 2011, SIP submittal from North Carolina (as revised and updated by the State's September 5, 2013, SIP submittal) as meeting the requirements of EPA's rule, “Implementation of the New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (PM2.5);” Final Rule, 73 FR 28321 (May 16, 2008) (hereafter referred to as the “2008 NSR PM2.5 Implementation Rule”).

    1 North Carolina's preconstruction permitting program for new and modified stationary sources is codified at 15A NCAC Subchapter 02D. Specifically, North Carolina's PSD preconstruction regulations are found at 15A NCAC 02D .0530 and apply to major stationary sources or modifications constructed in areas designated attainment or unclassifiable/attainment for the NAAQS, as required under part C of title I of the Clean Air Act (CAA or Act). North Carolina's NNSR regulations are found at 15A NCAC 02D .0531 and apply to the construction and modification of any major stationary source of air pollution in or impacting upon a NAAQS nonattainment area, as required by Part D of title I of the CAA.

    Second, EPA is proposing to disapprove North Carolina's September 5, 2013, SIP submittal with regard to changes to the State's regulation at 15A NCAC 02D .0530 because North Carolina's changes do not fully meet the requirements of EPA's rulemaking, “Prevention of Significant Deterioration (PSD) for Particulate Matter Less Than 2.5 Micrometers (PM2.5)—Increments, Significant Impact Levels (SILs) and Significant Monitoring Concentration (SMC),” Final Rule, 75 FR 64864 (October 20, 2010) (hereafter referred to as the “2010 PSD PM2.5 Rule”).

    Third, EPA is proposing to approve administrative changes to North Carolina's PSD and NNSR regulations at 15A NCAC 02D .0530 and 15A NCAC 02D .0531 provided by the State in a SIP submittal also dated May 16, 2011, including clarification of the applicability of best available control technology (BACT) and lowest achievable emission rate (LAER) for electrical generating units (EGUs) in the State, and the inclusion of an additional Federal Land Manager (FLM) notification provision.

    Lastly, as a result of the proposed disapproval of a portion of the State's NSR requirements, EPA is proposing to approve, in part, and disapprove, in part, the PSD elements of the North Carolina's infrastructure SIP submittals for the 2008 lead, 2008 8-hour ozone, 2010 SO2, 2010 NO2 and the 2012 PM2.5 NAAQS and to convert the Agency's previous conditional approvals of the PSD elements of the North Carolina's infrastructure SIP submittals for the 1997 Annual PM2.5 and 2006 24-hour PM2.5 NAAQS to partial approvals and partial disapprovals.

    II. Fine Particulate Matter and the NAAQS

    “Particulate matter,” also known as particle pollution or PM, is a complex mixture of extremely small particles and liquid droplets. Particle pollution is made up of a number of components, including acids (such as nitrates and sulfates), organic chemicals, metals, and soil or dust particles. The size of particles is directly linked to their potential for causing health problems. EPA is concerned about particles that are 10 micrometers in diameter or smaller because those are the particles that generally pass through the throat and nose and enter the lungs. Once inhaled, these particles can affect the heart and lungs and cause serious health effects. EPA groups particle pollution into two categories:

    • “Inhalable coarse particles,” or PM10, are particles larger than 2.5 micrometers but smaller than 10 micrometers in diameter. Inhalable coarse particles can be directly emitted from sources such as roadways and industries that create dusty emissions.

    • “Fine particles,” or PM2.5, are solid or liquid particles that are 2.5 micrometers in diameter and smaller. Fine particles can be directly emitted from sources such as industrial processes, diesel and gasoline engines, and wildfires, or they can be formed in the atmosphere secondarily as a result of chemical reactions between specific pollutants (known as PM2.5 precursors) that are emitted primarily from mobile and stationary combustion sources.

    The Clean Air Act (CAA or Act) requires EPA to set air quality standards to protect both public health and the public welfare (e.g., visibility, crops and vegetation). Particle pollution, especially fine particles, affects both. The human health effects associated with long- or short-term exposure to PM2.5 are significant and include premature mortality, aggravation of respiratory and cardiovascular disease (as indicated by increased hospital admissions and emergency room visits) and development of chronic respiratory disease. In addition, welfare effects associated with elevated PM2.5 levels include visibility impairment as well as effects on sensitive ecosystems, materials damage and soiling and climatic and radiative processes.

    On July 18, 1997, EPA revised the NAAQS for PM to add new standards for fine particles, using PM2.5 as the indicator. See 62 FR 38652. Previously, EPA used PM10 (inhalable particles smaller than or equal to 10 micrometers in diameter) as the indicator for the PM NAAQS. EPA established health-based (primary) annual and 24-hour standards for PM2.5, setting an annual standard at a level of 15 micrograms per cubic meter (µg/m3) and a 24-hour standards at a level of 65 µg/m3. Id. At the time EPA established the 1997 primary standards, EPA also established welfare-based (secondary) standards identical to the primary standards. Id. The secondary standards are designed to protect against major environmental effects of PM2.5, such as visibility, impairment, soiling, and materials damage. Id. On October 17, 2006, EPA revised the primary and secondary NAAQS for PM2.5. See 71 FR 61236. In that rulemaking, EPA reduced the 24-hour NAAQS for PM2.5 to 35 µg/m3 and retained the existing annual PM2.5 NAAQS of 15 µg/m3. Id. On December 14, 2012, the EPA Administrator signed a final rule revising the annual PM2.5 NAAQS to 12 µg/m3. See 78 FR 3086 (January 15, 2013).

    Whenever a new or revised NAAQS is promulgated, section 110(a) of the CAA obligates states to submit SIP revisions that provide for the implementation, maintenance, and enforcement of the new or revised NAAQS within three years following promulgation of such NAAQS—the so-called infrastructure SIP revisions. Although states typically have met many of the basic program elements required in section 110(a)(2) through earlier SIP submittals in connection with previous PM standards, states were still required to submit SIP revisions that address section 110(a)(2) for the 1997, 2006 and 2012 PM2.5 NAAQS.

    III. What is EPA's analysis of North Carolina's May 16, 2011, and September 5, 2013, SIP submittals addressing NSR requirements?

    North Carolina provided its May 16, 2011, and September 5, 2013, SIP submittals to, among other things, comply with federal permitting requirements related to implementation of the PM2.5 NAAQS through the NSR program. The relevant federal PM2.5 permitting requirements for SIPs, set forth in 40 CFR 51.165 and 51.166, were promulgated by EPA in the 2008 NSR PM2.5 Implementation Rule and the 2010 PSD PM2.5 Rule. States were required to make their SIP submittals to address the requirements of the 2008 NSR PM2.5 Implementation Rule no later than May 16, 2011, and to make their submittals to address the requirements of the 2010 PSD PM2.5 Rule no later than July 20, 2012.

    A. North Carolina's SIP Submittal Changes Regarding the 2008 NSR PM2.5 Implementation Rule

    North Carolina submitted its SIP to comply with the requirements of the 2008 NSR PM2.5 Implementation Rule on May 16, 2011. Subsequently, on September 5, 2013, North Carolina submitted an update to its original submittal to correct a deficiency related to the significant emission rate for nitrogen oxides (NOX) as a precursor to PM2.5 formation. Background on the 2008 NSR PM2.5 Implementation Rule and EPA's analysis of North Carolina's SIP submittals to comply with that rule is provided below.

    1. Background on EPA's 2008 NSR PM2.5 Implementation Rule

    On May 16, 2008, EPA finalized the 2008 NSR PM2.5 Rule to implement the 1997 PM2.5 NAAQS for the NSR permitting program. See 73 FR 28321. The 2008 NSR PM2.5 Implementation Rule revised the federal NSR program requirements to establish the framework for implementing preconstruction permit review for the PM2.5 NAAQS in both attainment and nonattainment areas. Among other things, the 2008 NSR PM2.5 Rule required states to incorporate into their SIPs the following components of the NSR program for the PM2.5 NAAQS: (1) The requirement for NSR permits to address directly emitted PM2.5 and precursor pollutants that contribute to the secondary formation of PM2.5; (2) significant emission rates for direct PM2.5 and precursor pollutants that lead to the secondary formation of PM2.5 (including SO2, NOX, and volatile organic compounds (VOC) 2 ); (3) NNSR PM2.5 emission offsets; and (4) the requirement for applicability determinations and emission limits in PSD and NNSR permits to account for gases that condense to form particles (condensables) in PM2.5 and PM10.3

    2 Under the 2008 NSR PM2.5 Rule, VOC is presumed not to be a precursor to PM2.5 unless the state demonstrates to the Administrator's satisfaction or EPA demonstrates that emissions of VOC from sources in a specific area are a significant contributor to that area's ambient PM2.5 concentrations.

    3 Additionally, the 2008 NSR PM2.5 Implementation Rule authorized states to adopt provisions in their nonattainment NSR rules that allowed for “interpollutant trading” for emission offsets. Specifically, the rule authorized states to allow new major stationary sources and major modifications in PM2.5 nonattainment areas to offset increases of direct PM2.5 emissions or PM2.5 precursors with reductions of either direct PM2.5 emissions or PM2.5 precursors in accordance with interpollutant offset ratios contained in the area's approved SIP. North Carolina elected not to include interpollutant trading ratios in its final SIP submittals and therefore will not be implementing interpollutant trading at this time.

    North Carolina's May 16, 2011, SIP submittal (as revised by the State's September 5, 2013, SIP submittal) addresses the PSD and NNSR provisions established in EPA's May 16, 2008, NSR PM2.5 Implementation Rule. Two key issues, the NSR PM2.5 litigation and condensable particulate matter emissions, are described in greater detail below.

    a. NSR PM2.5 Litigation

    On January 4, 2013, the United States Court of Appeals for the District of Columbia Circuit (hereafter referred to as the DC Circuit or Court) issued a judgment 4 that remanded two of EPA's rules promulgated for implementation of the 1997 PM2.5 NAAQS, including the 2008 NSR PM2.5 Implementation Rule. See Natural Resources Defense Council v. EPA, 706 F.3d 428 (D.C. Cir. 2013). The Court found that EPA erred in implementing the PM2.5 NAAQS in these rules solely pursuant to the general implementation provisions of subpart 1 of part D of title I of the CAA, rather than pursuant to the additional implementation provisions specific to particulate matter nonattainment areas in subpart 4. EPA had developed the NNSR requirements in the 2008 NSR PM2.5 Implementation Rule pursuant to the general nonattainment requirements of subpart 1 of Part D, title I, of the CAA. Relative to subpart 1, subpart 4 of Part D, title I includes additional provisions that apply to PM10 nonattainment and is more specific about what states must do to bring areas into attainment. In particular, subpart 4 includes section 189(e) of the CAA, which requires the control of major stationary sources of PM10 precursors (and hence under the court decision, PM2.5 precursors) “except where the Administrator determines that such sources do not contribute significantly to PM10 levels which exceed the standard in the area.” The Court found that subpart 4 applies to PM2.5 nonattainment and ordered EPA to repromulgate the 2008 PM2.5 Implementation Rule pursuant to subpart 4.

    4 The Natural Resources Defense Council, Sierra Club, American Lung Association, and Medical Advocates for Healthy Air challenged before the DC Circuit EPA's April 25, 2007, Rule entitled “Clean Air Fine Particle Implementation Rule,” 72 FR 20586, which established detailed implementation regulations to assist states with the development of SIPs to demonstrate attainment for the 1997 Annual and 24-hour PM2.5 NAAQS and the separate May 16, 2008, NSR PM2.5 Implementation Rule (which is considered in this proposed rulemaking). This proposed rulemaking only pertains to the impacts of the Court's decision on the May 16, 2008, NSR PM2.5 Implementation Rule.

    The 2008 NSR PM2.5 Implementation Rule promulgated new NSR requirements for implementation of PM2.5 in both nonattainment areas (NNSR) and attainment/unclassifiable areas (PSD). As Subpart 4 includes requirements only pertinent to nonattainment areas, EPA does not consider the portions of the 2008 rule that address requirements for PM2.5 attainment and unclassifiable areas to be affected by the Court's opinion.

    On June 2, 2014, EPA published a final rule 5 which, in part, set a December 31, 2014, deadline for states to make any remaining required SIP submittals needed for an attainment plan or the NNSR program, pursuant to and considering the application of subpart 4. See 79 FR 31566. Requirements under subpart 4 for a moderate nonattainment area are generally comparable to subpart 1, including: (1) CAA section 189(a)(1)(A) (NNSR permit program); (2) section 189(a)(1)(B) (attainment demonstration or demonstration that attainment by the applicable attainment date is impracticable); (3) section 189(a)(1)(C) (reasonably available control measures and reasonably available control technology; and (4) section 189(c) (reasonable further progress and quantitative milestones). The additional requirements pursuant to subpart 4 as opposed to subpart 1 correspond to section 189(e) (precursor requirements for major stationary sources). Further additional SIP planning requirements are introduced by subpart 4 in the event that a moderate nonattainment area is reclassified to a serious nonattainment area, or in the event that the moderate nonattainment area needs additional time to attain the NAAQS. The additional requirements under subpart 4 are not applicable for the purposes of CAA section 107(d)(3)(E) in any area that has submitted a complete redesignation request prior to the due date for those requirements; therefore, EPA is not required to consider subpart 4 requirements for moderate nonattainment areas that have submitted a redesignation request prior to December 31, 2014, or for any area that has already been redesignated to attainment. See 79 FR at 31570.

    5 The rule is titled “Identification of Nonattainment Classification and Deadlines for Submission of State Implementation Plan (SIP) Provisions for the 1997 Fine Particle (PM2.5) National Ambient Air Quality Standard (NAAQS) and 2006 PM2.5 NAAQS,” Final Rule, 79 FR 31566 (June 2, 2014). This final rule also identifies the initial classification of current 1997 and 2006 PM2.5 nonattainment areas as moderate and the EPA guidance and relevant rulemakings that are currently available regarding implementation of subpart 4 requirements.

    Two areas were initially designated nonattainment for the 1997 Annual PM2.5 NAAQS in North Carolina: The Greensboro-Winston Salem-High Point Area (hereafter referred to as the Greensboro Area) 6 and the Hickory-Morganton-Lenoir Area (hereafter referred to as the Hickory Area).7 On December 18, 2009 (later supplemented on December 22, 2010), NC DEQ 8 submitted redesignation requests for the Greensboro Area and the Hickory Area. These requests were granted, and the Greensboro Area and the Hickory Area were both redesignated to attainment on November 18, 2011. See 76 FR 71455 and 76 FR 71452, respectively. Because the counties comprising these areas have been redesignated to attainment, and no portions of North Carolina were designated nonattainment for either the 2006 PM2.5 NAAQS or the 2012 PM2.5 NAAQS, the State has no existing PM2.5 nonattainment areas. Therefore, the State is not currently required to regulate PM2.5 as part of its NNSR permitting program and, accordingly, the State did not need to submit additional SIP elements for PM2.5 to satisfy the Subpart 4 requirements.

    6 The nonattainment area for the Greensboro Area for the 1997 PM2.5 standard was comprised of Guilford and Davidson counties.

    7 The nonattainment area for the Hickory Area for the 1997 PM2.5 standard was comprised of Catawba County only.

    8 Formerly the North Carolina Department of Environment and Natural Resources.

    b. Condensables

    In the 2008 NSR PM2.5 Rule, EPA revised the definition of “regulated NSR pollutant” for PSD by adding paragraph 51.166(b)(49)(vi), which provided that “particulate matter (PM) emissions, PM2.5 emissions and PM10 emissions” shall include gaseous emissions from a source or activity which condense to form PM at ambient temperatures and that on or after January 1, 2011, such condensable PM shall be accounted for in applicability determinations and in establishing emissions limitations for PM, PM2.5 and PM10 in permits. See 73 FR at 28335. A similar paragraph revised the definition of “regulated NSR pollutant” in the NNSR rule but specified applicability to only “PM2.5 emissions and PM10 emissions” and not to “particulate matter (PM) emissions.” See 40 CFR 51.165(a)(1)(xxxvii)(D).

    Subsequently, EPA concluded that the 2008 NSR PM2.5 Rule's requirement that the measurement of “particulate matter emissions” (as opposed to PM2.5 or PM10) must include the condensable fraction of primary PM was an inadvertent error. On October 25, 2012, EPA corrected this inadvertent error by revising the definition of “regulated NSR pollutant” contained in the regulations for PSD at 40 CFR 51.166 and 52.21, and in EPA's Emission Offset Interpretative Ruling at 40 CFR part 51 Appendix S. See 77 FR 65107. In taking that action, EPA explained that requiring inclusion of condensable PM in measurements of “particulate matter emissions” would have little if any effect on preventing significant air quality deterioration or on efforts to attain the primary and secondary PM NAAQS. See 77 FR at 65112. Thus, as revised, the federal PSD regulations do not require the inclusion of condensable PM in measurements of “particulate matter emissions,” except where either the applicable NSPS compliance test includes the condensable PM fraction or the applicable implementation plan requires the condensable PM fraction to be counted. Id.

    North Carolina's May 16, 2011, SIP submittal (as updated by the September 5, 2013, submittal) adopts EPA's definition for “regulated NSR pollutant” requiring states to consider condensables (at 40 CFR 51.166(b)(49)(vi)). However, because the State's submittal adopts the definitions in the CFR as of May 16, 2008 (prior to EPA's correction), the State's rule requires sources to account for the condensable fraction in the measurement and regulation of “PM emissions” as well as “PM2.5 emissions” and “PM10 emissions.” As explained above, this difference between North Carolina's regulations and the current federal PSD regulations does not impact North Carolina's efforts to prevent significant deterioration of air quality or to attain and maintain compliance with the PM NAAQS.

    2. EPA's Analysis of North Carolina's SIP Submittal Changes Regarding the 2008 NSR PM2.5 Implementation Rule

    In a May 16, 2011, SIP submittal intended to satisfy the State's obligations under the 2008 PM2.5 Implementation Rule, North Carolina proposed to incorporate by reference (IBR) into North Carolina's SIP, with one exception, the relevant portions of the federal PSD and NNSR permitting regulations at 40 CFR 51.166 and 51.165 effective as of May 16, 2008.9 Specifically, North Carolina's May 16, 2011, submittal incorporates by reference into North Carolina's PSD regulations at 15A NCAC 02D .0530 (state effective date January 2, 2011) and into North Carolina's NNSR regulations at 15A NCAC 02D .0531 (state effective date January 2, 2011) the following PSD and NNSR provisions promulgated in the 2008 NSR PM2.5 Implementation Rule: (1) The requirement for PSD and NNSR permits to address directly emitted PM2.5 and precursor pollutants (SO2 and NOX (as codified at 40 CFR 51.165(a)(1)(xxxvii)(C) and 51.166(b)(49)); (2) the significant emission rates for direct PM2.5 and precursor pollutant (SO2) (as codified at 40 CFR 51.165(a)(1)(x)(A) and 51.166(b)(23)(i)); (3) the NNSR PM2.5 emission offsets (as codified at 51.165(9)(i)); and (4) the PSD and NNSR requirement that condensable PM, PM10 and PM2.5 emissions be accounted in PSD applicability determinations and in establishing emissions limitations for permitting (as codified at 40 CFR 51.165(a)(1)(xxxvii)(D) and 51.166(b)(49)).10

    9 Paragraph (w) of 15A NCAC 02D .0530 (effective date January 2, 2011) and Paragraph (o) of 15A NCAC 02D .0531 (effective date January 2, 2011) states: “The reference to the Code of Federal Regulations (CFR) in this Rule are incorporated by reference unless a specific reference states otherwise. Except for 40 CFR 81.334, the version of the CFR incorporated in this Rule is that as of May 16, 2008, and does not include any subsequent amendments or editions to the referenced material.”

    10 As discussed above, on October 25, 2012, EPA removed the requirement that condensable PM be included in measurements of “particulate matter emissions.” See 77 FR 65107.

    The one exception to North Carolina's IBR of relevant requirements from the 2008 NSR PM2.5 Implementation Rule in the State's May 16, 2011, submittal is the significant emissions rate for NOX as a precursor to the secondary formation of PM2.5. Specifically, instead of incorporating the 40 tons per year (tpy) significant emission rate for NOX as a PM2.5 precursor (set forth at 40 CFR 51.165(a)(1)(x)(A) and 40 CFR 51.166(b)(23)(i)), the state regulations included in North Carolina's May 16, 2011, SIP submittal set the rate at 140 tpy for both PSD and NNSR (at 15A NCAC 02D .0530(b)(4) and 15A NCAC 02D .0531(a)(3)).

    As mentioned above, in the 2008 NSR PM2.5 Rule, EPA promulgated final rules governing the implementation of NSR program for PM2.5 including adding significant emission rates for direct PM2.5 and their precursors of SO2 and NOX. EPA's permitting program uses significant emission rates to determine the applicability of major NSR requirements to existing sources undergoing modifications. Specifically, EPA established the federal definition of “significant” for PM2.5 is 40 tpy for NOX unless it is demonstrated not to be a PM2.5 precursor as provided under the definition of “Regulated NSR Pollutant.” See 40 CFR 51.165(a)(1)(x)(A) and 51.166(b)(23)(i). Pursuant to 40 CFR 51.166, a SIP can be more stringent than required by 40 CFR 51.166 but not less stringent. Under the 2008 NSR PM2.5 Implementation Rule, unless the state demonstrates that NOX is not a significant contributor to PM2.5 in a specific area, the significance threshold for NOX as a PM2.5 precursor can be no higher than 40 tpy. 40 CFR 51.166(b)(23)(i). North Carolina did not submit a demonstration that NOX is not a significant contributor to PM2.5 formation in the State. Thus, North Carolina's adoption of a significant emission rate of 140 tpy for NOX as a precursor to PM2.5 in its May 16, 2011, SIP submittal is inconsistent with the federal requirements.

    In a subsequent SIP submittal, dated September 5, 2013, North Carolina revised the significant emission rate for NOX as a PM2.5 precursor. Specifically, North Carolina submitted updated versions of 15A NCAC 02D .0530 (state effective date September 1, 2013) and 15A NCAC 02D .0531 (state effective date September 1, 2013) that IBR the federal rate of 40 tpy for NOX as a PM2.5 precursor into the North Carolina. See 15A NCAC 02D .0530(b)(4) (PSD regulations) and 15A NCAC 02D .0531(a)(3) (NNSR regulations). Therefore, the 140 tpy significant emission rate for NOX as a PM2.5 precursor originally proposed in North Carolina's May 16, 2008, SIP submittal has been replaced and is no longer before the Agency for review and consideration.

    EPA notes that North Carolina's submittal contains provisions relevant to nonattainment NSR programs for PM2.5 nonattainment areas. Specifically, in the definition of “regulated NSR pollutant,” the submittal provides that SO2 is a PM2.5 precursor, NOX is presumed to be a PM2.5 precursor, and VOCs and ammonia are presumed to not be PM2.5 precursors. This provision is consistent with the nonattainment NSR regulations promulgated in the 2008 PM2.5 NSR Implementation Rule. However, as mentioned above, on January 4, 2013, the DC Circuit, in Natural Resources Defense Council v. EPA, 706 F.3d at 428, issued a decision that remanded the 2008 PM2.5 NSR Implementation Rule back to EPA. The Court held that the provisions of subpart 4 of the CAA apply in areas designated nonattainment for a PM2.5 NAAQS. These subpart 4 requirements, as applied to PM2.5, include section 189(e) of the CAA, which requires the control of major stationary sources of PM2.5 and all PM2.5 precursors, i.e., SO2, NOX, VOC, and ammonia, in PM2.5 nonattainment areas unless the Administrator determines that such sources of a particular precursor do not contribute significantly to levels that exceed the standard in the nonattainment area.

    Although the State's submittal only requires regulation of SO2 and NOX as PM2.5 precursors in its NNSR permitting program, the State of North Carolina has no PM2.5 nonattainment areas. Accordingly, EPA finds it reasonable to conclude that major sources of VOCs and ammonia currently do not contribute significantly to PM2.5 nonattainment within the State. Thus, there is no need at this time for the State to regulate VOCs or ammonia as PM2.5 precursors in the State's nonattainment NSR permitting program, and this issue does not prevent EPA from approving the PM2.5 precursor provisions in North Carolina's May 16, 2011, SIP submittal (as revised by the State's September 5, 2013 submittal). Should EPA in the future designate an area in North Carolina as nonattainment for PM2.5, the State would have the obligation to submit a SIP revision demonstrating that the nonattainment NSR program meets all applicable requirements for PM2.5, including appropriate control of major sources of PM2.5 precursors under 189(e). See CAA sections 172(c)(5) and 189(a)(1)(A), (2)(B).

    EPA has preliminarily determined that North Carolina's May 16, 2011, SIP submittal, as updated by the September 5, 2013 SIP submittal, satisfies the requirements of the 2008 NSR PM2.5 Implementation Rule. Consequently, EPA is proposing to approve North Carolina's submittal (as updated) and to incorporate 15A NCAC 02D .0530 (state effective date September 1, 2013) and 15A NCAC 02D .0531 (state effective date September 1, 2013) into North Carolina's SIP, with the exception of certain regulatory provisions identified and discussed below.

    B. North Carolina's SIP Submittal Changes Regarding the 2010 PSD PM2.5 Rule

    North Carolina submitted its SIP to comply with the 2010 PSD PM2.5 Rule on September 5, 2013. Background on the 2010 PSD PM2.5 Rule and EPA's analysis of North Carolina's SIP submittal to comply with that rule is provided below.

    1. Background on EPA's 2010 PSD PM2.5 Rule a. Requirements of the 2010 PSD PM2.5 Rule for PSD SIP Programs

    EPA finalized the 2010 PSD PM2.5 Rule to provide additional regulatory requirements under the PSD SIP program regarding the implementation of the PM2.5 NAAQS. See 75 FR at 64864. The 2010 PSD PM2.5 Rule required states to submit SIP revisions to EPA by July 20, 2012, adopting provisions equivalent to or at least as stringent as the PSD increments and associated implementing regulations. Specifically, the 2010 PSD PM2.5 Rule requires states to adopt and submit for EPA approval into their SIP the numerical PM2.5 increments promulgated pursuant to section 166(a) of the CAA to prevent significant deterioration of air quality in areas meeting the NAAQS. States are also required to adopt and submit for EPA approval revisions to the definitions for “major source baseline date,” “minor source baseline date,” and “baseline area” as part of the implementing regulations for the PM2.5 increment.11

    11 The 2010 PSD PM2.5 Rule also gave states discretion to adopt PM2.5 SILs and a SMC. See 75 FR at 64900. On January 22, 2013, the DC Circuit vacated and remanded to EPA the portions of 50 CFR 51.166 and 52.21 addressing the PM2.5 SILs and also vacated the parts of the rule that established the PM2.5 SMC. North Carolina's September 5, 2013, submittal does not include SILs or SMC so these regulatory provisions are not relevant to today's proposed action.

    b. Requirement for PM2.5 Increments

    As established in part C of title I of the CAA, EPA's PSD program protects public health from adverse effects of air pollution by ensuring that construction of new major sources or modifications in attainment or unclassifiable areas does not lead to significant deterioration of air quality while simultaneously ensuring that economic growth will occur in a manner consistent with preservation of clean air resources. Under section 165(a)(3) of the CAA, a PSD permit applicant must demonstrate that emissions from the proposed construction and operation of a facility “will not cause, or contribute to, air pollution in excess of any maximum allowable increase or allowable concentration for any pollutant.” In other words, when a source applies for a permit to emit a regulated pollutant in an area that is designated as attainment or unclassifiable for a NAAQS, the state and EPA must determine if emissions of the regulated pollutant from the source will cause significant deterioration in air quality. Significant deterioration occurs when the amount of the new pollution exceeds the applicable PSD increment, which is the “maximum allowable increase” of an air pollutant allowed to occur above the applicable baseline concentration 12 for that pollutant. Therefore, an increment is the mechanism used to estimate “significant deterioration” of air quality for a pollutant in an area.

    12 Section 169(4) of the CAA provides that the baseline concentration of a pollutant for a particular baseline area is generally the air quality at the time of the first application for a PSD permit in the area.

    For purposes of calculating increment consumption, a baseline area for a particular pollutant includes the attainment or unclassifiable area in which the source is located, as well as any other attainment or unclassifiable area in which the source's emissions of that pollutant are projected (by air quality modeling) to result in a significant ambient pollutant increase. See 40 CFR 51.166(b)(14)(ii). Once the baseline area is established, subsequent PSD sources locating in that area need to consider that a portion of the available increment may have already been consumed by previous emissions increases.

    In general, the submittal date of the first complete PSD permit application in a particular area is the operative “baseline date” after which new sources must evaluate increment consumption.13 On or before the date of the first complete PSD application, emissions generally are considered to be part of the baseline concentration from which increment consumption is calculated, except for certain changes in emissions from major stationary sources. Emissions increases that occur after the baseline date will be counted toward the amount of increment consumed. Similarly, emissions decreases after the applicable baseline date restore or expand the amount of increment that is available.

    13 Baseline dates are pollutant-specific. That is, a complete PSD application establishes the baseline date only for those regulated NSR pollutants that are projected to be emitted in significant amounts (as defined in the regulations) by the applicant's new source or modification. Thus, an area may have different baseline dates for different pollutants.

    In practice, three dates related to the PSD baseline concept are important in understanding how to calculate the amount of increment consumed—(1) trigger date; (2) major source baseline date; and (3) minor source baseline date. The first relevant date is the trigger date. The trigger date, as the name implies, is a fixed date that triggers the overall increment consumption process nationwide. See 40 CFR 51.166(b)(14)(ii). The two remaining dates—“major source baseline date” and “minor source baseline date”—are necessary to properly account for the emissions that are to be counted toward the amount of increment consumed following the national trigger date, in accordance with the statutory definition of “baseline concentration” in section 169(4) of the Act. The “major source baseline date,” which precedes the trigger date, is the date after which actual changes in emissions associated with construction at any major stationary source affect the PSD increment. Such changes in emissions are not included in the baseline concentration, even if the changes in emissions occur before the minor source baseline date. In accordance with the statutory definition of “baseline concentration” at section 169(4), the PSD regulations define a fixed date to represent the major source baseline date for each pollutant for which an increment exists. The “minor source baseline date” is the earliest date after the trigger date on which a source or modification submits the first complete application for a PSD permit in a particular area. This is the date on which the baseline concentration is generally established. After the minor source baseline date, any change in actual emissions (from both major and minor sources) affects the PSD increment for that area.

    Once the minor source baseline date is established, the new emissions increase from the major source submitting the first PSD application consumes a portion of the increment in that area, as do any subsequent actual emissions increases that occur from any new or existing source in the area. When the maximum pollutant concentration increase defined by the increment has been reached, additional PSD permits cannot be issued until sufficient amounts of the increment are “freed up” via emissions reductions that may occur voluntarily (e.g., via source shutdowns) or by mandatory control requirements imposed by the reviewing authority. Moreover, the air quality in a region cannot deteriorate to a level in excess of the applicable NAAQS, even if all the increment in the area has not been consumed. Therefore, new or modified sources located in areas where the air pollutant concentrations are near the level allowed by the NAAQS may not have full use of the amount of pollutant concentration increase allowed by the increment.

    In the 2010 PSD PM2.5 Rule, pursuant to the authority under section 166(a) of the CAA, EPA promulgated numerical increments for PM2.5 as a new pollutant 14 for which NAAQS were established after August 7, 1977,15 and derived 24-hour and annual PM2.5 increments for the three area classifications (Class I, II and III). See 75 FR at 64869 and the ambient air increment table at 40 CFR 51.166(c)(1). EPA also established the PM2.5 “trigger date” as October 20, 2011 (40 CFR 51.166(b)(14)(ii)(c)), and the PM2.5 “major source baseline date” as October 20, 2010 (40 CFR 51.166(b)(14)(i). See 75 FR at 64903. Finally, EPA amended the term “baseline area” at 40 CFR 51.166(b)(15)(i) to include a level of significance of 0.3 μg/m3, annual average, for establishing a new baseline area for purposes of PM2.5 increments. Id.

    14 EPA generally characterized the PM2.5 NAAQS as a NAAQS for a new indicator of PM. EPA did not replace the PM10 NAAQS with the NAAQS for PM2.5 when the PM2.5 NAAQS were promulgated in 1997. EPA rather retained the Annual and 24-hour NAAQS for PM10 (retaining PM10 as an indicator of coarse particulate matter) and treated PM2.5 as a new pollutant for purposes of developing increments. See 75 FR at 64864.

    15 EPA interprets section 166(a) to authorize EPA to promulgate pollutant-specific PSD regulations meeting the requirements of section 166(c) and 166(d) for any pollutant for which EPA promulgates a NAAQS after 1977.

    2. EPA's Analysis of North Carolina's SIP Submittal Changes Regarding the 2010 PSD PM2.5 Rule

    North Carolina's September 5, 2013, SIP submittal adopts into the State's PSD permitting program at 15A NCAC 02D .0530 changes purporting to meet the requirements for PM2.5 increments in EPA's 2010 PSD PM2.5 Rule. However, while North Carolina's revised PSD regulations incorporate the numerical PM2.5 increments at paragraphs (q) and (v) of 15A NCAC 02D .0530, the regulations do not include other key regulatory provisions needed to implement the PM2.5 increments in accordance with federal requirements. Specifically, North Carolina's changes to 15A NCAC 02D .0530 fail to incorporate the following federal requirements pertaining to implementation of PM2.5 increments: (1) the definition of “[m]ajor source baseline date” for PM2.5 codified at 40 CFR 51.166(b)(14)(i)(c) (defined as October 20, 2010); (2) the definition of “[m]inor source baseline date” for PM2.5 codified at 40 CFR 51.166(b)(14)(ii)(c) (which establishes the PM2.5 trigger date as October 20, 2011); and (3) the definition of “[b]aseline area” codified at 40 CFR 51.166(b)(15)(i).16

    16 North Carolina's draft revisions to 15A NCAC 02D .0530 would have used incorporation by reference (IBR) to adopt the federal regulations in the CFR as of October 20, 2010. In the final regulations, however, North Carolina chose to retain the former IBR date of May 16, 2008. North Carolina also chose in the final regulations to incorporate the numerical PM2.5 increments directly into the text of 15A NCAC 02D .0530 rather than to incorporate the increments by reference. However, North Carolina's decision to IBR the provisions in the 2008 CFR rather than the provisions in the 2010 CFR meant that North Carolina did not adopt into its regulations the definitions of “major source baseline,” “minor source baseline,” and “baseline area” that EPA promulgated in the 2010 PSD PM2.5 rule. Rather, North Carolina adopted the definition of these terms as they appeared in the version of the CFR in effect as of May 16, 2008. Thus, the definition of “major source baseline date” incorporated into 15A NCAC 02D .0530 does not include the federally required PM2.5 major source baseline date of October 20, 2010, but instead states: “In the case of particulate matter and sulfur dioxide, January 6, 1975.” Likewise, the definition of “minor source baseline date” incorporated into 15A NCAC 02D .0530 does not include the federally required PM2.5 trigger date of October 20, 2011, but instead states: “In the case of particulate matter and sulfur dioxide, August 7, 1977.” It is EPA's understanding that North Carolina interprets the term “particulate matter” in these definitions to encompass PM2.5.

    Without the federally required definitions of “major source baseline date,” “minor source baseline date,” and “baseline area” set forth in the 2010 PSD PM2.5 Rule, North Carolina's PSD regulations do not require PSD sources to conduct the appropriate analyses demonstrating that emissions from proposed construction of major sources or modifications will not cause or contribute to air pollution beyond the PM2.5 increment. While a State has the option of demonstrating that it has alternative measures in its plan other than the PM2.5 increment requirements that satisfy the prevention of significant deterioration requirements under sections 166(c) and 166(d) of the CAA (see 40 CFR 51.166(c)(2)), North Carolina did not offer any such demonstration in connection with its September 5, 2013, SIP submittal. Therefore, EPA proposes to disapprove the portion of North Carolina's September 5, 2013, SIP submittal pertaining to adoption and implementation of the PM2.5 PSD increments on the basis that, taken as a whole, they are insufficient to satisfy the federal PM2.5 PSD increment requirements set forth in the 2010 PSD PM2.5 Rule. Specifically, EPA proposes to disapprove the changes to 15A NCAC 02D .0530, paragraphs (e), (q), and (v) that pertain to the PM2.5 increments.17 EPA notes that while the numerical PM2.5 increments at paragraphs (q) and (v) correctly reflect the numerical PM2.5 increments required by EPA's 2010 PSD PM2.5 Rule, EPA proposes to disapprove these provisions because North Carolina cannot properly apply the PM2.5 increments without adopting the associated definitions of “major source baseline date,” “minor source baseline date,” and “baseline area.”

    17 Paragraph (v) establishes the numerical PM2.5 increments. Paragraph (q) addresses the Class I PM2.5 variances. Paragraph (e) incorporates paragraph (v) by reference. EPA is proposing to disapprove 15A NCAC 02D .0530, paragraphs (e), (q), and (v) in part, rather than in their entirety, because the paragraphs also include previously approved PM10 increment requirements. Specifically, in addition to making the PM2.5-related changes to these paragraphs, North Carolina also revised 15A NCAC 02D .0530, paragraphs (e), (q), and (v), to directly incorporate the PM10 increments. Previously, North Carolina had incorporated the PM10 increments into 15A NCAC 02D .0530 by reference to the CFR. EPA is proposing to approve the PM10-related changes to paragraphs (e), (q), and (v).

    C. North Carolina's Miscellaneous SIP Submittal Changes Regarding the NSR Program

    In addition to providing SIP submittals to comply with the 2008 NSR PM2.5 Implementation Rule and 2010 PSD PM2.5 Rule, North Carolina provided administrative changes in the second of two May 16, 2011, SIP submittals (henceforth, the second May 16, 2011, SIP submittal) and in the September 5, 2013, SIP submittal, for the State's NSR regulations at 15A NCAC 02D .0530 (PSD) and 15A NCAC 02D .0531 (NNSR). First, North Carolina's second May 16, 2011, SIP submittal makes changes to clarify that BACT for PSD and LAER for NSR applies to all new natural gas-fired EGUs for which cost recovery is sought under the State's Clean Smokestacks Act (CSA). North Carolina's intended purpose for the rule clarification is to ensure that new-natural gas-fired EGUs that claim cost recovery pursuant to the CSA will not utilize the emission reductions to avoid BACT or LAER under the PSD or NNSR programs, respectively. EPA is proposing to approve this change to North Carolina's SIP for both rules 15A NCAC 02D .0530 and 15A NCAC 02D .0531.

    Second, North Carolina's second May 16, 2011, SIP submittal revises 15A NCAC 02D .0531(c) by removing out-of-date, pollutant-specific nonattainment area references (for ozone and carbon monoxide) in the State,18 and instead proposes to rely on the geographical nonattainment descriptions codified at 40 CFR 81.334 to promptly and accurately identify which areas in the State (for all NAAQS) are designated nonattainment, and thus are subject to NNSR permitting regulations. This change establishes these requirements for all future designated nonattainment areas. By relying on the automatic updates from changes to 40 CFR 81.334, this change would prevent any regulatory confusion and potential SIP gaps for identifying current nonattainment in the State subject to NNSR. EPA is proposing to approve this change as it is consistent with the CAA and EPA's requirements for NNSR.

    18 Currently, there are no nonattainment areas in the State, and thus the list of nonattainment areas approved in the current SIP is out of date.

    Third, North Carolina's second May 16, 2011, SIP submittal requests removal of language at 15A NCAC 02D .0531(n), which references text being deleted from 15A NCAC 02D .0531(c), as discussed above, and provides that certain permitting requirements for new major stationary sources or modifications of VOC and NOX emissions do not apply to sources that can demonstrate through urban airshed modeling that they would not contribute to a violation of the ozone NAAQS. The applicable time period for this provision is between the notification in the North Carolina Register of an ozone NAAQS violation in certain area(s) of the State and the designation of such area(s) as nonattainment in 40 CFR 81.334. However, because 15A NCAC 02D .0531(c) is being revised to rely solely on the nonattainment area designations codified at 40 CFR 81.334 and not on the State's notification of ozone NAAQS violations, the language at 15A NCAC 02D .0531(n) will be obsolete. EPA is proposing to approve this change.

    Fourth, North Carolina's second May 16, 2011, SIP submittal revises language at 15A NCAC 02D .0530(t) and 15A NCAC 02D .0531(m) regarding notification and administrative requirements related to visibility impacts to Class I Areas from proposed new modified sources. Specifically, North Carolina's revised regulations generally require that the state must notify the Federal Land Managers (FLM) no later than 60 days after receipt of a permit application submitted pursuant to 15A NCAC 02D .0530 (PSD) or 15A NCAC 02D .0531 (NNSR). This 60-day notice requirement is in addition to the pre-existing requirement in North Carolina's SIP-approved PSD and NNSR regulations that the state notify the FLM of any proposed new source or modification that may affect visibility in a Class I area and provide the FLM with “a copy of all information relevant to the permit application including an analysis provided by the source of the potential impact of the proposed source on visibility.” See 15A NCAC 02D .0530(t)(2) (PSD); 15A NCAC 02D .0531(m)(3) (NNSR).

    North Carolina's FLM notification provisions regarding proposed sources and modifications that may affect visibility in a Federal Class I area reflect federal regulatory requirements at 40 CFR 51.307(a)(1) governing visibility protection in state NSR programs.19 EPA notes that the proposed changes to North Carolina's FLM notification provisions are consistent with a letter EPA sent to North Carolina officials on April 16, 2013, which is included in the docket for this proposed rulemaking. In that letter, EPA generally concurred (with some exceptions) with North Carolina's expressed understanding of EPA's interpretation of the federal requirements governing the evaluation of the visibility impacts of new and modified sources on Class I areas under the PSD permitting program. Specifically, EPA affirmed that the process for determining whether a proposed new source or modification will cause an “adverse impact on visibility” in a Class I area is a two-step process. The first step requires an assessment of visibility impairment based on how visibility would change from what would have existed in the absence of any human-caused pollution. This analysis must be provided to the appropriate FLM(s) regardless of whether the Class I increment is exceeded. The second step in the analysis, the determination of whether the source will have an adverse impact on visibility, requires a more holistic evaluation of the various factors affecting visibility, potentially including current visibility conditions and whether the State is on track toward improving visibility. EPA concluded that because North Carolina's SIP-approved regulations at 15A NCAC 02D .0530(b) incorporate by reference the key federal regulatory provisions,20 North Carolina's FLM notification provisions are consistent with federal visibility requirements. North Carolina's proposed SIP revision would incorporate an additional FLM notification mechanism into North Carolina's NSR procedures (generally requiring FLM notification of any PSD or NNSR permit application regardless of whether the proposed source or modification may affect visibility in a Class I area) and therefore does not conflict with the federal FLM notification requirements described above.21 Accordingly, EPA is proposing to approve the changes to 15A NCAC 02D .0530(t) and 15A NCAC 02D .0531(m) provided in North Carolina's second May 16, 2011, SIP submittal.

    19 FLM notification is needed to enable the FLMs to fulfill their obligation under 50 CFR 51.166(p)(2) “to protect the air quality related values (including visibility) of [Class I lands] and to consider, in consultation with the Administrator, whether a proposed source or modification would have an adverse impact on such values.”

    20 When approving these provisions into North Carolina's SIP, EPA specifically noted that North Carolina's SIP incorporates the federal definitions of “adverse impact on visibility” and “visibility impairment.” 51 FR 2695 (January 21, 1986). North Carolina's NNSR regulations also incorporate by reference the federal regulatory definitions pertaining to visibility impact assessment. See 15A NCAC 02D .0531(a).

    21 Under previously approved North Carolina SIP provisions, North Carolina must notify the FLMs of any proposed new source or modification that may affect visibility in a Class I area and provide the FLMs with an analysis of the potential visibility impact. General FLM notification of all permit applications pursuant to the SIP revision proposed for approval in today's notice would not replace North Carolina's more specific, existing SIP obligations regarding FLM notification of proposed new or modified sources that may affect visibility in a Class I area.

    Lastly, North Carolina's September 5, 2013, SIP submittal includes several administrative and typographical changes for the State's NSR regulations at 15A NCAC 02D .0530 (PSD) and 15A NCAC 02D .0531 (NNSR). EPA is proposing to approve these changes to the extent that they do not relate to 2010 PSD PM2.5 Rule.22 Specifically, EPA is proposing to approve all of the changes to 15A NCAC 02D .0531 (NNSR) and all of the changes to 15A NCAC 02D .0530 (PSD) except the portions of paragraphs 15A NCAC 02D .0530(e), (q), and (v) that pertain to PM2.5 increments. As explained above, EPA is proposing to disapprove the portions of paragraphs 15A NCAC 02D .0530(e), (q), and (v) that pertain to PM2.5 increments because they are not associated with the correct major source baseline date.

    22 For example, aside from the PM2.5-related changes, North Carolina also revised 15A NCAC 02D .0530, paragraphs (e), (q), and (v), to directly incorporate the PM10 increments. Previously, North Carolina had incorporated the PM10 increments into 15A NCAC 02D .0530 by reference to the CFR. North Carolina's decision to instead incorporate the PM10 increments directly into state regulations does not change the PM10 increment requirements under North Carolina's PSD program and does not impact EPA's prior determination that North Carolina's SIP appropriately incorporates the federal PM10 increments. Therefore, EPA proposes to approve North Carolina's proposed PM10-related changes to paragraphs (e), (q), and (v) of 15A NCAC 02D .0530.

    In sum, EPA is proposing to approve into the SIP the versions of 15A NCAC 02D .0530 (PSD) and 15A NCAC 02D .0531 (NNSR) that became effective in the state on September 1, 2013, except the portions of paragraphs 15A NCAC 02D .0530(e), (q), and (v) that pertain to PM2.5 increments. EPA is proposing to disapprove North Carolina's September 5, 2013, submittal with respect to the PM2.5-increment-related portions of paragraphs 15A NCAC 02D .0530(e), (q), and (v).

    IV. What is EPA's analysis of the PSD elements for North Carolina's infrastructure SIP submittals?

    As mentioned above, as a result of this proposed rule to partially disapprove the PSD increment portion of North Carolina's September 5, 2013, SIP submittal, EPA is proposing to partially approve and partially disapprove the PSD elements of the North Carolina's infrastructure SIP submittals for the 2008 lead NAAQS (received on July 20, 2012); the 2008 8-hour ozone NAAQS (received on November 2, 2012); the 2010 SO2 NAAQS (received March 18, 2014); the 2010 NO2 NAAQS (received on August 23, 2013); and the 2012 PM2.5 NAAQS (received on December 4, 2015). Further, EPA is proposing to convert the conditional approval of the PSD elements for North Carolina's 1997 PM2.5 infrastructure submittal (dated April 1, 2008), and North Carolina's 2006 PM2.5 infrastructure submittal (dated September 21, 2009) to partial approvals and partial disapprovals. The background for infrastructure submittal requirements related to PSD is provided below, followed by a summary of EPA's analysis of the PSD elements for North Carolina's 1997 PM2.5, 2006 PM2.5, 2008 lead, 2008 8-hour ozone, 2010 NO2, 2010 SO2 and 2012 PM2.5 NAAQS infrastructure SIP submittals. In a technical support document for this proposed rulemaking, EPA provides more information on infrastructure requirements and how EPA reviews state submittals related to these requirements.

    By statute, SIPs meeting the requirements of sections 110(a)(1) and (2) of the CAA are to be submitted by states within three years after promulgation of a new or revised NAAQS to provide for the implementation, maintenance, and enforcement of the new or revised NAAQS. EPA has historically referred to these SIP submittals made for the purpose of satisfying the requirements of sections 110(a)(1) and 110(a)(2) as “infrastructure SIP” submittals. Sections 110(a)(1) and (2) require states to address basic SIP elements such as for monitoring, basic program requirements, and legal authority that are designed to assure attainment and maintenance of the newly established or revised NAAQS. More specifically, section 110(a)(1) provides the procedural and timing requirements for infrastructure SIPs. Section 110(a)(2) lists specific elements that states must meet for the infrastructure SIP requirements related to a newly established or revised NAAQS. The contents of an infrastructure SIP submittal may vary depending upon the data and analytical tools available to the state, as well as the provisions already contained in the state's implementation plan at the time in which the state develops and submits the submittal for a new or revised NAAQS.

    A. PSD Elements for Infrastructure Submittals for the 2008 Lead, 2008 8-Hour Ozone, 2010 NO2, 2010 SO2 and 2012 PM2.5 NAAQS

    The PSD elements for infrastructure requirements are contained in section 110(a)(2)(C), 110(a)(2)(D)(i)(II) (also known as prong 3), and 110(a)(2)(J). For the remainder of this proposed rulemaking, EPA's intent in referring to “PSD elements” is to address the PSD requirements in sections 110(a)(2)(C), 110(a)(2)(D)(i)(II) (also known as prong 3), and 110(a)(2)(J). More detail regarding the aforementioned 110(a)(2) requirements related to PSD is provided below.

    Section 110(a)(2)(C) has three components that must be addressed in infrastructure SIP submittals: Enforcement, state-wide regulation of new and modified minor sources and minor modifications of major sources; and PSD permitting of new major sources and major modifications in areas designated attainment or unclassifiable as required by CAA title I part C (i.e., the major source PSD program). With regard to section 110(a)(2)(C), this proposed action only addresses North Carolina's infrastructure SIP submittals with respect to the major source PSD program.

    Section 110(a)(2)(D)(i) has two components; 110(a)(2)(D)(i)(I) and 110(a)(2)(D)(i)(II). Each of these components has two subparts resulting in four distinct components, commonly referred to as “prongs,” that must be addressed in infrastructure SIP submittals. The first two prongs, which are codified in section 110(a)(2)(D)(i)(I), are provisions that prohibit any source or other type of emissions activity in one state from contributing significantly to nonattainment of the NAAQS in another state (“prong 1”), and interfering with maintenance of the NAAQS in another state (“prong 2”). The third and fourth prongs, which are codified in section 110(a)(2)(D)(i)(II), are provisions that prohibit emissions activity in one state from interfering with measures required to prevent significant deterioration of air quality in another state (“prong 3”), or to protect visibility in another state (“prong 4”). With regard to section 110(a)(2)(D)(i), this proposed action only addresses North Carolina's infrastructure SIP submittals for prong 3.

    Section 110(a)(2)(J) has four components that must be addressed in infrastructure SIP submittals: (1) consultation with government officials, (2) public notification, (3) PSD, and (4) visibility protection. With regard to section 110(a)(2)(J), today's proposed action only addresses North Carolina's infrastructure SIP submittals for PSD.

    Regarding the PSD elements of sections 110(a)(2)(C) and (J), EPA interprets the CAA to require each state to make, for each new or revised NAAQS, an infrastructure SIP submittal that demonstrates that the state has a complete PSD permitting program meeting the current requirements for all regulated NSR pollutants. The requirements of the PSD element of section 110(a)(2)(D)(i)(II) (also known as prong 3) may also be satisfied by demonstrating that the air agency has a complete PSD permitting program correctly addressing all regulated NSR pollutants.

    As described in EPA's September 13, 2013, guidance,23 an infrastructure SIP submittal should demonstrate that one or more air agencies has the authority to implement a comprehensive PSD permit program under CAA title I part C, for all PSD-subject sources located in areas that are designated attainment or unclassifiable for one or more NAAQS. EPA interprets the PSD elements to require that a state's infrastructure SIP submission for a particular NAAQS demonstrate that the state has a complete PSD permitting program in place covering the structural PSD requirements for all regulated NSR pollutants. A state's PSD permitting program is complete for the PSD elements if EPA has already approved or is simultaneously approving the state's SIP with respect to all structural PSD requirements that are due under the EPA regulations or the CAA on or before the date of the EPA's proposed action on the infrastructure SIP submission. EPA is proposing to partially approve the PSD elements of North Carolina's infrastructure SIP submittals for the 2008 lead, 2008 8-hour ozone, 2010 NO2, 2010 SO2, and 2012 PM2.5 NAAQS and to disapprove these submittals with respect to the PM2.5 increment requirements of 2010 PSD PM2.5 Rule.

    23 EPA's September 13, 2013, guidance, titled “Guidance on Infrastructure State Implementation Plan (SIP) Elements under Clean Air Act Sections 110(a)(1) and 110(a),” provides advice on the development of infrastructure SIPs for the 2008 ozone NAAQS, the 2010 nitrogen dioxide NAAQS, the 2010 sulfur dioxide NAAQS, and the 2012 PM2.5 NAAQS, as well as infrastructure SIPs for new or revised NAAQS promulgated in the future.

    1. 2008 Lead NAAQS

    On October 15, 2008, EPA revised the primary and secondary NAAQS for lead to 0.15 µg/m3. 73 FR 66964 (November 12, 2008). States were required to submit infrastructure SIP submittals for the 2008 8-hour lead NAAQS to EPA no later than October 15, 2011. For the 2008 lead NAAQS, this proposed action only addresses the PSD elements of North Carolina's infrastructure SIP submittals received on July 20, 2012. As explained above, EPA is proposing to disapprove North Carolina's September 5, 2013, SIP revision related to the PM2.5 increment requirements. Consequently, North Carolina's SIP does not contain a fully approvable PSD program covering the structural PSD requirements for all NAAQS. EPA is thus proposing to approve in part the PSD elements for North Carolina's July 20, 2012, infrastructure submittal for the 2008 lead NAAQS, and disapprove this submittal with respect to the PM2.5 increment requirements of 2010 PSD PM2.5 Rule. EPA took action on other portions of North Carolina's July 20, 2012, SIP submittal in separate rulemakings. See 80 FR 12343 (March 9, 2015); 80 FR 67645 (November 3, 2015).

    2. 2008 8-Hour Ozone NAAQS

    On March 12, 2008, EPA revised the 8-hour ozone NAAQS to 0.075 parts per million. 73 FR 16436 (March 27, 2008). States were required to submit infrastructure SIP submittals for the 2008 8-hour ozone NAAQS to EPA no later than March 12, 2011. For the 2008 8-hour ozone NAAQS, this proposed action only addresses the PSD elements of North Carolina's infrastructure SIP submittal received on November 2, 2012. As explained above, EPA is proposing to disapprove North Carolina's September 5, 2013, SIP revision related to the PM2.5 increment requirements. Consequently, North Carolina's SIP does not contain a fully approvable PSD program covering the structural PSD requirements for all NAAQS. EPA is thus proposing to approve in part the PSD elements for North Carolina's November 2, 2012, infrastructure submittal for the 2008 8-hour ozone NAAQS, and disapprove this submittal with respect to the PM2.5 increment requirements of 2010 PSD PM2.5 Rule. EPA took action on portions of North Carolina's November 2, 2012, SIP submittal in separate rulemakings. See 80 FR 67645 (November 3, 2015); 80 FR 68453 (November 5, 2015).

    3. 2010 NO2 NAAQS

    On January 22, 2010, EPA established a new 1-hour primary NAAQS for NO2 at a level of 100 parts per billion (ppb), based on a 3-year average of the 98th percentile of the yearly distribution of 1-hour daily maximum concentrations. See 75 FR 6474 (February 9, 2010). States were required to submit infrastructure SIP submittals for the 2010 1-hour NO2 NAAQS to EPA no later than January 22, 2013. For the 2010 1-hour NO2 NAAQS, this proposed action only addresses the PSD elements of North Carolina's infrastructure SIP submittal received on August 23, 2013. As explained above, EPA is proposing to disapprove North Carolina's September 5, 2013, SIP revision related to the PM2.5 increment requirements. Consequently, North Carolina's SIP does not contain a fully approvable PSD program covering the structural PSD requirements for all NAAQS. EPA is thus proposing to approve in part the PSD elements for North Carolina's August 23, 2013, infrastructure submittal for the 2010 1-hour NO2 NAAQS, and disapprove this submittal with respect to the PM2.5 increment requirements of 2010 PSD PM2.5 Rule. EPA will take action on the remainder of North Carolina's August 23, 2013 SIP submittal through a separate rulemaking.

    4. 2010 SO2 NAAQS

    On June 2, 2010, EPA revised the primary SO2 NAAQS to an hourly standard of 75 ppb based on a 3-year average of the annual 99th percentile of 1-hour daily maximum concentrations. See 75 FR 35520 (June 22, 2010). States were required to submit infrastructure SIP submittals for the 2010 1-hour SO2 NAAQS to EPA no later than June 2, 2013. For the 2010 1-hour SO2 NAAQS, this proposed action only addresses the PSD elements of North Carolina's infrastructure SIP submittal received on March 18, 2014. As explained above, EPA is proposing to disapprove North Carolina's September 5, 2013, SIP revision related to the PM2.5 increment requirements. Consequently, North Carolina's SIP does not contain a fully approvable PSD program covering the structural PSD requirements for all NAAQS. EPA is thus proposing to approve in part the PSD elements for North Carolina's March 18, 2014, infrastructure submittal for the 2010 1-hour SO2 NAAQS, and disapprove this submittal with respect to the PM2.5 increment requirements of 2010 PSD PM2.5 Rule. EPA will take action on the remainder of North Carolina's March 18, 2014, SIP submittal through a separate rulemaking.

    5. 2012 PM2.5 NAAQS

    On December 14, 2012, EPA revised the primary annual PM2.5 NAAQS to 12 μg/m3. See 78 FR 3086 (January 15, 2013). An area will meet the standard if the three-year average of its annual average PM2.5 concentration (at each monitoring site in the area) is less than or equal to 12.0 μg/m3. States were required to submit infrastructure SIP submittals for the 2012 PM2.5 NAAQS to EPA no later than December 14, 2015. For the 2012 PM2.5 NAAQS, this proposed action only addresses the PSD elements of North Carolina's infrastructure SIP submittal received on December 4, 2015. As explained above, EPA is proposing to disapprove North Carolina's September 5, 2013, SIP revision related to the PM2.5 increment requirements. Consequently, North Carolina's SIP does not contain a fully approvable PSD program covering the structural PSD requirements for all NAAQS. EPA is thus proposing to approve in part the PSD elements for North Carolina's December 4, 2015, infrastructure submittal for the 2012 PM2.5 NAAQS, and disapprove this submittal with respect to the PM2.5 increment requirements of 2010 PSD PM2.5 Rule. EPA will take action on the remainder of North Carolina's December 4, 2015, SIP submittal through a separate rulemaking.

    B. PSD Elements for Infrastructure Submittals for the 1997 and 2006 PM2.5 NAAQS

    On October 16, 2012, and March 26, 2013, EPA conditionally approved the PSD elements of section 110(a)(2)(C) and (J) of North Carolina's SIP submittals for the 1997 PM2.5 and 2006 PM2.5 NAAQS, dated April 1, 2008, and September 21, 2009, respectively. See 77 FR 63234 and 78 FR 18241. On April 1, 2008, and September 21, 2009, North Carolina submitted infrastructure SIP submittals for the 1997 PM2.5 and 2006 PM2.5 NAAQS, respectively. The conditional approvals were granted on the condition that North Carolina would submit complete SIP revisions to address deficiencies in relation to the State's NSR regulations within one year of publication of the final conditional approvals.24

    24 In North Carolina's July 10, 2012, request for conditional approval of the State's infrastructure submittal for the 2006 PM2.5 NAAQS, the State committed to revising its rules to reflect the 40 tons per year significance level for NOX as a PM2.5 precursor and to adopt the 2006 PM2.5 PSD increments.

    EPA noted in the October 16, 2012, final rulemaking that “[i]f North Carolina fails to submit these revisions by October 16, 2013, this conditional approval will automatically become a disapproval on that date and EPA will issue a finding of disapproval. EPA is not required to propose the finding of disapproval. If the conditional approval is converted to a disapproval, the final disapproval triggers the Federal Implementation Plan requirement under section 110(c). However, if the State meets its commitment within the applicable timeframe, the conditionally approved submittal will remain a part of the SIP until EPA takes final action approving or disapproving the new submittal. If EPA disapproves the new submittal, the conditionally approved submittal will also be disapproved at that time.” EPA reiterated this condition in the March 26, 2013, final rulemaking.

    North Carolina provided its submittal purporting to correct the deficiencies with the State's NSR program on September 5, 2013. As mentioned in EPA's October 16, 2012, and March 26, 2013, final rulemakings, since North Carolina met the deadline to provide the corrective SIP revision, the conditional approval remains in effect until EPA concludes its action on the corrective SIP revision. This proposed action is to disapprove North Carolina's September 5, 2013, SIP submittal (i.e., the corrective SIP) in relation to the baseline for the PM2.5 PSD increment—a critical component for the State's NSR program. Thus, EPA is proposing to convert EPA's previous conditional approval of these PSD elements of North Carolina's 1997 PM2.5 and 2006 PM2.5 NAAQS infrastructure SIP submittals to a partial approval and a partial disapproval for the PM2.5 increment component.

    V. Incorporation by Reference

    In this rulemaking, EPA is proposing to include in a final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is proposing to incorporate by reference the portions of North Carolina's regulations 15A NCAC 02D .0530 and 15A NCAC 02D .0531, entitled “Prevention of Significant Deterioration” and “Sources in Nonattainment Areas,” respectively, that EPA is proposing to approve herein. EPA is not proposing to incorporate provisions for which the Agency is proposing to disapprove. EPA has made, and will continue to make, these documents generally available electronically through www.regulations.gov and/or in hard copy at the EPA Region 4 office (see the ADDRESSES section of this preamble for more information).

    VI. Proposed Actions

    EPA is proposing to approve, in part, and disapprove, in part, changes to the North Carolina SIP, provided by the NC DEQ, to EPA on May 16, 2011, (two submittals) and September 5, 2013. These changes modify North Carolina's NSR—PSD and NNSR—permitting regulations codified at 15A 02D .0530—Prevention of Significant Deterioration and 15A NCAC 02D.0531—Sources in Nonattainment Areas, and include the adoption of some federal requirements respecting implementation of the PM2.5 NAAQS through the NSR permitting program. Specifically, EPA is proposing to approve the State's changes as they relate to the requirements to comply with EPA's 2008 PM2.5 NSR Rule and the State's miscellaneous changes as described in Section II.C of this proposed rulemaking. EPA is proposing to disapprove North Carolina's September 5, 2013, SIP submittal as it relates to the requirements to comply with EPA's 2010 PSD PM2.5 Rule. If EPA finalizes all of the actions proposed in today's notice, the versions of 15A NCAC 02D .0530 (PSD) and 15A NCAC 02D .0531 (NNSR) that became effective in the state on September 1, 2013, will be incorporated into North Carolina's SIP, with the exception of the portions of paragraphs 15A NCAC 02D .0530(e), (q), and (v) that pertain to PM2.5 increments. EPA's proposed disapproval of North Carolina's September 5, 2013, SIP submittal as it relates to the requirements to comply with EPA's 2010 PSD PM2.5 Rule, if finalized, will trigger the requirement under section 110(c) for EPA to promulgate a FIP no later than two years from the date of the disapproval unless the State corrects the deficiency through a SIP revision and EPA approves the SIP revision before EPA promulgates such a FIP.

    As a result of the proposed disapproval of a portion of the State's NSR requirements, EPA is proposing to disapprove the PSD elements of the North Carolina's infrastructure SIP submittals for the 2008 lead, 2008 8-hour ozone, 2010 SO2, 2010 NO2 and the 2012 PM2.5 NAAQS; and is proposing to convert the Agency's previous conditional approvals of the PSD elements of North Carolina's infrastructure SIP submittals for the 1997 Annual PM2.5 and 2006 24-hour PM2.5 NAAQS to disapprovals. North Carolina did not submit these infrastructure SIPs to meet requirements for Part D of the CAA or a SIP call; therefore, if EPA takes final action to disapprove the PSD portions of these submittals, no sanctions will be triggered. However, if EPA finalizes this proposed disapproval action, that final action will trigger the requirement under section 110(c) for EPA to promulgate a FIP no later than two years from the date of the disapproval unless the State corrects the deficiency through a SIP revision and EPA approves the SIP revision before EPA promulgates such a FIP.

    VII. Statutory and Executive Order Reviews

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

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

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

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

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

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

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

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

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

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

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

    List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides.

    Authority:

    42 U.S.C. 7401 et seq.

    Dated: April 29, 2016. Heather McTeer Toney, Regional Administrator, Region 4.
    [FR Doc. 2016-10894 Filed 5-9-16; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R08-OAR-2016-0107; FRL-9946-18-Region 8] Approval and Promulgation of Air Quality Implementation Plans; Interstate Transport for Utah AGENCY:

    Environmental Protection Agency.

    ACTION:

    Proposed rule.

    SUMMARY:

    The Environmental Protection Agency (EPA) is proposing action on the portions of two submissions from the State of Utah that are intended to demonstrate that the State Implementation Plan (SIP) meets certain interstate transport requirements of the Clean Air Act (Act or CAA). These submissions address the 2008 ozone National Ambient Air Quality Standards (NAAQS) and 2008 lead (Pb) NAAQS. Specifically, the EPA is proposing to approve interstate transport prongs 1 and 2 for the 2008 Pb NAAQS, and proposing to disapprove prongs 1 and 2 for the 2008 ozone NAAQS.

    DATES:

    Comments must be received on or before June 9, 2016.

    ADDRESSES:

    Submit your comments, identified by Docket ID No. EPA-R08-OAR-2016-0107 at http://www.regulations.gov. Follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from regulations.gov. The EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission (i.e., on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit http://www2.epa.gov/dockets/commenting-epa-dockets.

    FOR FURTHER INFORMATION CONTACT:

    Adam Clark, Air Program, U.S. Environmental Protection Agency (EPA), Region 8, Mail Code 8P-AR, 1595 Wynkoop Street, Denver, Colorado 80202-1129. (303) 312-7104, [email protected]

    SUPPLEMENTARY INFORMATION: I. General Information What should I consider as I prepare my comments for EPA?

    1. Submitting Confidential Business Information (CBI). Do not submit CBI to EPA through http://www.regulations.gov or email. Clearly mark the part or all of the information that you claim to be CBI. For CBI information on a disk or CD ROM that you mail to EPA, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

    2. Tips for preparing your comments. When submitting comments, remember to:

    • Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register volume, date, and page number);

    • Follow directions and organize your comments;

    • Explain why you agree or disagree;

    • Suggest alternatives and substitute language for your requested changes;

    • Describe any assumptions and provide any technical information and/or data that you used;

    • If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced;

    • Provide specific examples to illustrate your concerns, and suggest alternatives;

    • Explain your views as clearly as possible, avoiding the use of profanity or personal threats; and

    • Make sure to submit your comments by the comment period deadline identified.

    II. Background

    On March 12, 2008, EPA revised the levels of the primary and secondary 8-hour ozone standards to 0.075 parts per million (ppm) (73 FR 16436, March 27, 2008). On October 15, 2008, EPA revised the level of the primary and secondary Pb NAAQS to 0.15 μg/m3 (73 FR 66964, Nov. 12, 2008).

    Pursuant to section 110(a)(1) of the CAA, states are required to submit SIPs meeting the applicable requirements of section 110(a)(2) within three years after promulgation of a new or revised NAAQS or within such shorter period as EPA may prescribe. Section 110(a)(2) requires states to address structural SIP elements such as requirements for monitoring, basic program requirements, and legal authority that are designed to provide for implementation, maintenance, and enforcement of the NAAQS. The SIP submission required by these provisions is referred to as the “infrastructure” SIP. Section 110(a) imposes the obligation upon states to make a SIP submission to the EPA for a new or revised NAAQS, but the contents of individual state submissions may vary depending upon the facts and circumstances.

    CAA Section 110(a)(2)(D)(i)(I) requires SIPs to include provisions prohibiting any source or other type of emissions activity in one state from emitting any air pollutant in amounts that will contribute significantly to nonattainment, or interfere with maintenance, of the NAAQS in another state (known as the “good neighbor” provision). The two provisions of this section are referred to as prong 1 (significant contribution to nonattainment) and prong 2 (interfere with maintenance). Section 110(a)(2)(D)(i)(II) requires SIPs to contain adequate provisions to prohibit emissions that will interfere with measures required to be included in the applicable implementation plan for any other state under part C to prevent significant deterioration of air quality (prong 3) or to protect visibility (prong 4).

    In this action, the EPA is only addressing prongs 1 and 2 of CAA section 110(a)(2)(D)(i) with regard to the 2008 ozone and 2008 Pb NAAQS.

    III. State Submissions and EPA's Assessment

    The Utah Department of Environmental Quality (Department or UDEQ) submitted a certification of Utah's infrastructure SIP for the 2008 Pb NAAQS on January 19, 2012, a certification of Utah's infrastructure SIP for the 2008 ozone NAAQS on January 31, 2013, and a supplement regarding CAA section 110(a)(2)(D)(i)(I) with respect to the 2008 ozone NAAQS on December 22, 2015.1

    1 The 110(a)(2)(D)(i)(I) 2008 ozone supplement was submitted as part of Utah's infrastructure SIP certification for the 2012 PM2.5 NAAQS.

    Each of these infrastructure certifications addressed all of the infrastructure elements including element (D).2 In this action, we are only addressing element (D) prongs 1 and 2 from the 2008 Pb certification, 2008 ozone certification, and the December 22, 2015 supplement which addressed prongs 1 and 2 for the 2008 ozone NAAQS. All other infrastructure elements from these certifications are being addressed in separate actions.

    2 For discussion of other infrastructure elements, see EPA's “Guidance on Infrastructure State Implementation Plan (SIP) Elements under Clean Air Act Sections 110(a)(1) and (2),” September 13, 2013.

    2008 Ozone NAAQS

    In its January 31, 2013 2008 ozone infrastructure submittal, UDEQ addressed 110(a)(2)(D)(i)(I) prongs 1 and 2 by citing EPA Administrator Gina McCarthy's November 19, 2012 memo 3 which outlined the EPA's intention to abide by the decision of the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) in EME Homer City Generation, L.P. v. E.P.A., 696 F.3d 7 (D.C. Cir. 2012)). The EME Homer City decision addressed the Cross-State Air Pollution Rule (CSAPR) promulgated by the EPA to address the interstate transport requirements under section 110(a)(2)(D)(i)(I) with respect to the 1997 ozone NAAQS, the 1997 fine particulate matter (PM2.5) NAAQS, and the 2006 PM2.5 NAAQS. Among other things, the D.C. Circuit held that states did not have an obligation to submit SIPs addressing section 110(a)(2)(D)(i)(I) interstate transport requirements as to any NAAQS until the EPA first quantified each state's emissions reduction obligation. Id. at 30-31. In its submittal, the Department noted that the EPA had not quantified Utah's transport obligation as to the 2008 ozone NAAQS and that Utah's infrastructure SIP was therefore adequate with regard to prongs 1 and 2 of CAA section 110(a)(2)(D)(i)(I).

    3 Memo from Gina McCarthy to Air Division Directors, Regions 1-10 re: Next Steps for Pending Redesignation Requests and State Implementation Plan Actions Affected by the Recent Court Decision Vacating the 2011 Cross-State Air Pollution Rule (Nov. 19, 2012).

    Subsequent to the UDEQ submission, on April 29, 2014, the U.S. Supreme Court reversed and remanded the D.C. Circuit's EME Homer City decision on CSAPR and held, among other things, that under the plain language of the CAA, states must submit SIPs addressing interstate transport requirements of CAA section 110(a)(2)(D)(i)(I) within three years of the promulgation of a new or revised NAAQS, regardless of whether EPA first provides guidance, technical data or rulemaking to quantify the state's obligation. EPA v. EME Homer City Generation, L.P., 134 S. Ct. 1584, 1601 (2014). UDEQ therefore additionally addressed 110(a)(2)(D)(i) prongs 1 and 2 for the 2008 ozone NAAQS as part of its December 22, 2015 infrastructure submittal that otherwise addressed the 2012 PM2.5 NAAQS. As stated, the EPA is proposing action on both the January 31, 2013 and December 22, 2015 certifications with regard to prongs 1 and 2 for the 2008 ozone NAAQS.

    In its subsequent December 22, 2015 infrastructure submittal, UDEQ acknowledged the changed legal landscape, and asserted that emissions from the State did not significantly contribute to nonattainment or interfere with maintenance of the 2008 ozone NAAQS in any other state. The Department cited air quality modeling assessing interstate transport of ozone that was released by the EPA on August 4, 2015, and explained that it did not consider the modeled contribution levels to nonattainment and maintenance receptors in the Denver, Colorado area and in southern California to be significant.

    As noted by UDEQ, the EPA shared technical information with states to assist them with meeting section 110(a)(2)(D)(i)(I) requirements for the 2008 ozone NAAQS. The EPA developed this technical information following the same approach used to evaluate interstate contribution in CSAPR in order to support the recently proposed Cross-State Air Pollution Rule Update for the 2008 Ozone NAAQS, 80 FR 75706 (Dec. 3, 2015) (“CSAPR Update Rule”). In CSAPR, the EPA used detailed air quality analyses to determine whether an eastern state's contribution to downwind air quality problems was at or above specific thresholds. If a state's contribution did not exceed the specified air quality threshold, the state was not considered “linked” to identified downwind nonattainment and maintenance receptors and was therefore not considered to significantly contribute or interfere with maintenance of the standard in those downwind areas. If a state exceeded that threshold, the state's emissions were further evaluated, taking into account both air quality and cost considerations, to determine what, if any, emissions reductions might be necessary. For the reasons stated below, we believe it is appropriate to use the same approach the EPA used in CSAPR to establish an air quality threshold for the evaluation of interstate transport requirements for the 2008 ozone standard.

    On August 4, 2015, the EPA issued a Notice of Data Availability (NODA) containing air quality modeling data that projects interstate transport contributions for the year 2017 for the 2008 8-hour ozone NAAQS.4 The modeling data released in the NODA was also used to support the proposed CSAPR Update Rule and is also cited by UDEQ in its updated 2008 ozone submittal. Since the moderate area attainment date for the 2008 ozone standard is July 11, 2018, states will use 2015 through 2017 ambient ozone data in order to demonstrate attainment by this attainment deadline—meaning the 2017 ozone season will be the last full season from which data can be used to determine attainment of the NAAQS. The D.C. Circuit's decision in North Carolina v. EPA requires that the EPA coordinate interstate transport compliance deadlines with downwind nonattainment deadlines. As noted in EPA's proposed CSAPR Update Rule, the Agency interprets the North Carolina decision to compel EPA to identify upwind reductions and implementation programs to achieve these reductions, to the extent possible, for the 2017 ozone season. Therefore, the EPA determined that 2017 is an appropriate future year to model for the purpose of examining interstate transport for the 2008 8-hour ozone NAAQS. The Agency used photochemical air quality modeling to project ozone concentrations at air quality monitoring sites to 2017 and estimated state-by-state ozone contributions to those 2017 concentrations. This modeling used the Comprehensive Air Quality Model with Extensions (CAMx version 6.11) to model the 2011 base year, and the 2017 future base case emissions scenarios to identify projected nonattainment and maintenance sites with respect to the 2008 8-hour ozone NAAQS in 2017. The EPA used nationwide state-level ozone source apportionment modeling (CAMx Ozone Source Apportionment Technology/Anthropogenic Precursor Culpability Analysis technique) to quantify the contribution of 2017 base case nitrogen oxides (NOX) and volatile organic compounds (VOC) emissions from all sources in each state to the 2017 projected receptors. The air quality model runs were performed for a modeling domain that covers the 48 contiguous United States and adjacent portions of Canada and Mexico.

    4 Notice of Availability of the Environmental Protection Agency's Updated Ozone Transport Modeling Data for the 2008 Ozone National Ambient Air Quality Standard (NAAQS), 80 FR 46271 (August 4, 2015).

    The EPA used the modeling released in the NODA to support its proposed CSAPR Update rulemaking (80 FR 75706, Dec. 3, 2015). As discussed in our CSAPR Update Rule proposal for the 2008 ozone NAAQS, the air quality modeling (1) identified locations in the U.S. where the EPA anticipates nonattainment or maintenance issues in 2017 for the 2008 ozone NAAQS (these are identified as nonattainment and maintenance receptors), and (2) quantified the projected contributions from emissions from upwind states to downwind ozone concentrations at the receptors in 2017. Id. at 75720-30. Consistent with the framework established in CSAPR, the EPA proposed to use a threshold of one percent of the 2008 ozone NAAQS of 75 ppb (0.75 ppb) to identify linkages between upwind states and the downwind nonattainment and maintenance receptors. In the proposed CSAPR Update Rule, the EPA considered eastern states 5 whose contributions to a specific receptor meet or exceed the threshold “linked” to that receptor and we analyzed these states further to determine if emissions reductions might be required from each state to address the downwind air quality problem. Id. at 75728.

    5 For purposes of the proposed CSAPR Update Rule, “eastern” states refer to all contiguous states east of the Rocky Mountains, specifically not including: Montana, Wyoming, Colorado and New Mexico.

    As to western states, the EPA noted that the 2017 implementation timeframe constrained the opportunity to evaluate the applicability of these criteria to such states and whether additional criteria should be considered in certain circumstances as to western states. Therefore, the EPA proposed to focus the rulemaking on the eastern states while requesting comment on whether to include western states. Id. at 75709. Consistent with our statements in the proposed CSAPR Update Rule, the EPA intends to address western states, like Utah, on a case-by-case basis. The modeling data released in the NODA on August 4, 2015, are the most up-to-date information the EPA has developed to inform our analysis of upwind state linkages to downwind air quality problems. We intend to use these data to help evaluate the state's submittals and any potential emission reduction obligations as to the 2008 ozone standard under section 110(a)(2)(D)(i)(I).

    As noted earlier, in CSAPR the EPA proposed an air quality threshold of one percent of the applicable NAAQS and requested comment on whether one percent was appropriate.6 The EPA evaluated the comments received and ultimately determined that one percent was an appropriately low threshold because there were important, even if relatively small, contributions to identified nonattainment and maintenance receptors from multiple upwind states. In response to commenters who advocated a higher or lower threshold than one percent, the EPA compiled the contribution modeling results for CSAPR to analyze the impact of different possible thresholds for the eastern United States. The EPA's analysis showed that the one percent threshold captures a high percentage of the total pollution transport affecting downwind states, while the use of higher thresholds would exclude increasingly larger percentages of total transport. For example, at a five percent threshold, the majority of interstate pollution transport affecting downwind receptors would be excluded.7 In addition, the EPA determined that it was important to use a relatively lower one percent threshold because there are adverse health impacts associated with ambient ozone even at low levels.8 The EPA also determined that a lower threshold such as 0.5 percent would result in relatively modest increases in the overall percentages of fine particulate matter and ozone pollution transport captured relative to the amounts captured at the one percent level. The EPA determined that a “0.5 percent threshold could lead to emission reduction responsibilities in additional states that individually have a very small impact on those receptors — an indicator that emission controls in those states are likely to have a smaller air quality impact at the downwind receptor. We are not convinced that selecting a threshold below one percent is necessary or desirable.” 9

    6 CSAPR proposal, 75 FR 45210, 45237 (August 2, 2010).

    7See also Air Quality Modeling Final Rule Technical Support Document, Appendix F, Analysis of Contribution Thresholds, Docket ID # EPA-hq-oar-2009-0491.

    8 CSAPR, 76 FR 48208, 48236-37 (August 8, 2011).

    9Id.

    In the final CSAPR, the EPA determined that one percent was a reasonable choice considering the combined downwind impact of multiple upwind states in the eastern United States, the health effects of low levels of fine particulate matter and ozone pollution, and the EPA's previous use of a one percent threshold in CAIR. The EPA used a single “bright line” air quality threshold equal to one percent of the 1997 8-hour ozone standard, or 0.08 ppm.10 The projected contribution from each state was averaged over multiple days with projected high modeled ozone, and then compared to the one percent threshold. We concluded that this approach for setting and applying the air quality threshold for ozone was appropriate because it provided a robust metric, was consistent with the approach for fine particulate matter used in CSAPR, and because it took into account, and would be applicable to, any future ozone standards below 0.08 ppm.11 The EPA has subsequently proposed to use the same threshold for purposes of evaluating interstate transport with respect to the 2008 ozone standard in eastern states in the CSAPR Update Rule.

    10Id.

    11Id.

    The EPA's recent air quality modeling shows that multiple upwind states collectively contributed to projected downwind nonattainment or maintenance receptors in Colorado. In particular, the EPA found that the total upwind states' contribution to ozone concentrations (from linked and unlinked states) to identified downwind air quality problems in Colorado is about 11 percent.12 Thus, the EPA has found that the collective contribution of emissions from upwind states represent a large portion of the ozone concentrations at projected nonattainment and maintenance receptors in Colorado. As noted, the Agency has consistently found that the one percent threshold is appropriate for identifying interstate transport linkages for states collectively contributing to downwind ozone nonattainment or maintenance problems because that threshold captures a high percentage of the total pollution transport affecting downwind receptors. The EPA believes contribution from an individual state equal to or above one percent of the NAAQS could be considered significant where the collective contribution of emissions from one or more upwind states is responsible for a considerable portion of the downwind air quality problem regardless of where the receptor is geographically located. In this case, five of the states contributing to those identified receptors, including Utah, contribute emissions greater than or equal to one percent of the 2008 ozone NAAQS. Given this data, the EPA is proposing to find that the NODA modeling and its use of the one percent threshold are also appropriate to determine linkages from Utah to downwind nonattainment and maintenance receptors in Colorado with respect to the 2008 ozone NAAQS.

    12 The stated 11% is based on the highest upwind contributions to nonattainment or maintenance receptors in each area. All nonattainment and maintenance receptors had upwind contributions at 9% or more.

    Tables 1 and 2 summarize the air quality modeling results from the August 4, 2015 NODA modeling. The modeling indicates that Utah contributes emissions above the one percent threshold of 0.75 ppb with respect to four receptors in the Denver, Colorado area. These tables show the monitors in the Denver area to which Utah emissions are modeled to contribute above one percent of the 2008 ozone NAAQS.13

    13 The NODA modeling had taken into account the shutdown of the Carbon Power Plant, which was shut down in April 2015. See Carbon Permit Revocation Letter, in the docket for this action.

    Table 1—Maintenance Receptors With Utah Contribution Modeled Above 1% Monitor I.D. State County Utah modeled
  • contribution
  • (ppb)
  • 80050002 Colorado Arapahoe 1.66 80590011 Colorado Jefferson 1.34
    Table 2—Nonattainment Receptors With Utah Contribution Modeled Above 1% Monitor I.D. State County Utah modeled
  • contribution
  • (ppb)
  • 80350004 Colorado Douglas 1.59 80590006 Colorado Jefferson 0.87

    Utah's largest contribution to any projected downwind nonattainment site is 1.59 ppb, and its largest contribution to any projected downwind maintenance-only site is 1.66 ppb. Since the NODA modeling indicates that the contributions from Utah are above the one percent threshold of 0.75 ppb with respect to nonattainment and maintenance receptors in the Denver, Colorado area, the EPA is proposing to determine that Utah significantly contributes to nonattainment and interferences with maintenance of the 2008 ozone NAAQS for the Denver, Colorado area.

    UDEQ states that, despite the modeling results, emissions from the State do not significantly contribute to nonattainment in the Denver area, but the State does not provide any technical analysis to explain why it believes the modeling results are inaccurate or why, if the results are accurate, the State's level of contribution to Denver-area receptors should be deemed insignificant. Moreover, UDEQ does not address the State's modeled contributions to projected downwind maintenance receptors identified by the EPA. Rather, UDEQ cites various SIP-approved area source rules which it asserts will result in additional reductions in ozone precursor emissions as further evidence that emissions from the State do not contribute significantly to nonattainment of the 2008 ozone NAAQS in any other state. The Department listed several VOC emissions limitations on various industries submitted as part of the State's greater PM2.5 control strategy which were recently approved by EPA.14 UDEQ also pointed to a rule prohibiting the sale of water heaters that do not comply with low NOX emission rates which will go into effect on November 1, 2017. UDEQ argued that because NOX and VOC are precursors to ozone, these emission limitations would further reduce ozone transport to nonattainment and maintenance receptors in both Colorado and California, but failed to quantify or explain how these limitations would significantly reduce Utah ozone emissions. UDEQ did not discuss emissions limits or reductions from any other source categories, such as large electric generating units (EGUs) within the State.

    14 For more detail, see EPA's final action on these area source rules at 81 FR 9343, February 25, 2016, and the associated docket at EPA-R08-OAR-2014-0369.

    Though the EPA considers the measures UDEQ described to be beneficial in reducing ozone transport, UDEQ has not provided any analysis to demonstrate that the reductions will be sufficient to significantly reduce Utah ozone emissions. The Department did not quantify the total anticipated reductions in NOX and VOC emissions from its listed regulations or evaluate the impact of those reductions in downwind air quality at the Denver area receptors. As explained above, the NODA modeling indicates that in spite of the measures Utah describes, emissions from sources in Utah contribute well above the one percent threshold of 0.75 ppb with respect to nonattainment and maintenance receptors in the Denver, Colorado area. UDEQ has not provided any technical analysis to contradict that information.

    UDEQ also states in the 2015 submission that the State does not believe it significantly contributes or interferes with maintenance of the 2008 ozone NAAQS in southern California, citing the State's VOC and NOX emission limitations. UDEQ also cites the general west to east wind direction in the western U.S. as further evidence that Utah emissions are unlikely to significantly impact ozone pollution in southern California. Although the State did not provide a particular technical analysis to support this conclusion, EPA's modeling released in the August 4, 2015 NODA confirms UDEQ's assertion that the State does not significantly contribute to nonattainment or interfere with maintenance in California.

    As explained earlier, UDEQ's SIP submissions do not provide an adequate technical analysis demonstrating that the SIP contains adequate provisions prohibiting emissions that will significantly contribute to nonattainment or interfere with the 2008 ozone NAAQS in any other state. Moreover, EPA's most recent modeling indicates that emissions from Utah are projected to contribute to downwind nonattainment and maintenance receptors in the Denver, Colorado area. Accordingly, EPA proposes to disapprove the portion of the January 31, 2013 SIP submittal and the December 22, 2015 submittal addressing CAA section 110(a)(2)(D)(i)(I) prongs 1 and 2 with respect to the 2008 ozone NAAQS. EPA is soliciting public comments on this proposed action and will consider public comments received during the comment period.

    2008 Pb NAAQS

    UDEQ's analysis of potential interstate transport for the 2008 Pb NAAQS discussed the lack of sources with significant Pb emissions near the State's borders. The Department also noted that there are no Pb nonattainment areas in states neighboring Utah.

    As noted in our October 14, 2011 Infrastructure Guidance Memo, there is a sharp decrease in Pb concentrations, at least in the coarse fraction, as the distance from a Pb source increases. See “Guidance on Infrastructure SIP Elements Required Under Sections 110(a)(1) and (2) for the 2008 Lead (Pb) National Ambient Air Quality Standards (NAAQS).” October 14, 2011 at 8. For this reason, the EPA found that the requirements of subsection 110(a)(2)(D)(i)(I) (prongs 1 and 2) could be satisfied through a state's assessment as to whether or not emissions from Pb sources located in close proximity to their state borders have emissions that impact the neighboring state such that they contribute significantly to nonattainment or interfere with maintenance in that state. Id. at 8. In that guidance document, the EPA further specified that any source appeared unlikely to contribute significantly to nonattainment unless it was located less than two miles from a state border and emitted at least 0.5 tons per year of Pb. UDEQ's 110(a)(2)(D)(i)(I) analysis specifically noted that there are no sources in the State that meet both of these criteria. EPA concurs with the State's analysis and conclusion that no Utah sources have the combination of Pb emission levels and proximity to nearby nonattainment or maintenance areas to contribute significantly to nonattainment in or interfere with maintenance by other states for this NAAQS. Utah's SIP is therefore adequate to ensure that such impacts do not occur. We are proposing to approve UDEQ's submittal with regard to the requirements of section 110(a)(2)(D)(i) prongs 1 and 2 for the 2008 Pb NAAQS.

    IV. Proposed Action

    The EPA is proposing to approve CAA section 110(a)(2)(D)(i)(I) prongs 1 and 2 for the 2008 Pb NAAQS, and proposing to disapprove prongs 1 and 2 for the 2008 ozone NAAQS based on consideration of modeling results in EPA's August 4, 2015 NODA. The EPA is soliciting public comments on this proposed action and will consider public comments received during the comment period.

    V. Statutory and Executive Order Reviews

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

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

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

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

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

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

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

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

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

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

    In addition, the SIP does not apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the proposed rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

    List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.

    Authority:

    42 U.S.C. 7401 et seq.

    Dated: April 26, 2016. Shaun L. McGrath, Regional Administrator, Region 8.
    [FR Doc. 2016-10893 Filed 5-9-16; 8:45 am] BILLING CODE 6560-50-P
    DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Parts 227 and 252 [Docket DARS-2016-0010] RIN 0750-AI91 Defense Federal Acquisition Regulation Supplement: Rights in Technical Data (DFARS Case 2016-D008) AGENCY:

    Defense Acquisition Regulations System, Department of Defense (DoD).

    ACTION:

    Proposed rule.

    SUMMARY:

    DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2016 that addresses rights in technical data relating to major weapon systems, expanding application of the presumption that a commercial item has been developed entirely at private expense.

    DATES:

    Comments on the proposed rule should be submitted in writing to the address shown below on or before July 11, 2016, to be considered in the formation of a final rule.

    ADDRESSES:

    Submit comments identified by DFARS Case 2016-D008, using any of the following methods:

    Regulations.gov: http://www.regulations.gov. Submit comments via the Federal eRulemaking portal by entering “DFARS Case 2016-D008” under the heading “Enter keyword or ID” and selecting “Search.” Select the link “Submit a Comment” that corresponds with “DFARS Case 2016-D008.” Follow the instructions provided at the “Submit a Comment” screen. Please include your name, company name (if any), and “DFARS Case 2016-D008” on your attached document.

    Email: [email protected] Include DFARS Case 2016-D008 in the subject line of the message.

    Fax: 571-372-6094.

    Mail: Defense Acquisition Regulations System, Attn: Ms. Amy G. Williams, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060.

    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To confirm receipt of your comment(s), please check www.regulations.gov, approximately two to three days after submission to verify posting (except allow 30 days for posting of comments submitted by mail).

    FOR FURTHER INFORMATION CONTACT:

    Ms. Amy G. Williams, telephone 571-372-6106.

    SUPPLEMENTARY INFORMATION:

    I. Background

    DoD is proposing to revise the DFARS to implement section 813(a) of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016 (Pub. L. 114-92) that modifies 10 U.S.C. 2321(f) to address rights in technical data relating to major weapon systems.

    The validation of asserted restrictions on technical data is based on statutory requirements, codified primarily at 10 U.S.C. 2321, which are implemented in the DFARS at 227.7102-3 for commercial technical data and at 227.7103-13 for noncommercial technical data, and incorporated into individual contracts via the clause DFARS 252.227-7037, Validation of Restrictive Markings on Technical Data, for both commercial technical data and noncommercial technical data. By long-standing policy, these requirements and procedures are adapted and applied to noncommercial computer software (see 227.7203-13 and clause 252.227-7019, Validation of Asserted Restrictions—Computer Software), but are not applied to commercial computer software.

    Since 1995, these validation procedures have included specialized presumptions and procedures for commercial technical data. For discussion purposes, these specialized requirements will be referred to as the “Commercial Rule” (see 10 U.S.C. 2320(b)(1) and 2321(f)). Under the Commercial Rule, a contracting officer is required to presume that a commercial item has been developed entirely at private expense, unless shown otherwise in accordance with the procedures at 10 U.S.C. 2321(f).

    Subsequently, section 802(b) of the NDAA for FY 2007, as amended by section 815(a)(2) of the NDAA for FY 2008, modified 10 U.S.C. 2321(f)(2) to establish another specialized set of procedures for technical data related to major systems (including subsystems or components thereof). For discussion purposes, this second set of specialized requirements has been referred to as the “Major Systems Rule.” Under the Major Systems Rule, a contracting officer's challenge to asserted restrictions on technical data relating to a major system shall be sustained unless the contractor or subcontractor submits information demonstrating that the item was developed exclusively at private expense; except for commercially available off-the-shelf (COTS) items, which remained subject to the Commercial Rule in all cases.

    The Major Systems Rule, as an exception to the Commercial Rule, was implemented in the DFARS via DFARS Case 2007-D003, which was published for comments as a proposed rule in the Federal Register on May 07, 2010 (75 FR 25161), and subsequently became effective via a final rule published on September 20, 2011 (76 FR 58144). As a result, the Commercial Rule was implemented for technical data at DFARS 227.7103-13(c)(1) and in the clause at DFARS 252.227-7037(b)(1), and the Major Systems Rule was implemented at 227.7103-13(c)(2) and 252.227-7037(b)(2). Additionally, the Major Systems Rule was applied to noncommercial computer software at 227.7203-13(d) and in the clause at 252.227-7019(f), although in the noncommercial computer software implementation the Major Systems Rule stands alone, rather than as an exception to the Commercial Rule, because neither the Commercial Rule, nor any element of the validation procedures overall, has been applied to commercial computer software.

    Section 813(a) revised 10 U.S.C. 2321(f) to amend both the Commercial Rule and the Major Systems Rule in two primary ways:

    (1) The major systems rule was narrowed to apply only to major weapon systems—essentially converting the Major Systems Rule into the Major Weapon Systems Rule.

    (2) The COTS exception to the Major Systems Rule was expanded to include three additional exceptions. More specifically, the formerly COTS-only exception was expanded to include—

    (i) COTS items with modifications of a type customarily available in the commercial marketplace or minor modifications made to meet Federal Government requirements;

    (ii) Commercial subsystems or components of a major weapon system, if the major weapon system was acquired as a commercial item in accordance with 10 U.S.C. 2379(a); and

    (iii) Components of a subsystem, if the subsystem was acquired as a commercial item in accordance with 10 U.S.C. 2379(b).

    II. Discussion and Analysis A. Implementation of the Statutory Changes for Validation of Asserted Restrictions on Technical Data

    Because the DFARS already included an implementation of the Commercial Rule and Major Systems Rule, and section 813(a) revised only particular characteristics and subelements of the Major Systems Rule, the implementation of the statutory changes is relatively straightforward. More specifically, the Major Systems Rule is amended to apply only in the case of a major weapon system (see revised DFARS 227.7103-13(c)(2)(ii), and 252.227-7037(b)(2)), and the exception to the Major Systems Rule that previously referenced only COTS items, was expanded to include the three new exceptions, as well (see new DFARS 227.7103-13(c)(2)(ii)(1) through (3), and 252.227-7037(b)(2)(i)).

    In addition, a minor change was made to the coverage for the Commercial Rule, which had previously referred to COTS items as always being covered by the Commercial Rule. Under the new schema, which includes four categories of items that are exceptions to the Major Weapon Systems Rule, and thereby are always governed by the Commercial Rule, it was deemed to be too complicated to refer to all four exceptions in both the coverage for the Commercial Rule and the Major Weapon Systems Rule. Accordingly, the exceptions are listed only within the Major Weapon Systems Rule, and the Commercial Rule merely cross-references that coverage as an exception to the Commercial Rule. In addition to avoiding unnecessary duplication in the coverage, this approach provides an advantage in circumstances involving an assertion regarding any type of commercial item that is not part of a major weapon system or subsystem thereof, such that there would be no need to parse through the entire Major Weapon Systems Rule only to find that the item is covered by one of the exceptions to the Major Weapon Systems Rule, and thus still covered by the Commercial Rule.

    B. Application of the Revised Requirements and Procedures to Validation of Asserted Restrictions on Computer Software

    DoD has made no additional edits to extend the section 813(a) construct to noncommercial computer software, and has deleted the baseline coverage of noncommercial computer software in major systems, currently at DFARS 227.7203-13(d) and 252.227-7019(f), because the purpose for the Major Weapon Systems Rule is to function as an exception to the Commercial Rule; but in the context of computer software, these validation procedures do not apply to commercial computer software, and the coverage for noncommercial computer software is concerned only with the Major Weapon Systems Rule procedures for noncommercial computer software. In the end, the application of the Major Weapon Systems Rule in those cases is extremely unlikely to reach a result that is any different from the application of the “normal” rules for noncommercial computer software. More specifically, in all cases the Government cannot initiate a challenge unless it has a reasonable basis to do so (see DFARS 227.7203-13(a) and (e)(3)(i), and 252.227-7019(d)(3) and (e)(1) for noncommercial computer software; see also 227.7103-13(a), (c)(1), and (d)(4), and 252.227-7037(d)(2) for technical data). After a challenge is initiated, both the Major Weapon Systems Rule and the “normal” validation procedures would result in the challenge being sustained unless the contractor provides information to demonstrate that the noncommercial computer software was developed exclusively at private expense.

    III. Applicability to Contracts at or Below the Simplified Acquisition Threshold (SAT) and for Commercial Items, Including Commercially Available Off-the-Shelf (COTS) Items

    This proposed rule does not add any new provisions or clauses or add new requirements to existing provision or clauses. Rather, when acquiring major weapon systems, it expands the circumstances relating to commerciality in which the contracting officer shall presume that development was exclusively at private expense.

    IV. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 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). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is a significant regulatory action and, therefore, was subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

    V. Regulatory Flexibility Act

    DoD does not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:

    This proposed rule was initiated to implement section 813(a) of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016 (Pub. L. 114-92).

    The objective of this rule is to reduce the requirement to respond to Government challenges of restricted rights, by expanding the applicability of the presumption regarding development exclusively at private expense in accordance with section 813(a) of the NDAA for FY 2016.

    DoD cannot accurately determine the number of small entities that will be affected by this change in the regulations, because DoD does not have sufficient information about subcontract awards of subsystems and components of major weapon systems. However, DoD estimates an annual reduction of 50 prechallenge requests for information and 2 challenges of asserted technical data restrictions. DoD further estimates, based on data from the DoD FY 2014 Small Business Procurement Scorecard, that this reduction in challenges will affect about 17 small businesses (52 prechallenges/challenges × 33 percent of subcontract awards to small businesses).

    The proposed rule reduces the requirement to respond to Government challenge of restricted rights. Under current regulations, the presumption regarding development exclusively at private expense does not apply to major systems or subsystems or components thereof, except for commercially available off-the-shelf items. This rule expands applicability of the presumption regarding development exclusively at private expense with regard to a major weapon system, or a subsystem or component thereof, to cover—

    • A commercial subsystem or component of a major weapon system, if the major weapon system was acquired as a commercial item in accordance with DFARS subpart 234.70 (10 U.S.C. 2379(a));

    • A component of a subsystem, if the subsystem was acquired as a commercial item in accordance with DFARS subpart 234.70 (10 U.S.C. 2379(b)); and

    • Commercially available off-the-shelf items with modifications of a type customarily available in the commercial marketplace or minor modifications made to meet Federal Government requirements.

    The classes of small entities that will be affected by this reduction are small businesses that provide any items in the above categories that are not challenged due to the new statute.

    The rule does not duplicate, overlap, or conflict with any other Federal rules.

    This rule reduces the burden on small entities to the maximum extent permitted by the statute.

    DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

    DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C 610 (DFARS Case 2016-D008), in correspondence.

    VI. Paperwork Reduction Act

    This rule affects the information collection requirements in the provisions at DFARS 252.227-7019 and 252.227-7037, currently approved under OMB Control Number 0704-0369, entitled “Defense Federal Acquisition Regulation Supplement (DFARS): Rights in Technical Data and Computer Software,” in accordance with the Paperwork Reduction Act (44 U.S.C. chapter 35). The rule is expected to result in a reduction of 1,040 hours in the total estimated burden hours. DoD will submit a change request to OMB to document the reduction in burden hours at the final rule stage.

    A. Based on the advice of DoD subject matter experts, DoD currently estimates approximately 500 prechallenge requests for information and approximately 20 challenges per year associated with DFARS clause 252.227-7019, Validation of Asserted Restrictions—Computer Software, and 252.227-7037, Validation of Restrictive Markings on Technical Data. Including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information, the estimated average burden to respond to a prechallenge request for information is 10 hours, and the estimated average burden to respond to each challenge, is 270 hours, resulting in a weighted average of approximately 20 hours per response.

    Under current regulations, the presumption regarding development exclusively at private expense does not apply to major systems or subsystems or components thereof, except for commercially available off-the-shelf items. This rule expands applicability of the presumption regarding development exclusively at private expense with regard to a major weapon system, or a subsystem or component thereof, to cover—

    • A commercial subsystem or component of a major weapon system, if the major weapon system was acquired as a commercial item in accordance with DFARS subpart 234.70 (10 U.S.C. 2379(a));

    • A component of a subsystem, if the subsystem was acquired as a commercial item in accordance with DFARS subpart 234.70 (10 U.S.C. 2379(b)); and

    • Commercially available off-the-shelf items with modifications of a type customarily available in the commercial marketplace or minor modifications made to meet Federal Government requirements.

    Therefore, DoD estimates a reduction of about 10 percent in the estimated number of prechallenge requests for information and challenges under DFARS 252.227-7019 and 252.227-7037 as follows:

    Current
  • requirement
  • Revised Delta
    Respondents 520 468 52 Responses per respondent 1 1 1 Total annual responses 520 468 52 Preparation hours per response 20 20 20 Total response burden hours 10,400 9,360 1,040
    B. Request for Comments Regarding Paperwork Burden

    Written comments and recommendations on the proposed information collection, including suggestions for reducing this burden, should be sent to Ms. Jasmeet Seehra at the Office of Management and Budget, Desk Officer for DoD, Room 10236, New Executive Office Building, Washington, DC 20503, or email [email protected], with a copy to the Defense Acquisition Regulations System, Attn: Ms. Amy G. Williams, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060. Comments can be received from 30 to 60 days after the date of this proposed rule, but comments to OMB will be most useful if received by OMB within 30 days after the date of this proposed rule.

    Public comments are particularly invited on: whether this collection of information is necessary for the proper performance of functions of the DFARS, and will have practical utility; whether our estimate of the public burden of this collection of informat