Federal Register Vol. 81, No.99,
Federal Register Volume 81, Issue 99 (May 23, 2016)
Federal Register Volume 81, Issue 99 (May 23, 2016)
| Page Range | 32227-32615 | |
| FR Document |
Document Created: 2015-12-31 23:05:36
Document Modified: 2015-12-31 23:05:36
| Page and Subject | |
|---|---|
| 81 FR 32611 - A Comprehensive Approach to Atrocity Prevention and Response | |
| 81 FR 32609 - National Hepatitis Testing Day, 2016 | |
| 81 FR 32381 - BNSF Railway Company-Abandonment Exemption-in Cook County, Ill | |
| 81 FR 32319 - Notice of Sunshine Act Meeting | |
| 81 FR 32303 - Meeting of the U.S. Air Force Academy Board of Visitors | |
| 81 FR 32348 - Office of Procurement; Public Availability of NASA FY 2015 Service Contract Inventory | |
| 81 FR 32383 - Fiscal Year 2015 and 2016 Passenger Ferry Grant Program Project Selections | |
| 81 FR 32385 - Proposed Collection; Comment Request for Regulation Project | |
| 81 FR 32385 - Proposed Collection; Comment Request for Revenue Procedure 2001-21 | |
| 81 FR 32383 - Forty-Fourth Meeting: RTCA Special Committee 206 (SC-206) Aeronautical Information and Meteorological Data Link Services | |
| 81 FR 32382 - Twenty-Third Meeting: RTCA Special Committee 225 (SC-225) Rechargeable Lithium Battery and Battery Systems | |
| 81 FR 32382 - Ninth Meeting: RTCA Special Committee 230 (SC-230) Airborne Weather Detection Systems (Joint With WG-95 Inflight Ice Long Range Awareness Systems' Fourth Meeting) | |
| 81 FR 32241 - Protection of Stratospheric Ozone: Determination 31 for Significant New Alternatives Policy Program | |
| 81 FR 32327 - Proposed Information Collection Request; Comment Request; EPA Application Materials for the Water Infrastructure Finance and Innovation Act | |
| 81 FR 32326 - Proposed Information Collection Request; Comment Request; Registration of Fuels and Fuel Additives-Requirements for Manufacturers | |
| 81 FR 32306 - Applications for New Awards; Teacher Quality Partnership Grant Program | |
| 81 FR 32230 - Federal Firearms License Proceedings-Hearings | |
| 81 FR 32259 - Air Quality Control, Reporting, and Compliance | |
| 81 FR 32302 - Agency Information Collection Activities: Submission for OMB Review; Comment Request | |
| 81 FR 32347 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Multiple Worksite Report and Report of Federal Employment and Wages | |
| 81 FR 32342 - Endangered and Threatened Wildlife and Plants; Initiation of a 5-Year Review of the Eskimo Curlew | |
| 81 FR 32304 - National Security Education Board; Notice of Federal Advisory Committee Meeting | |
| 81 FR 32249 - Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; Snapper-Grouper Fishery Off the Southern Atlantic States; Amendment 35 | |
| 81 FR 32269 - Fisheries of the Northeastern United States; Recreational Management Measures for the Summer Flounder, Scup, and Black Sea Bass Fisheries; Fishing Year 2016 | |
| 81 FR 32274 - Notice of Public Meeting of the Assembly of the Administrative Conference of the United States | |
| 81 FR 32344 - Certain Air Mattress Bed Systems and Components Thereof; Institution of Investigation | |
| 81 FR 32343 - Certain Hybrid Electric Vehicles and Components Thereof, Institution of Investigation | |
| 81 FR 32306 - Meeting of the U.S. Naval Academy Board of Visitors | |
| 81 FR 32277 - Notice of Funds Availability (NOFA) for the Rural Community Development Initiative (RCDI) for Fiscal Year 2016 | |
| 81 FR 32286 - Request for Proposals: Farm Labor Housing Technical Assistance Grants | |
| 81 FR 32339 - Notice Announcing the Automated Commercial Environment (ACE) as the Sole CBP-Authorized Electronic Data Interchange (EDI) System for Processing Electronic Entry and Entry Summary Filings | |
| 81 FR 32320 - Swanton Hydro, LLC; Notice of Preliminary Permit Application Accepted for Filing and Soliciting Comments, Motions To Intervene, and Competing Applications | |
| 81 FR 32320 - American Airlines, Inc. v. Plantation Pipe Line Company; Notice of Complaint | |
| 81 FR 32321 - Notice of Commission Staff Attendance | |
| 81 FR 32322 - Texas Eastern Transmission, LP; Supplemental Notice of Intent To Prepare an Environmental Assessment for the Proposed Access South, Adair Southwest, and Lebanon Extension Projects and Request for Comments on Environmental Issues | |
| 81 FR 32294 - Fisheries of the Gulf of Mexico; Southeast Data, Assessment, and Review (SEDAR); Public Meeting | |
| 81 FR 32296 - New England Fishery Management Council; Public Meeting | |
| 81 FR 32295 - New England Fishery Management Council; Public Meeting | |
| 81 FR 32381 - 30-Day Notice of Proposed Information Collection; Reporting Requirements on Responsible Investment in Burma; Correction | |
| 81 FR 32351 - PSEG Nuclear LLC; Salem Nuclear Generating Station, Unit Nos. 1 and 2 | |
| 81 FR 32329 - Agency Forms Undergoing Paperwork Reduction Act Review | |
| 81 FR 32355 - Advisory Committee on Reactor Safeguards (ACRS); Meeting of the ACRS Subcommittee on Planning and Procedures; Notice of Meeting | |
| 81 FR 32350 - In the Matter of Luminant Generation Company LLC; Comanche Peak Nuclear Power Plant, Unit Nos. 1 and 2, and Independent Spent Fuel Storage Installation Facility | |
| 81 FR 32303 - Reserve Forces Policy Board; Notice of Federal Advisory Committee Meeting | |
| 81 FR 32343 - Minor Boundary Revision at Fredericksburg and Spotsylvania County Battlefields Memorial National Military Park | |
| 81 FR 32341 - Agency Information Collection Activities: Application for Temporary Protected Status, Form I-821; Revision of a Currently Approved Collection | |
| 81 FR 32324 - Notice of Schedule for Environmental Review of the Nexus Gas Transmission and Texas Eastern Appalachian Lease Projects | |
| 81 FR 32320 - Combined Notice of Filings #2 | |
| 81 FR 32325 - Combined Notice of Filings #1 | |
| 81 FR 32325 - Records Governing Off-the-Record Communications; Public Notice | |
| 81 FR 32335 - Notice of Request for Information by the Presidential Advisory Council on Combating Antibiotic-Resistant Bacteria | |
| 81 FR 32298 - Patent Processing (Updating) | |
| 81 FR 32295 - North Pacific Fishery Management Council; Public Meetings | |
| 81 FR 32296 - Gulf of Mexico Fishery Management Council; Public Meeting | |
| 81 FR 32355 - Containment Shell or Liner Moisture Barrier Inspection | |
| 81 FR 32275 - Eastern Arizona Resource Advisory Committee | |
| 81 FR 32297 - Fisheries of the South Atlantic; Southeast Data, Assessment, and Review (SEDAR); Public Meeting | |
| 81 FR 32349 - Notice of Intent To Prepare an Environmental Impact Statement and Initiate Section 106 Consultation for Proposed Changes to Arecibo Observatory Operations, Arecibo, Puerto Rico and Notice of Public Scoping Meetings and Comment Period | |
| 81 FR 32305 - Proposed Collection; Comment Request | |
| 81 FR 32386 - Proposed Information Collection (Notice of Disagreement (NOD) (Pension, Dependency and Indemnity Compensation (DIC), Burial and Accrued), VA Form 21P-0970); Comment Request | |
| 81 FR 32387 - Proposed Information Collection (Medical Expense Report, VA Form 21P-8416) Activity: Comment Request | |
| 81 FR 32387 - Proposed Information Collection (Principles of Excellence Complaint System Intake); Activity: Comment Request | |
| 81 FR 32376 - Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Adopt NYSE Arca Equities Rule 8.900 To Permit Listing and Trading of Managed Portfolio Shares and To Permit Listing and Trading of Shares of Fifteen Issues of the Precidian ETFs Trust | |
| 81 FR 32258 - Banned Devices; Proposal To Ban Electrical Stimulation Devices Used To Treat Self-Injurious or Aggressive Behavior; Extension of Comment Period | |
| 81 FR 32345 - Porcelain-On-Steel Cooking Ware From China; Scheduling of an Expedited Five-Year Review | |
| 81 FR 32336 - Center for Scientific Review; Notice of Closed Meetings | |
| 81 FR 32338 - Center for Scientific Review; Notice of Closed Meetings | |
| 81 FR 32346 - Alloy Magnesium From China; Scheduling of an Expedited Five-Year Review | |
| 81 FR 32328 - Petition of COSCO Container Lines Company Limited for an Exemption From Commission Regulations; Notice of Filing of Request for Extension of Time | |
| 81 FR 32347 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Personal Protective Equipment for Shipyard Employment | |
| 81 FR 32340 - Notice of Public Workshop Regarding the Cybersecurity Information Sharing Act of 2015 Implementation | |
| 81 FR 32360 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Amendment No. 5 to Proposed Rule Change Adopting Initial and Continued Listing Standards for the Listing of Equity Investment Tracking Stocks and Adopting Listing Fees Specific to Equity Investment Tracking Stocks | |
| 81 FR 32371 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Relating to a Change to the Underlying Index for the PowerShares Build America Bond Portfolio | |
| 81 FR 32364 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to the Listing and Trading of Shares of the AdvisorShares KIM Korea Equity ETF | |
| 81 FR 32356 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rules 15.1(a) and (c) in Order To Implement a Tape B Quoting Tier | |
| 81 FR 32359 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change Amending Rule 12904 (Awards) of the Code of Arbitration Procedure for Customer Disputes and Rule 13904 (Awards) of the Code of Arbitration Procedure for Industry Disputes To Permit Award Offsets in Arbitration | |
| 81 FR 32384 - Sanctions Actions Pursuant to Executive Order 13448, Executive Order 13310, and Executive Order 13464 | |
| 81 FR 32332 - Agency Forms Undergoing Paperwork Reduction Act Review | |
| 81 FR 32333 - Proposed Data Collection Submitted for Public Comment and Recommendations | |
| 81 FR 32330 - Proposed Data Collection Submitted for Public Comment and Recommendations | |
| 81 FR 32289 - Authorization of Production Activity; Foreign-Trade Subzone 249A; GE Generators (Pensacola) L.L.C.; (Wind Turbine Nacelles and Hubs); Pensacola, Florida | |
| 81 FR 32291 - Multilayered Wood Flooring From the People's Republic of China: Final Results and Partial Rescission of Countervailing Duty Administrative Review; 2013 | |
| 81 FR 32289 - Floor-Standing, Metal-Top Ironing Tables and Certain Parts Thereof From the People's Republic of China: Notice of Court Decision Not in Harmony With Final Results and Notice of Amended Final Results of the Antidumping Duty Administrative Review; 2007-2008 | |
| 81 FR 32328 - Submission for OMB Review; Quality Assurance Requirements | |
| 81 FR 32260 - Air Plan Approval; New Hampshire; Ozone Maintenance Plan | |
| 81 FR 32239 - Approval and Promulgation of Implementation Plans; Arkansas; New Mexico; Oklahoma; Disapproval of Greenhouse Gas Biomass Deferral, Step 2 and Minor Source Permitting Requirements | |
| 81 FR 32235 - Air Plan Approval; New Hampshire; Ozone Maintenance Plan | |
| 81 FR 32229 - Heavy Vehicle Use Tax; Technical Correction | |
| 81 FR 32319 - President's Council of Advisors on Science and Technology | |
| 81 FR 32227 - Airworthiness Directives; Dassault Aviation Airplanes | |
| 81 FR 32554 - Uniform Procedures for State Highway Safety Grant Programs | |
| 81 FR 32268 - United States Rail Service Issues-Performance Data Reporting | |
| 81 FR 32274 - Prince of Wales Resource Advisory Committee | |
| 81 FR 32276 - Prince of Wales Resource Advisory Committee | |
| 81 FR 32275 - Prince of Wales Resource Advisory Committee | |
| 81 FR 32276 - Tri-County Resource Advisory Committee | |
| 81 FR 32391 - Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees | |
| 81 FR 32390 - Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees; Announcement of Time-Limited Non-Enforcement Policy for Providers of Medicaid-Funded Services for Individuals With Intellectual or Developmental Disabilities in Residential Homes and Facilities With 15 or Fewer Beds | |
| 81 FR 32261 - National Flood Insurance Program (NFIP): Financial Assistance/Subsidy Arrangement | |
| 81 FR 32256 - Airworthiness Directives; Airbus Airplanes |
Issue
Forest Service
Rural Housing Service
Foreign-Trade Zones Board
International Trade Administration
National Oceanic and Atmospheric Administration
Patent and Trademark Office
Air Force Department
Navy Department
Federal Energy Regulatory Commission
Centers for Disease Control and Prevention
Food and Drug Administration
National Institutes of Health
Federal Emergency Management Agency
U.S. Citizenship and Immigration Services
U.S. Customs and Border Protection
Fish and Wildlife Service
National Park Service
Ocean Energy Management Bureau
Alcohol, Tobacco, Firearms, and Explosives Bureau
Wage and Hour Division
Federal Aviation Administration
Federal Highway Administration
Federal Transit Administration
National Highway Traffic Safety Administration
Foreign Assets Control Office
Internal Revenue Service
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.
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Federal Aviation Administration (FAA), Department of Transportation (DOT).
Final rule.
We are adopting a new airworthiness directive (AD) for certain Dassault Aviation Model MYSTERE-FALCON 900 airplanes, FALCON 900EX airplanes, and FALCON 2000EX airplanes. This AD was prompted by a report that during a test flight, it was found that the yaw damper on the takeoff roll can increase the Minimum Control Speed on Ground (Vmcg). This AD requires revising the airplane flight manual (AFM) to incorporate procedures for the flightcrew to check that the yaw damper is set to “off” before takeoff. We are issuing this AD to ensure that the flightcrew has procedures to set the yaw damper to “off” before takeoff, which, if activated, could result in reduced control of the airplane if one engine were to fail during takeoff.
This AD is effective June 27, 2016.
You may examine the AD docket on the Internet at
Tom Rodriguez, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1137; fax 425-227-1149.
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Dassault Aviation Model MYSTERE-FALCON 900 airplanes, FALCON 900EX airplanes, and FALCON 2000EX airplanes. The NPRM published in the
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2015-0005, dated January 14, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Dassault Aviation Model MYSTERE-FALCON 900 airplanes, FALCON 900EX airplanes, and FALCON 2000EX airplanes. The MCAI states:
During a flight test on a development aeroplane, it was found that the yaw damper (YD) working on the take-off roll can increase the Minimum Control Speed on Ground (Vmcg). A review of the certification data of the affected aeroplanes shows that Vmcg values published in the Airplane Flight Manuals (AFM) have been determined without YD.
This condition, if not corrected, could result, in case of an engine failure occurring during the roll acceleration [during takeoff], in reduced lateral control of the aeroplane.
To address this condition, Dassault Aviation developed Change Proposals (CP) and Temporary Changes (TC) to the applicable AFMs, which instruct flight crews to check that yaw damper is set to “off” before take-off.
For the reasons described above, this [EASA] AD requires an amendment of the applicable AFM.
We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public.
We reviewed the relevant data and determined that air safety and the public interest require adopting this AD as proposed except for minor editorial changes. We have determined that these minor changes:
• Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and
• Do not add any additional burden upon the public than was already proposed in the NPRM.
We have revised paragraph (g) of this AD to remove “table 1 to paragraph (g) of this AD” regarding the use of the applicable AFM change. This change is necessary because the AFM materials specified in the proposed AD do not meet the requirements for approval of incorporation by reference by the Office of the Federal Register. Therefore, operators must contact the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, for information regarding the use of the applicable AFM change for revising the normal procedures and limitations sections of the AFM, as applicable, to include new yaw damper procedures.
We estimate that this AD affects 284 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 AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this AD on U.S. operators to be $24,140, or $85 per product.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
3. Will not affect intrastate aviation in Alaska; and
4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD is effective June 27, 2016.
None.
This AD applies to the airplanes specified in paragraphs (c)(1), (c)(2), and (c)(3) of this AD, certificated in any category.
(1) Dassault Aviation Model MYSTERE-FALCON 900 airplanes, all serial numbers.
(2) Dassault Aviation Model FALCON 900EX airplanes, all serial numbers, except airplanes with “EASy II” “2nd certification” avionics, which are defined as: Airplanes modified in production with Dassault Aviation modification M5595; or airplanes modified in service with Dassault Aviation Service Bulletin F900EX-400 or with Dassault Aviation Service Bulletin F900EX-414, except for airplanes modified in service with any of the service information specified in paragraphs (c)(2)(i) through (c)(2)(vii) of this AD.
(i) Dassault Aviation Service Bulletin F900EX-400, dated July 1, 2011.
(ii) Dassault Aviation Service Bulletin F900EX-400, Revision 1, dated July 5, 2012.
(iii) Dassault Aviation Service Bulletin F900EX-400, Revision 2, dated November 30, 2012.
(iv) Dassault Aviation Service Bulletin F900EX-414, dated July 20, 2011.
(v) Dassault Aviation Service Bulletin F900EX-414, Revision 1, dated July 5, 2012.
(vi) Dassault Aviation Service Bulletin F900EX-414, Revision 2, dated July 27, 2012.
(vii) Dassault Aviation Service Bulletin F900EX-414, Revision 3, dated November 30, 2012.
(3) Dassault Aviation Model FALCON 2000EX airplanes, all serial numbers, except airplanes with Dassault Aviation production modification M3254, or modified in service by Dassault Aviation Service Bulletin F2000EX-300 (“EASy II” avionics).
Air Transport Association (ATA) of America Code 01, Operations Information.
This AD was prompted by a report that during a test flight, it was found that the yaw damper on the takeoff roll can increase the Minimum Control Speed on Ground (Vmcg). We are issuing this AD to ensure that the flightcrew has procedures to set the yaw damper to “off” before takeoff, which, if activated, could result in reduced control of the airplane if one engine were to fail during takeoff.
Comply with this AD within the compliance times specified, unless already done.
Within 30 days after the effective date of this AD, revise the normal procedures and limitations sections of the AFM, as applicable, to include new yaw damper procedures, in accordance with using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA.
The following provisions also apply to this AD:
(1)
(2)
Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2015-0005, dated January 14, 2015, for related information. This MCAI may be found in the AD docket on the Internet at
None.
Federal Highway Administration (FHWA), Department of Transportation (DOT).
Final rule.
This rule makes a technical correction to the regulations that govern the enforcement of the Heavy Vehicle Use Tax. The amendments contained herein make no substantive changes to FHWA regulations, policies, or procedures. The current regulation references a section of the United States Code that was later amended by the Moving Ahead for Progress in the 21st Century Act (MAP-21).
This rule is effective June 22, 2016.
Michael Dougherty, Office of Highway Policy Information, telephone 202-366-9234 or email at
An electronic copy of this document may be downloaded by accessing the Office of the Federal Register's home page at:
This rulemaking makes technical corrections to the regulations that govern policies and procedures relating to the enforcement of the Heavy Vehicle Use Tax found at 23 CFR part 669. In the final rule published in the
However, the regulations in 23 CFR part 669 have several references to the old statute at 23 U.S.C. 104(b)(4) and also suggest the penalty is 25 percent rather than 8 percent. As such, references in 23 CFR 669.13 and 669.19 to 23 U.S.C. 104(b)(4) cause confusion. These amendments will direct readers of 23 CFR 669 to the proper section of 23 U.S.C.
Finally, the authority citation for part 669 will be updated to reflect ministerial changes in the numbering of FHWA delegations of authority made with the publication of the final rule on Organization and Delegation of Powers and Duties on August 17, 2012 (77 FR 49964, 49981). The current regulation cites authority contained in 49 CFR 1.48. The location of those sections describing delegations to the Federal Highway Administrator are now found at 49 CFR 1.85.
The 2012 change in location within the CFR is ministerial in nature and pertains to DOT management and organization. Amendment of the section identifying the authority for part 669 will direct readers to the proper section of 49 CFR.
Under the Administrative Procedure Act (5 U.S.C. 553(b)), an agency may waive the normal notice and comment requirements if it finds, for good cause, that they are impracticable, unnecessary, or contrary to the public interest. The FHWA finds that notice and comment for this rule is unnecessary and contrary to the public interest because it will have no substantive impact, is technical in nature, and relates only to management, organization, procedure, and practice. The amendments to the rule are based upon the explicit language of statutes that were enacted subsequent to the promulgation of the rule. The FHWA does not anticipate receiving meaningful comments on it. State and local governments rely upon the regulations corrected by this action. These corrections will reduce confusion for these entities and should not be unnecessarily delayed. Accordingly, for the reasons listed above, FHWA finds good cause under 5 U.S.C. 553(b)(3)(B) to waive notice and opportunity for comment.
The FHWA has determined that this final rule is not a significant regulatory action within the meaning of Executive Orders 12866 or significant within the meaning of DOT regulatory policies and procedures. This action complies with Executive Orders 12866 and 13563 to improve regulation. It is anticipated that the economic impact of this rulemaking will be minimal. This final rule only makes minor corrections that will not alter the regulatory effect of 23 CFR 669. Thus, the final rule will not adversely affect, in a material way, any sector of the economy. In addition, these changes will not interfere with any action taken or planned by another agency and will not materially alter the budgetary impact of any entitlements, grants, user fees, or loan programs.
In compliance with the Regulatory Flexibility Act (Pub. L. 96-354), FHWA has evaluated the effects of this action on small entities and has determined that the action will not have a significant economic impact on a substantial number of small entities. The final rule will not make any substantive changes to our regulations or in the way that our regulations affect small entities; it merely corrects technical errors. For this reason, FHWA certifies that this action will not have a significant economic impact on a substantial number of small entities.
This final rule does not impose unfunded mandates as defined by the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This final rule does not impose any requirements on State, local, or tribal governments, or the private sector and, thus, will not require those entities to expend any funds.
This final rule has been analyzed in accordance with the principles and criteria contained in Executive Order 13132. The FHWA has determined that this final rule does not have sufficient federalism implications to warrant the preparation of a federalism assessment. The FHWA has also determined that this final rule does not preempt any
The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities apply to these programs.
This final rule does not create any new information collection requirements for which submission to the Office of Management and Budget would be needed under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
The FHWA has analyzed this final rule for the purpose of the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4347) and has determined that this action will not have any effect on the quality of the environment.
The FHWA has analyzed this final rule under Executive Order 13175. The FHWA concluded that the final rule will not have substantial direct effects on one or more Indian tribes; will not impose substantial direct compliance costs on Indian tribal government; and will not preempt tribal law. There are no requirements set forth in the final rule that directly affect one or more Indian tribes. Therefore, a tribal summary impact statement is not required.
This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988 to minimize litigation, eliminate ambiguity, and reduce burden.
Under Executive Order 13045 this final rule is not economically significant and does not involve an environmental risk to health and safety that may disproportionally affect children.
This final rule will not affect a taking of private property or otherwise have taking implications under Executive Order 12630.
This final rule has been analyzed under Executive Order 13211. The FHWA has determined that it is not a significant energy action under that order because it is not a significant regulatory action under Executive Order 12866 and this final rule is not likely to have a significant adverse effect on the supply, distribution, or use of energy.
A regulation identification number (RIN) is assigned to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. The RINs contained in the heading of this document can be used to cross reference this action with the Unified Agenda.
Excise taxes, Grant programs-transportation, Highways and roads, Motor vehicles.
In consideration of the foregoing, 23 CFR part 669 is amended as set forth below.
23 U.S.C. 141(c) and 315; 49 CFR 1.85.
If a State fails to certify as required by this regulation or if the Secretary of Transportation determines that a State is not adequately obtaining proof-of-payment of the heavy vehicle use tax as a condition of registration notwithstanding the State's certification, Federal-aid highway funds apportioned to the State under 23 U.S.C. 104(b)(1) for the next fiscal year shall be reduced in an amount up to 8 percent as determined by the Secretary.
(a) The Administrator may reserve from obligation up to 8 percent of a State's apportionment of funds under 23 U.S.C. 104(b)(1), pending a final determination.
(b) Funds withheld pursuant to a final administrative determination under this regulation shall be reapportioned to all other eligible States pursuant to the formulas of 23 U.S.C. 104(b)(1) and the apportionment factors in effect at the time of the original apportionments, unless the Secretary determines, on the basis of information submitted by the State, that the state has come into conformity with this regulation prior to the final determination. * * *
Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), Department of Justice.
Final rule.
The Department of Justice is amending the regulations of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) regarding administrative hearings held as part of firearms license proceedings. This rule clarifies that persons requesting a hearing will be afforded the opportunity to submit facts and arguments for review and consideration during the hearing, and may make offers of settlement before or after the hearing. The regulations are intended to ensure that Federal firearms licensees and persons applying for a Federal firearms license are familiar with the hearing process relative to the denial, suspension, or revocation of a firearms license, or imposition of a civil fine.
This rule is effective July 22, 2016.
Shermaine Kenner, Office of Regulatory Affairs, Enforcement Programs and Services, Bureau of Alcohol, Tobacco, Firearms, and Explosives, U.S. Department of Justice, 99 New York Avenue NE., Washington, DC 20226; telephone: (202) 648-7070.
The Attorney General is responsible for enforcing the Gun Control Act of 1968 (the Act), 18 U.S.C. Chapter 44. She has delegated that responsibility to the Director of ATF (Director), subject to the direction of the Attorney General and the Deputy Attorney General. 28 CFR 0.130(a). ATF has promulgated regulations that implement the Act in 27 CFR part 478.
The regulations in subpart E of part 478, §§ 478.71-478.78, relate to proceedings involving Federal firearms licenses, including the denial, suspension, or revocation of a license, or the imposition of a civil fine. In particular, § 478.71 provides that the Director may issue a notice of denial, ATF Form 4498, to an applicant for a license if he has reason to believe that the applicant is not qualified, under the provisions of § 478.47, to receive a license. The notice sets forth the matters of fact and law relied upon in determining that the application should be denied, and affords the applicant 15 days from the date of receipt of the notice in which to request a hearing to review the denial. If a request for a hearing is not filed within such time, the application is disapproved and a copy, so marked, is returned to the applicant.
Under § 478.72, an applicant who has been denied an original or renewal license may file a request with the Director of Industry Operations for a hearing to review the denial of the application. On conclusion of the hearing and after consideration of all relevant facts and circumstances presented by the applicant or his representative, the Director renders a decision confirming or reversing the denial of the application. If the decision is that the denial should stand, a certified copy of the Director's findings and conclusions is furnished to the applicant with a final notice of denial, ATF Form 5300.13.
Section 478.73 provides that whenever the Director has reason to believe that a firearms licensee has willfully violated any provision of the Act or part 478, a notice of revocation of the license, ATF Form 4500, may be issued. In addition, a notice of revocation, suspension, or imposition of a civil fine may be issued on ATF Form 4500 whenever the Director has reason to believe that a licensee has knowingly transferred a firearm to an unlicensed person and knowingly failed to comply with the requirements of 18 U.S.C. 922(t)(1) (relating to a National Instant Criminal Background Check System (NICS) background check) with respect to the transfer and, at the time that the transferee most recently proposed the transfer, the NICS was operating and information was available to the system demonstrating that the transferee's receipt of a firearm would violate 18 U.S.C. 922(g) or 922(n) or State law. Additionally a notice of suspension or revocation of a license, or the imposition of a civil penalty, may be issued whenever the Director has reason to believe that a licensee has violated § 922(z)(1) by selling, delivering, or transferring any handgun to any person other than a licensee unless the transferee was provided with a secure gun storage or safety device for that handgun.
As specified in 27 CFR 478.74, a licensee who has received a notice of license suspension or revocation of a license, or imposition of a civil fine, may, within 15 days of receipt, file a request for a hearing with the Director of Industry Operations. On conclusion of the hearing and after consideration of all the relevant presentations made at the hearing, the Director renders a decision and prepares a brief summary of the findings and conclusions on which the decision is based. If the decision is that the license should be revoked or, in actions under 18 U.S.C. 922(t)(5) or 924(p)(1), that the license should be revoked or suspended, or that a civil fine should be imposed, a certified copy of the summary is furnished to the licensee with the final notice of revocation, suspension, or imposition of a civil fine on ATF Form 5300.13. If the decision is that the license should not be revoked, or in actions under §§ 922(t)(5) or 924(p)(1), that the license should not be revoked or suspended, and a civil fine should not be imposed, the licensee is notified in writing.
Under 27 CFR 478.76, a firearms licensee or an applicant for a firearms license may be represented at a hearing by an attorney, certified public accountant, or other person recognized to practice before ATF, provided certain requirements are met. The Director may be represented in hearing proceedings by an authorized attorney in the Office of Chief Counsel. Pursuant to § 478.77, hearings concerning license denials, suspensions, or revocations, or the imposition of a civil fine, must be held in a location convenient to the aggrieved party.
In addition, ATF has published in the
On February 3, 2012, ATF published in the
Specifically, the NPRM proposed to add language stating that a hearing would be informal and that a licensee or applicant would have the opportunity to submit facts, arguments, offers of settlement, or proposals of adjustment for review and consideration as part of the hearing process. While the opportunity for a licensee or applicant to submit additional material for review and consideration has always been afforded to such parties since the enactment of the Act, this clarification of the regulations was intended to ensure that all parties involved in firearms license administrative hearings are fully aware of these opportunities.
The comment period for Notice No. 32P closed on May 3, 2012.
All public comments were considered in preparing this final rule. In response to Notice No. 32P, ATF received ten comments. Five of the commenters agreed with the proposed rule. Commenters who agreed with the proposed rule primarily did so because they believed that implementation of the rule would clarify the opportunities available to an applicant or licensee requesting a hearing in response to a notice of the denial, revocation, or suspension of a firearms license, or imposition of a civil fine. Commenters who disagreed with the proposed rule did so for a variety of reasons, with the most common objection relating to the proposed addition of the term “informal” as applied to firearms license administrative hearings.
One commenter stated that the proposed rule should better clarify what conduct can lead to a revocation, denial, or suspension of a Federal firearms license so that a person applying for a license can be on notice of the possibilities before taking the steps to get the license. Existing regulations in part 478, however, already specify which actions and violations by a licensee or applicant may lead to a license denial, revocation, or suspension, or imposition of a civil fine. Therefore, clarification of this matter is not needed.
One commenter stated, “[i]n order to ensure that Federal firearms licensees and applicants for a Federal firearms license are familiar with the hearing process relative to the denial, suspension, or revocation of a firearms license, or imposition of a civil fine, the information regarding the process and procedures for the denial hearing should be included in the Director of Industry Operation's report that is sent to the applicant or licensee.” ATF already follows this practice: The notice of denial, revocation, suspension, or imposition of a civil fine includes information concerning specific procedures on how to request a hearing, a citation to the applicable regulations, and a pamphlet on the hearing process. In addition, information regarding the hearing process as well as what is required from an applicant or licensee can be found in §§ 478.72 and 478.74, and the hearing procedures were published by ATF in the
One commenter argued that this proposed rule will likely cause crime to rise by making it more difficult for law-abiding citizens to have access to firearms. The same commenter stated that penalties for violations where the Director has reason to believe that a licensee has knowingly transferred a firearm to an unlicensed person and knowingly failed to comply with the requirements of 18 U.S.C. 922(t)(l) should be strengthened. Regarding the commenter's first assertion, this rule will not have any negative effect on the ability of law-abiding citizens to acquire firearms. If anything, this rule will benefit licensees or applicants requesting hearings by informing them of their option to submit material that may mitigate or reverse ATF's decision to revoke, suspend, or deny an application for a Federal firearms license. Concerning the commenter's second assertion, strengthening the penalties in § 922(t)(5) for violations of § 922(t)(1) is a matter for Congress, and cannot be addressed by ATF in this rulemaking. The Department notes that the amounts of civil fines and civil penalties as set forth in various Federal statutes are subject to being increased, by regulation, to account for inflation, pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, codified as amended at 28 U.S.C. 2461 note. That is a matter to be addressed in a separate rulemaking.
Two commenters expressed concern that the 15-day period in which to file the request for an administrative hearing under 27 CFR 478.72 to review the denial of a license, or under § 478.74 to review the revocation or suspension of a license, or the imposition of a civil fine, is too short. One commenter suggested the response period should be extended to one month from the date the applicant or licensee receives a notice of the denial, revocation, or suspension of a Federal firearms license, or imposition of a civil fine. The second commenter suggested the response period should be extended to 45 days from receipt of such notice. Both commenters argued the additional time would provide licensees and applicants with a more reasonable amount of time to respond to the notice. ATF is unaware of any evidence demonstrating that the 15-day period, which has been in place for many years, is not ample time to request a hearing.
One commenter who supported the proposed rule suggested that ATF create a “database that ensures those who get licenses also have a photo that attaches the license and the serial number of that firearm together.” Although novel, this suggestion is not responsive to this rulemaking's request for comments regarding administrative hearings for Federal firearms licensees.
One commenter provided four comments regarding the implementation of the proposed rule. First, the commenter argued that the current “informal” hearing is only as informal as it suits ATF Counsel. Second, the commenter argued, “ATF Executives previously attempted at least the appearance of fairness in its administrative licensing proceedings by promulgating and adopting guidelines—known as the Administrative Action Order (`AAO')—which required uniformity in the handling and outcomes of ATF administrative matters, yet the AAO is ignored by ATF Counsel.” Third, the commenter argued, “[t]he false confidence generated by a system that `stacks the deck' for one-sided adjudication in ATF's favor fosters unnecessary hostility with the industry, while obstructing bona fide ATF decision-makers from entertaining or implementing common sense solutions.” Finally, the commenter argued, “[n]on-communication among ATF personnel in key positions manifests itself in situations that compromise the entire bureau's integrity and reputation, not just the integrity and reputations of individual or isolated actors, and alienates the regulated environment.”
The issues presented by the commenter, while substantive and related to the firearms license administrative hearings process, generally address a separate issue of how cases are adjudicated. First, as will be discussed further below, the Department has decided to remove the word “informal” from the regulatory text of the final rule. Second, ATF procedures are implemented to provide fairness and uniformity to all participants. Furthermore, as noted above, ATF provides a pamphlet on the hearing process with each notice, and has published a public notice of Hearing Procedures Relating to Federal Firearms Licensees, 75 FR 48362, to provide guidance on the process. Third, the regulations do not prevent common-sense solutions, but instead permit parties to make offers of settlement for review and consideration before or after the hearing. The final rule clarifies that offers of settlement will not be entertained at the hearing because the hearing is not a settlement conference but an opportunity to establish the factual record. Fourth, communication between ATF personnel is an integral part of this process, and ATF disagrees with the commenter's assertion that ATF personnel do not communicate with one another.
One commenter suggested further amendments to the proposed rule by adding and emphasizing the word “informal” in additional sections not amended in the proposed rule, including the second sentence in 27 CFR 478.71 and the section title of § 478.72. As will be discussed further below, however, the Department has decided to remove the word “informal” from the regulatory text of the final rule.
Several comments sought additional clarification of or suggested substantive changes to the proposed rule. Four commenters expressed concern that the use of the term “informal” as applied to firearms administrative license proceedings required further clarification. Additionally, one commenter argued that the proposed rule would be contrary to the requirements of the Administrative Procedure Act (APA).
As discussed in Section II of this preamble, the NPRM included language proposing to amend the regulations in subpart E of part 478 to clarify that firearms license administrative hearings are informal in nature and that adherence to civil court rules and procedures is consequently not required.
One commenter expressed support for the rule, but expressed the following concerns about the clarity of the term “informal”:
This notice states that the hearings are to be informal in nature, however further clarification is needed here I believe. How informal exactly? Will there be a record of the proceedings in the event that the decision is appealed and how would that be handled? If adherence to civil court rules and procedure is not required, then what type of rules and procedure will be required and implemented? I think there needs to be a little more detailed description of what type of process the person who requests a hearing will go through when the person is submitting their facts and arguments.
As the NPRM explained, the proposed rule would not change any of the procedures or rules that govern the administrative hearings provided for in §§ 478.72 and 478.74, but would merely clarify for the benefit of the licensee or applicant the opportunities afforded to the individual requesting such a hearing. In addition, ATF's published explanation of its hearing procedures already states that “[h]earing procedures in firearms licensing matters are informal in nature.” 75 FR at 48363. Nonetheless, it is clear from the response of commenters both supporting and opposing the rule that the proposal to characterize firearms administrative hearings as “informal” in this rule would not provide additional clarification to a licensee or applicant seeking such a hearing, as was the original intent of the proposed rule.
As a result of these comments, and in light of the intent to clarify as expressed in the proposed rule, the Department is modifying the final rule so that it will no longer insert the phrase “the hearing shall be informal” into the regulatory text. So modified, the final rule will inform the licensee or applicant of the option to submit supporting material for consideration during a requested firearms license administrative hearing without stating or implying that the nature of those hearings will otherwise change.
One commenter argued that the inclusion of the term “informal” in the proposed rule is directly contrary to what Congress intended for license hearings under 18 U.S.C. 923(f)(2), and that Congress intended all firearms license proceedings to be subject to the formal adjudication requirements of the APA. The commenter concluded, “[t]he Administrative Procedure Act [under 5 U.S.C. 556(d)] requires that the hearings be formal proceedings where the agency has the burden of proof, where the evidence offered must be reliable, probative, and substantial, and where the applicant may present evidence and conduct cross-examination of the agency's witnesses.”
Although the provisions of the APA generally apply to firearms license administrative hearings, ATF disagrees with the conclusion that the APA's formal adjudication provisions are applicable to firearms license administrative proceedings. Under 5 U.S.C. 554(a), the formal adjudication provisions of the APA (sections 554, 556, and 557) apply “in every case of an adjudication required by statute to be determined on the record after opportunity for an agency hearing.” 5 U.S.C. 554(a). In order to trigger this requirement, courts have held, a statute generally must state that an agency shall provide a “hearing on the record,” rather than just a “hearing.”
The Act does not trigger the formal adjudication provisions of the APA with respect to firearms hearings. The pertinent provisions of the Act require the Attorney General to hold “a hearing,” not a hearing “on the record,” in connection with the denial, revocation, or suspension of a license, or imposition of a civil fine.
The commenter also cites APA procedural requirements contained in 5 U.S.C. 556. However, section 556(a) provides as follows: “This section applies, according to the provisions thereof, to hearings required by section 553 or 554 of this title to be conducted in accordance with this section.” Sections 553 or 554 state that the procedural requirements of section 556 apply to rules and adjudications that are “required by statute to be made [or determined] on the record after opportunity for an agency hearing.” As discussed above, the Act does not require firearms licensing hearings to be conducted “on the record.”
For the reasons discussed above, this final rule has been revised from the proposed rule to omit any references that characterize hearings concerning the denial, suspension, or revocation of
The Department has also revised sections 478.73 and 478.74 to clarify that those sections apply to actions to revoke or suspend a license, or impose a civil fine, under 18 U.S.C. 924(p). This is a technical change that merely reiterates the requirements of the statute,
This rule has been drafted and reviewed in accordance with Executive Order 12866, “Regulatory Planning and Review,” section 1(b), Principles of Regulation, and in accordance with Executive Order 13563, “Improving Regulation and Regulatory Review,” section 1, General Principles of Regulation, and section 6, Retrospective Analyses of Existing Rules.
Further, both 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. The Department has assessed the costs and benefits of this regulation and believes that the regulatory approach selected maximizes net benefits.
This rule will not have an annual effect on the economy of $100 million or more, nor will it adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities. Similarly, it does not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency, materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof, or raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in Executive Order 12866. Accordingly, this proposed rule is not a “significant regulatory action” as defined by Executive Order 12866.
Section 6 of Executive Order 13563 directs agencies to develop a plan to review existing significant rules that may be “outmoded, ineffective, insufficient, or excessively burdensome,” and to make appropriate changes where warranted. The Department selected and reviewed this rule under the criteria set forth in its Plan for Retrospective Analysis of Existing Rules, and determined that this final rule merely clarifies that an applicant or licensee requesting an administrative hearing as a result of the denial, suspension, or revocation of a firearms license, or the imposition of a civil fine, will have the opportunity for the submission and consideration of facts and arguments for review and consideration by the Director, and to make offers of settlement before or after a hearing.
This regulation will not have substantial direct effects on the States, on the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132, “Federalism,” the Attorney General has determined that this regulation does not have sufficient Federalism implications to warrant the preparation of a Federalism summary impact statement.
This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988, “Civil Justice Reform.”
The Regulatory Flexibility Act (5 U.S.C. 605(b)) requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small not-for-profit enterprises, and small governmental jurisdictions. The Attorney General has reviewed this rule and, by approving it, certifies that this rule will not have a significant economic impact on a substantial number of small entities. The amendments merely clarify that an applicant or licensee requesting an administrative hearing as a result of the denial, suspension, or revocation of a firearms license, or the imposition of a civil fine, will have the opportunity for the submission and consideration of facts and arguments for review and consideration by the Director, and to make offers of settlement before or after a hearing.
This rule is not a major rule as defined by section 251 of the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 804. This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets.
This rule will not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.
This final rule does not impose any new reporting or recordkeeping requirements under the Paperwork Reduction Act.
Copies of the NPRM, all comments received in response to the NPRM, and this final rule will be available for public inspection by appointment during normal business hours at: ATF Reading Room, Room 1E-062, 99 New York Avenue NE., Washington, DC 20226; telephone: (202) 648-8740.
The author of this document is Shermaine Kenner, Office of Regulatory
Administrative practice and procedure, Arms and munitions, Customs duties and inspection, Exports, Imports, Intergovernmental relations, Law enforcement officers, Military personnel, Penalties, Reporting and recordkeeping requirements, Research, Seizures and forfeitures, and Transportation.
Accordingly, for the reasons discussed in the preamble, 27 CFR part 478 is amended as follows:
5 U.S.C. 552(a); 18 U.S.C. 847, 921-930; 44 U.S.C. 3504(h).
* * * During the hearing the applicant will have the opportunity to submit facts and arguments for review and consideration; offers of settlement will not be entertained at the hearing but may be made before or after the hearing. * * *
(a) * * * In addition, pursuant to 18 U.S.C. 922(t)(5) and 18 U.S.C. 924(p), a notice of revocation, suspension, or imposition of a civil fine may be issued on ATF Form 4500 whenever the Director has reason to believe that a licensee has knowingly transferred a firearm to an unlicensed person and knowingly failed to comply with the requirements of 18 U.S.C. 922(t)(1) with respect to the transfer and, at the time that the transferee most recently proposed the transfer, the national instant criminal background check system was operating and information was available to the system demonstrating that the transferee's receipt of a firearm would violate 18 U.S.C. 922(g) or 922(n) or State law; or that a licensee has violated 18 U.S.C. 922(z)(1) by selling, delivering, or transferring any handgun to any person other than a licensee, unless the transferee was provided with a secure gun storage or safety device for that handgun.
* * * If the decision is that the license should be revoked, or, in actions under 18 U.S.C. 922(t)(5) or 924(p), that the license should be revoked or suspended, or that a civil fine should be imposed, a certified copy of the summary shall be furnished to the licensee with the final notice of revocation, suspension, or imposition of a civil fine on ATF Form 5300.13. If the decision is that the license should not be revoked, or in actions under 18 U.S.C. 922(t)(5) or 924(p), that the license should not be revoked or suspended, and a civil fine should not be imposed, the licensee shall be notified in writing. During the hearing the licensee will have the opportunity to submit facts and arguments for review and consideration; offers of settlement will not be entertained at the hearing but may be made before or after the hearing.
Environmental Protection Agency.
Direct final rule.
The Environmental Protection Agency (EPA) is approving a State Implementation Plan (SIP) revision submitted by the State of New Hampshire that contains an ozone maintenance plan for New Hampshire's former 1-hour ozone nonattainment areas. The Clean Air Act requires that areas that are designated attainment for the 1997 8-hour ozone standard, and also had been previously designated either nonattainment or maintenance for the 1-hour ozone standard, develop a plan showing how the state will maintain the ozone standard for the area. The intended effect of this action is to approve New Hampshire's maintenance plan. This action is being taken in accordance with the Clean Air Act.
This direct final rule will be effective July 22, 2016, unless EPA receives adverse comments by June 22, 2016. If adverse comments are received, EPA will publish a timely withdrawal of the direct final rule in the
Submit your comments, identified by Docket ID No. EPA-R01-OAR-2012-0289 at
Anne Arnold, Air Quality Planning Unit, U.S. Environmental Protection Agency, Suite 100, Mail Code OEP05-02, Boston, MA 02109-3912, telephone number (617) 918-1047, fax number (617) 918-0047, email
Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.
Organization of this document. The following outline is provided to aid in locating information in this preamble.
This action addresses requirements associated with the transition from the 1-hour National Ambient Air Quality Standards (NAAQS) for ground-level ozone to the 1997 8-hour ozone NAAQS.
EPA has established, and periodically reviews and revises, the NAAQS for ground-level ozone. On July 18, 1997 (62 FR 38855), EPA published a final rule for a new 8-hour ozone standard of 0.08 parts per million (ppm). On April 30, 1994 (69 FR 23858), EPA designated and classified areas for the 1997 8-hour ozone NAAQS. Also, on April 30, 2004 (69 FR 23951), EPA published the Phase 1 rule for implementation of the 1997 8-hour ozone NAAQS. Among other requirements, this rule set forth requirements for anti-back sliding purposes for areas designated attainment for the 1997 8-hour ozone standard.
Subsequently, in 2008, and in 2015, EPA again revised the ozone NAAQS to 0.075 ppm and 0.070 ppm, respectively.
EPA is approving a State Implementation Plan (SIP) revision submitted by the State of New Hampshire on March 2, 2012. The SIP revision consists of the Clean Air Act (CAA or Act) section 110(a)(1) ozone maintenance plan for the 1997 8-hour ozone standard for New Hampshire. The maintenance plan demonstrates how the state intends to maintain the 1997 8-hour National Ambient Air Quality Standard for ozone.
The CAA section 110(a)(1) maintenance plan requirement applies to areas that are designated as attainment/unclassifiable for the 1997 8-hour ozone standard and also had a designation of either nonattainment or attainment with an approved maintenance plan for the 1-hour ozone standard as of June 15, 2004, the effective date of the 1997 8-hour ozone standard designation for these areas (See 69 FR 23857). In New Hampshire, this area consists of the cities and towns listed in Table 1.
Pursuant to section 110(a)(1) of the Clean Air Act, the implementation rule for the 1997 ozone standard requires that areas that were either nonattainment or maintenance areas for the 1-hour ozone NAAQS, but attainment for the 1997 8-hour ozone NAAQS, submit a plan to demonstrate the continued maintenance of the 1997 8-hour ozone NAAQS. EPA established June 15, 2007, three years after the effective date of the initial 1997 8-hour ozone designations, as the deadline for submission of plans for these areas. See 40 CFR 51.905.
On May 20, 2005, EPA issued guidance
Subsequently, in the implementation rule for the 2008 ozone NAAQS (80 FR 12264; March 6, 2015), EPA revoked the 1997 8-hour ozone standard. Nevertheless, New Hampshire's March 2, 2012 SIP revision of a Section 110(a)(1) ozone maintenance plan for the 1997 8-hour ozone standard is pending before us, so we are taking action on it at this time.
EPA has determined that the New Hampshire Department of
An emissions inventory is an itemized list of emission estimates for sources of air pollution in a given area for a specified time period. NHDES has provided a comprehensive emissions inventory for ozone precursors (NO
With regard to demonstrating continued maintenance of the 1997 8-hour ozone standard, NHDES projects that the total emissions from the maintenance area will decrease during the ten-year maintenance period. NHDES has projected emissions from 2002 until 2014. The projected trend in emissions is downward. This clearly demonstrates that the 1997 8-hour ozone standard will be maintained for the ten year period between 2004 and 2014, which is the required test.
Table 2 shows the total VOC and NOx emissions for the maintenance area in New Hampshire for the base year (2002), an interim year (2012), and a final year (2014).
With regard to the ambient air monitoring component of a maintenance plan, New Hampshire's submittal describes the ozone monitoring network in the maintenance area and New Hampshire commits to the continuing operation of an effective air quality monitoring network to verify the area's attainment status in accordance with the Code of Federal Regulations (CFR), specifically, 40 CFR part 58. New Hampshire's SIP revision was submitted on March 2, 2012 and includes ozone design values
EPA
New Hampshire's SIP revision notes that the State will track the maintenance of attainment by analyzing air quality trends at local monitors and annually updating the state's emissions inventories. NHDES produces comprehensive emission inventories on a three-year cycle and revises the inventories annually using updated emissions data for the largest sources.
Finally, as a practical matter, at this point in time, the 10 year maintenance period (2004-2014) has ended and, as noted by the ozone design values in Table 3 above, the area has maintained the 1997 8-hour ozone standard.
EPA is approving into the New Hampshire SIP the Clean Air Act Section 110(a)(1) 1997 8-hour ozone maintenance plan for the New Hampshire area that is required to have such a plan. This area includes the cities and towns listed in Table 1 above.
The EPA is publishing this action without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comments. However, in the proposed rules section of this
If the EPA receives such comments, then EPA will publish a notice withdrawing the final rule and informing the public that the rule will not take effect. All public comments received will then be addressed in a subsequent final rule based on the proposed rule. The EPA will not institute a second comment period on the proposed rule. All parties interested in commenting on the proposed rule should do so at this time. If no such comments are received, the public is advised that this rule will be effective on July 22, 2016 and no further action will be taken on the proposed rule. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.
Under the Clean Air Act, 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, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• 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
• 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 EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications 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).
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by July 22, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for
Environmental protection, Air pollution control, Incorporation by reference, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds.
Part 52 of chapter I, title 40 of the Code of Federal Regulations is amended as follows:
42 U.S.C. 7401
(j) Approval—EPA is approving the Clean Air Act section 110(a)(1) maintenance plan for the 1997 8-hour ozone National Ambient Air Quality Standard in the area of the New Hampshire required to have such a plan. This area includes portions of Hillsborough, Merrimack, Rockingham, and Strafford Counties, and all of Cheshire County. This maintenance plan was submitted to EPA on March 2, 2012.
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is disapproving severable portions of the February 6, 2012 Oklahoma State Implementation Plan (SIP) submittal that are inconsistent with federal laws based on recent decisions by the United States Courts and subsequent EPA rulemaking. This submittal established Minor New Source Review permitting requirements for greenhouse gas (GHG) emissions and includes Prevention of Significant Deterioration (PSD) permitting provisions for sources that are classified as major, and, thus, required to obtain a PSD permit, based solely on their potential GHG emissions. The PSD permitting provisions also require a PSD permit for modifications of otherwise major sources because they increased only GHG emissions above applicable levels. Additionally, we are disapproving severable portions of SIP submittals for the States of Arkansas, New Mexico, and Oklahoma addressing the EPA's July 20, 2011 rule deferring PSD requirements for carbon dioxide (CO
This rule is effective on June 22, 2016.
The EPA has established a docket for this action under Docket ID No. EPA-R06-OAR-2015-0783. All documents in the docket are listed on the
Ms. Adina Wiley, (214) 665-2115,
Throughout this document, “we,” “us,” and “our” means the EPA.
The background for this action is discussed in detail in our January 11, 2016 proposal.
We received one comment on our proposed action. Our response to the submitted comment is provided below.
We are taking this final action under section 110 and part C of the Act; as such, we are not imposing sanctions as a result of this disapproval. This final disapproval does not require the EPA to promulgate a Federal Implementation Plan because we are finding that the submitted provisions are inconsistent with federal laws for the regulation and permitting of GHG emissions.
We are disapproving the following severable portions of the February 6, 2012 Oklahoma SIP submittal that establish GHG permitting requirements for minor sources and Step 2 PSD:
• Substantive revisions to the Oklahoma SIP establishing Minor NSR GHG permitting requirements at OAC 252:100-7-2.1 as submitted on February 6, 2012; and
• Substantive revisions to the Oklahoma PSD program in OAC 252:100-8-31 establishing PSD permitting requirements for Step 2 sources at paragraph (E) of the definition of “subject to regulation” as submitted on February 6, 2012.
We are also disapproving as inconsistent with federal laws and regulations for PSD permitting, severable portions of the following SIP submittals that include the Biomass Deferral:
• Substantive revisions to the Arkansas SIP definition of “CO
• Substantive revisions to the New Mexico SIP definition of “Subject to Regulation” at 20.2.74.7 (AZ)(2)(
• Substantive revisions to the Oklahoma SIP definitions of “carbon dioxide equivalent emissions” at OAC 252:100-1-3 and “subject to regulation” at OAC 252:100-8-31 as submitted on January 18, 2013.
As a result of the final disapproval actions listed above, the EPA is also updating the “Approval status” section of the Arkansas SIP at 40 CFR 52.172, New Mexico SIP at 40 CFR 52.1622, and Oklahoma SIP at 40 CFR 52.1922. Additionally, we are renumbering 40 CFR 52.172 of the Arkansas SIP for consistency.
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 choices, provided that they meet the criteria of the CAA. We have concluded that the state choices under review in this action do not meet the criteria of the CAA. Accordingly, this action disapproves state law as not meeting Federal requirements for the regulation and permitting of GHG emissions.
This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review.
This action does not impose an information collection burden under the PRA. There is no burden imposed under the PRA because this action disapproves submitted revisions that are no longer consistent with federal laws for the regulation and permitting of GHG emissions.
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities. This action disapproves submitted revisions that are no longer consistent with federal laws for the regulation and permitting of GHG emissions, and therefore will have no impact on small entities.
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. This action disapproves submitted revisions that are no longer consistent with federal laws for the regulation and permitting of GHG emissions, and therefore will have no impact on small governments.
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.
This action does not have tribal implications as specified in Executive Order 13175. This action disapproves provisions of state law that are no longer consistent with federal laws for the regulation and permitting of GHG emissions; there are no requirements or responsibilities added or removed from Indian Tribal Governments. Thus, Executive Order 13175 does not apply to this action.
The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it disapproves state permitting provisions that are inconsistent with federal laws for the regulation and permitting of GHG emissions.
This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.
This rulemaking does not involve technical standards.
The EPA believes the human health or environmental risk addressed by this action will not have potential disproportionately high and adverse
The Congressional Review Act, 5 U.S.C. 801
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 22, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purpose 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)).
Environmental protection, Air pollution control, Incorporation by reference, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.
40 CFR part 52 is amended as follows:
42 U.S.C. 7401
With the exceptions set forth in this subpart, the Administrator approves Arkansas's state implementation plan under section 110 of the Clean Air Act. Furthermore, the Administrator finds that the plan satisfies all applicable requirements of Parts C and D, Title I, of the Clean Air Act as amended in 1990, except as noted below.
(a) 1997 PM
(b) 2006 PM
(c) GHGs: The revisions to the Arkansas SIP definition of “CO
With the exceptions set forth in this subpart, the Administrator approves New Mexico's state implementation plan under section 110 of the Clean Air Act. Furthermore, the Administrator finds that the plan satisfies all applicable requirements of Parts C and D, Title I, of the Clean Air Act as amended in 1990, except as noted below.
(a) The revisions to the New Mexico SIP definition of “Subject to Regulation” at 20.2.74.7 (AZ)(2)(
(b) [Reserved]
With the exceptions set forth in this subpart, the Administrator approves Oklahoma's state implementation plan under section 110 of the Clean Air Act. Furthermore, the Administrator finds that the plan satisfies all applicable requirements of Parts C and D, Title I, of the Clean Air Act as amended in 1990, except as noted below.
(a) Revisions to the Oklahoma SIP establishing Minor NSR GHG permitting requirements at OAC 252:100-7-2.1 as submitted on February 6, 2012.
(b) Revisions to the Oklahoma PSD program in OAC 252:100-8-31 establishing PSD permitting requirements for sources that are classified as major and thus required to obtain a PSD permit based solely on their potential GHG emissions (“Step 2 sources”) at paragraph (E) of the definition of “subject to regulation” as submitted on February 6, 2012.
(c) Revisions to the Oklahoma SIP definitions of “carbon dioxide equivalent emissions” at OAC 252:100-1-3 and “subject to regulation” at OAC 252:100-8-31 to implement the GHG Biomass Deferral as submitted on January 18, 2013.
Environmental Protection Agency (EPA).
Determination of acceptability.
This determination of acceptability expands the list of acceptable substitutes pursuant to the U.S. Environmental Protection Agency's (EPA) Significant New Alternatives Policy (SNAP) program. This action lists as acceptable additional substitutes for use in the refrigeration and air conditioning sector.
This determination is effective on May 23, 2016.
EPA established a docket for this action under Docket ID No. EPA-HQ-OAR-2003-0118 (continuation of Air Docket A-91-42). All electronic documents in the docket are listed in the index at
Gerald Wozniak by telephone at (202) 343-9624, by email at
For more information on the Agency's process for administering the SNAP program or criteria for the evaluation of substitutes, refer to the initial SNAP rulemaking published in the
This action presents EPA's most recent decision to list as acceptable several substitutes in the refrigeration and air conditioning sector. New substitutes are:
• CO
• Hydrofluoroolefin
• HFO-1336mzz(
• R-513A in retail food refrigeration—food processing and dispensing equipment.
For copies of the full list of acceptable substitutes for ozone depleting substances (ODS) in all industrial sectors, visit the SNAP portion of EPA's Ozone Layer Protection Web site at
The sections below discuss each substitute listing in detail. Appendix A contains tables summarizing today's listing decisions for these new substitutes. The statements in the “Further Information” column in the tables provide additional information, but are not legally binding under section 612 of the Clean Air Act (CAA). In addition, the “Further Information” column may not include a comprehensive list of other legal obligations you may need to meet when using the substitute. Although you are not required to follow recommendations in the “Further Information” column of the table to use a substitute consistent with section 612 of the CAA, some of these statements may refer to obligations that are enforceable or binding under federal or state programs other than the SNAP program. In many instances, the information simply refers to standard operating practices in existing industry standards and/or building codes. When using these substitutes, EPA strongly encourages you to apply the information in this column. Many of these recommendations, if adopted, would not require significant changes to existing operating practices.
You can find submissions to EPA for the substitutes listed in this document, as well as other materials supporting the decisions in this action, in Docket EPA-HQ-OAR-2003-0118 at
Carbon dioxide is also known as R-744 when used as a refrigerant. Its Chemical Abstracts Service Registry Number (CAS Reg. No.) is 124-38-9.
You may find the redacted submissions in Docket EPA-HQ-OAR-2003-0118 at
EPA previously listed CO
EPA's regulation codified at 40 CFR part 82, subpart F exempts CO
CO
To mitigate these potential health risks in the workplace, CO
In ice skating rinks, many substitutes listed as acceptable have higher GWPs than the GWP of one for CO
In centrifugal and positive displacement chillers, most other substitutes listed as acceptable have higher GWPs than CO
In industrial process air conditioning, most other substitutes listed as acceptable have higher GWPs than CO
Flammability and toxicity risks of this substitute are comparable to or lower than the flammability and toxicity risks of other available substitutes in the same end-uses. Flammability risks are low, as discussed above. The toxicity risks are similar to those for many other refrigerants and, as with those other refrigerants, can be minimized by use consistent with the OSHA PEL, NIOSH STEL, ASHRAE 15 and other industry standards, recommendations in the SDS, and other safety precautions common in the refrigeration and air conditioning industry.
EPA finds CO
HFO-1336mzz(
You may find the redacted submission in Docket EPA-HQ-OAR-2003-0118 at
• “Risk Screen on Substitutes for Use in Chillers and Industrial Process Air Conditioning Substitute: HFO-1336mzz(
• “Risk Screen on Substitutes for Use in Heat Transfer Substitute: HFO-1336mzz(
We have previously listed HFO-1336mzz(
EPA anticipates that HFO-1336mzz(
In centrifugal and positive displacement chillers, most other substitutes listed as acceptable have higher GWPs than HFO-1336mzz(
In industrial process air conditioning, most other substitutes listed as acceptable have higher GWPs than HFO-1336mzz(
In non-mechanical heat transfer, most other substitutes listed as acceptable have higher GWPs such as HFC-245fa, HFC-134a and HFC-125 with GWPs ranging from 1,030 to 3,500. HFO-1336mzz(
Flammability and toxicity risks of this substitute are comparable to or lower than the flammability and toxicity risks of other available substitutes in the same end-uses. Flammability risks are low, as discussed above. Toxicity risks can be minimized by use consistent with the OARS WEEL, ASHRAE 15 and other industry standards, recommendations in the SDS, and other safety precautions common in the refrigeration and air conditioning industry.
EPA finds HFO-1336mzz(
• Centrifugal chillers (new and retrofit equipment)
• Positive-displacement chillers (new and retrofit equipment)
This refrigerant is a weighted blend of 74.7 percent HFO-1336mzz(
You may find the redacted submission in Docket EPA-HQ-OAR-2003-0118 at
EPA anticipates that HFO-1336mzz(
In centrifugal and positive-displacement chillers, most other substitutes listed as acceptable have higher GWPs than HFO-1336mzz(
Flammability and toxicity risks of this substitute are comparable to or lower than the flammability and toxicity risks of other available substitutes in the same end-uses. Flammability risks are low, as discussed above. Toxicity risks can be minimized by use consistent with the OSHA PEL, OARS WEEL, the manufacturer's recommended AEL, ASHRAE 15 and other industry standards, recommendations in the SDS, and other safety precautions common in the refrigeration and air conditioning industry.
EPA finds HFO-1336mzz(
R-513A, marketed under the trade name Opteon® XP10, is a weighted blend of 44 percent HFC-134a, which is also known as 1,1,1,2 tetrafluoroethane (CAS Reg. No. 811-97-2); and 56 percent HFO-1234yf, which is also known as 2,3,3,3-tetrafluoroprop-1-ene (CAS Reg. No. 754-12-1).
You may find the redacted submission in Docket EPA-HQ-OAR-2003-0118 at
The AIHA has established WEELs of 1,000 ppm and 500 ppm as an 8-hour TWA for HFC-134a and HFO-1234yf, respectively, the components of R-513A. The manufacturer of R-513A recommends an AEL of 653 ppm on an 8-hour TWA for the blend. EPA anticipates that users will be able to meet each of the AIHA WEELs and the manufacturer's AEL, and address potential health risks by following requirements and recommendations in the SDS, in ASHRAE 15, and other safety precautions common to the refrigeration and air conditioning industry.
R-513A's GWP of about 630 is comparable to or lower than most other substitutes in retail food refrigeration—refrigerated food processing and dispensing, including R-450A, HFC-134a, R-404A, R-407C, and a number of HFC blends, with GWPs ranging from approximately 600 to 3,920.
Flammability and toxicity risks are comparable to or lower than flammability and toxicity risks of other available substitutes in the same end-use. Flammability risks are low, as discussed above. Toxicity risks can be minimized by use consistent with the AIHA WEELs, ASHRAE 15 and other industry standards, recommendations in the SDS, and other safety precautions common in the refrigeration and air conditioning industry.
EPA finds R-513A acceptable in the end-use listed above, because the overall environmental and human health risk posed by R-513A is lower than or comparable to the risks posed by other available substitutes in the same end-use.
Section 612 of the CAA requires EPA to develop a program for evaluating alternatives to ozone-depleting substances. EPA refers to this program as the Significant New Alternatives Policy (SNAP) program. The major provisions of section 612 are:
Section 612(c) requires EPA to promulgate rules making it unlawful to replace any class I substance (CFC, halon, carbon tetrachloride, methyl chloroform, methyl bromide, hydrobromofluorocarbon, and chlorobromomethane) or class II substance (HCFC) with any substitute that the Administrator determines may present adverse effects to human health or the environment where the Administrator has identified an alternative that (1) reduces the overall risk to human health and the environment, and (2) is currently or potentially available.
Section 612(c) requires EPA to publish a list of the substitutes unacceptable for specific uses and to publish a corresponding list of acceptable alternatives for specific uses. The list of “acceptable” substitutes is found at
Section 612(d) grants the right to any person to petition EPA to add a substance to, or delete a substance from, the lists published in accordance with section 612(c). The Agency has 90 days to grant or deny a petition. Where the Agency grants the petition, EPA must publish the revised lists within an additional six months.
Section 612(e) directs EPA to require any person who produces a chemical substitute for a class I substance to notify the Agency not less than 90 days before new or existing chemicals are introduced into interstate commerce for significant new uses as substitutes for a class I substance. The producer must also provide the Agency with the producer's unpublished health and safety studies on such substitutes.
Section 612(b)(1) states that the Administrator shall seek to maximize the use of federal research facilities and resources to assist users of class I and II substances in identifying and developing alternatives to the use of such substances in key commercial applications.
Section 612(b)(4) requires the Agency to set up a public clearinghouse of alternative chemicals, product substitutes, and alternative manufacturing processes that are available for products and manufacturing processes which use class I and II substances.
On March 18, 1994, EPA published the initial SNAP rule (59 FR 13044) which established the process for administering the SNAP program and issued EPA's first lists identifying acceptable and unacceptable substitutes in the major industrial use sectors (subpart G of 40 CFR part 82). These sectors are the following: Refrigeration and air conditioning; foam blowing; solvents cleaning; fire suppression and explosion protection; sterilants; aerosols; adhesives, coatings and inks; and tobacco expansion. These sectors comprise the principal industrial sectors that historically consumed the largest volumes of ODS.
Section 612 of the CAA requires EPA to list as acceptable those substitutes that do not present a significantly greater risk to human health and the environment as compared with other substitutes that are currently or potentially available.
Under the SNAP regulations, anyone who plans to market or produce a substitute to replace a class I substance or class II substance in one of the eight major industrial use sectors must provide the Agency with notice and the required health and safety information on the substitute at least 90 days before introducing it into interstate commerce for significant new use as an alternative (40 CFR 82.176(a)). While this requirement typically applies to chemical manufacturers as the entity likely to be planning to introduce the substitute into interstate commerce,
The Agency has identified four possible decision categories for substitute submissions: Acceptable; acceptable subject to use conditions; acceptable subject to narrowed use limits; and unacceptable (40 CFR 82.180(b)).
After reviewing a substitute, the Agency may make a determination that a substitute is acceptable only if certain conditions in the way that the substitute is used are met to minimize risks to human health and the environment. EPA describes such substitutes as “acceptable subject to use conditions.” Entities that use these substitutes without meeting the associated use conditions are in violation of EPA's SNAP regulations (40 CFR 82.174(c)).
For some substitutes, the Agency may permit a narrowed range of use within an end-use or sector. For example, the Agency may limit the use of a substitute to certain end-uses or specific applications within an industry sector. The Agency generally requires a user of a substitute subject to narrowed use limits to demonstrate that no other acceptable substitutes are available for their specific application.
The section 612 mandate for EPA to prohibit the use of a substitute that may present risk to human health or the environment where a lower risk alternative is available or potentially available
As described in this document and elsewhere, including the initial SNAP rule published in the
In contrast, EPA publishes “notices of acceptability” or “determinations of acceptability,” to notify the public of substitutes that are deemed acceptable with no restrictions. As described in the preamble to the rule initially implementing the SNAP program (59 FR 13044; March 18, 1994), EPA does not believe that rulemaking procedures are necessary to list alternatives that are acceptable without restrictions because such listings neither impose any sanction nor prevent anyone from using a substitute.
Many SNAP listings include “comments” or “further information” to provide additional information on substitutes. Since this additional information is not part of the regulatory decision, these statements are not binding for use of the substitute under the SNAP program. However, regulatory requirements so listed are binding under other regulatory programs (
For copies of the comprehensive SNAP lists of substitutes or additional information on SNAP, refer to EPA's Ozone Depletion Web site at:
Environmental protection, Administrative practice and procedure, Air pollution control, Reporting and recordkeeping requirements.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final rule.
NMFS issues regulations to implement Amendment 35 to the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (FMP) (Amendment 35), as prepared and submitted by the South Atlantic Fishery Management Council (Council). Amendment 35 and this final rule removes black snapper, mahogany snapper, dog snapper, and schoolmaster from the FMP and the regulations, and revises regulations regarding the golden tilefish longline endorsement program. The purpose of this final rule is to ensure that only snapper-grouper species requiring Federal management are included in the Snapper-Grouper FMP, improve the consistency of management of snapper-grouper species in waters off south Florida across state and Federal jurisdictional boundaries, and to align regulations for golden tilefish longline endorsements with the Council's original intent for establishing the longline endorsement program.
This final rule is effective June 22, 2016.
Electronic copies of Amendment 35 may be obtained from the Southeast Regional Office Web site at
Nikhil Mehta, telephone: 727-824-5305; email:
The snapper-grouper fishery of the South Atlantic is managed under the FMP, and includes black snapper, mahogany snapper, dog snapper, schoolmaster, and golden tilefish. The FMP was prepared by the Council and is implemented through regulations at 50 CFR part 622 under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act).
On February 5, 2016, NMFS published a notice of availability for Amendment 35 and requested public comment (81 FR 6222). On March 4, 2016, NMFS published a proposed rule for Amendment 35 and requested public comment (81 FR 11502). The Secretary
Amendment 35 and this final rule removes black snapper, mahogany snapper, dog snapper, and schoolmaster from the FMP and the regulations, and revises the golden tilefish longline endorsement regulations to be consistent with the Council's original intent for establishing the longline endorsement program.
The Council determined in Amendment 35 that black snapper, mahogany snapper, dog snapper, and schoolmaster should be removed from the FMP, to ensure that only species requiring Federal management are included in the FMP. While these species are currently in the FMP, they have extremely low commercial landings in state and Federal waters, and almost all harvest (recreational and commercial) occurs in waters off the coast of South Florida. Currently, NMFS does not manage these species in Federal waters of the Gulf of Mexico (Gulf); however, the species are subject to regulations in Florida state waters. As described in Amendment 35, there are currently different regulations for recreational bag limits, size limits, and catch levels for these species in South Atlantic Federal waters and Florida state waters. Inconsistent regulations make enforcement difficult and can be confusing to the public. Amendment 35 and this final rule removes black snapper, mahogany snapper, dog snapper, and schoolmaster from the FMP and the regulations and NMFS will not manage these species in Federal waters of the South Atlantic. At its April 2016 meeting, the Florida Fish and Wildlife Conservation Commission approved extending state regulation of these species into Federal waters off Florida for Florida-state registered fishing vessels, consistent with section 306(a)(3)(A) of the Magnuson-Stevens Act, to provide consistent regulations for these species across state and Federal jurisdictional boundaries.
Black snapper is part of the deep-water complex within the FMP. The deep-water complex currently includes black snapper, yellowedge grouper, silk snapper, misty grouper, queen snapper, sand tilefish, and blackfin snapper. With black snapper removed from the FMP, the annual catch limit (ACL) for the deep-water complex is reduced from 170,278 lb (77,237 kg), round weight, to 169,896 lb (77,063 kg), round weight, a difference of 382 lb (173 kg), round weight.
Dog snapper and mahogany snapper are part of the other snappers complex within the FMP. The other snappers complex currently includes cubera snapper, gray snapper, lane snapper, dog snapper, and mahogany snapper. Removal of dog snapper and mahogany snapper from the FMP reduces the other snappers complex ACL from 1,517,716 lb (688,424 kg), round weight, to 1,513,883 lb (686,688 kg), round weight, a difference of 3,833 lb (1,739 kg), round weight.
Schoolmaster is currently designated as an ecosystem component (EC) species in the FMP. The Council chose not to retain dog snapper, mahogany snapper, and black snapper in the FMP as EC species because the objective of the amendment is to establish a consistent regulatory environment across jurisdictional boundaries in Gulf and South Atlantic Federal waters and Florida state waters. Because NMFS does not manage these species in Gulf Federal waters, the Council determined that retaining them as EC species would continue inconsistent regulations across jurisdictional boundaries. Additionally, if these species were designated as EC species, the state of Florida would not be able to extend their management authority for these species into Federal waters, because states may not generally manage species in Federal waters if those species are included in Federal fishery management plans, as per section 306(a)(3)(A) of the Magnuson-Stevens Act.
Removing these species from the FMP and the regulations is not expected to result in any adverse biological effects.
The final rule to implement Amendment 18B to the FMP (78 FR 23858, April 23, 2013) established a longline endorsement program for the commercial golden tilefish component of the snapper-grouper fishery. A longline endorsement is required to fish for golden tilefish with longline gear. Amendment 18B also established a golden tilefish hook-and-line quota and modified the golden tilefish commercial trip limits. The Council established the longline endorsement program and gear specific commercial quotas to help ensure that fishermen fishing with each gear type have a fair and equitable allocation of the commercial quota. The Council did not intend for longline endorsement holders to fish on the hook-and-line quota, or for non-endorsement holders to fish on the longline quota.
The Council and NMFS are aware that since Amendment 18B was implemented, some longline endorsement holders are transferring their golden tilefish longline endorsement to another vessel and then fishing for golden tilefish using hook-and-line gear under the hook-and-line quota. Other endorsement holders are renewing their Federal commercial snapper-grouper vessel permit but are waiting to renew their golden tilefish longline endorsement, so that they are able to fish for golden tilefish using hook-and-line gear under the hook-and-line quota while their longline endorsement is not valid. Neither scenario is consistent with the original intent of the Council in Amendment 18B. The Council decided to clarify their intent for golden tilefish longline endorsement holders in Amendment 35. Currently, as described at § 622.191(a)(2)(ii), the regulations state that “Vessels with a golden tilefish longline endorsement are not eligible to fish for golden tilefish using hook-and-line gear under this 500-lb (227-kg), gutted weight, trip limit.” This final rule revises the regulations to state that “Vessels that have valid or renewable golden tilefish longline endorsements anytime during the fishing year, are not eligible to fish for golden tilefish using hook-and-line gear under this 500-lb (227-kg), gutted weight, trip limit.” Thus, a fisherman who owns a vessel with a valid or renewable golden tilefish longline endorsement would not be eligible to fish for golden tilefish using hook-and-line gear under the 500-lb (227-kg), gutted weight, hook-and-line trip limit during that fishing year.
In the part 622 regulations, NMFS would revise “allowable biological catch” to read “acceptable biological catch” wherever it occurs. In the part 600 regulations, “ABC” is defined as “acceptable biological catch;” however, in the part 622 regulations, “ABC” is defined as “acceptable biological catch” in three places and “allowable biological catch” in four places. NMFS has determined that “acceptable biological catch” is the more precise definition for “ABC”. Therefore, to be consistent with the part 600 regulations and to use the more precise terminology, NMFS changes the definition of “ABC” to “acceptable biological catch,” and accordingly revise “allowable biological catch,”
A total of 11 comments were received on the proposed rule and Amendment 35 from individuals, a recreational fishing organization, the state of Florida, and a Federal agency. One individual and the state of Florida supported the removal of the four species from the Snapper-Grouper FMP. Two comments were not related to the actions in the Amendment 35. The Federal agency stated that it had no comment on the proposed rule or Amendment 35. The remaining comments that specifically relate to the actions contained in the amendment and the rule as well as NMFS' respective responses, are summarized below.
However, the Council and NMFS are aware that since Amendment 18B was implemented, some longline endorsement holders have been transferring their golden tilefish longline endorsement to another vessel and then fishing for golden tilefish using hook-and-line gear under the hook-and-line quota. Other endorsement holders are renewing their Federal commercial snapper-grouper vessel permit but are waiting to renew their golden tilefish longline endorsement, thereby fishing for golden tilefish using hook-and-line gear under the hook-and-line quota while their longline endorsement is not valid. Neither scenario is consistent with the original intent of the Council in Amendment 18B. Through Amendment 35, the Council clarified and reaffirmed their intent for the golden tilefish longline endorsement program in the snapper-grouper fishery, to ensure that fishermen using both gear types can participate in harvesting the golden tilefish resource.
If a commercial fishermen with a longline endorsement wishes to continue fishing for golden tilefish under the hook-and-line commercial trip limit during a specific fishing year after the effective date of this final rule, they would need to do so on a different vessel with a different commercial snapper-grouper permit. This is consistent with the Council's original intent in Amendment 18B, which was reaffirmed by the Council in Amendment 35. NMFS notes that it would likely not be economically feasible to purchase a new vessel and permit for the sole purpose of harvesting golden tilefish under the hook-and-line trip limit; however, NMFS assumes commercial fishers will only purchase new assets if they expect to result in a profit. Therefore, the negative economic effects of this final rule are limited in scope to a potential reduction in golden tilefish revenue for the 22 longline endorsement holders, most of whom did not harvest golden tilefish under both
The Regional Administrator, Southeast Region, NMFS, has determined that this final rule is consistent with Amendment 35, the FMP, the Magnuson-Stevens Act, and other applicable laws.
This final rule has been determined to be not significant for purposes of Executive Order 12866.
The Magnuson-Stevens Act provides the statutory basis for this rule. The proposed rule and the preamble to this final rule provide a statement of the need for and objectives of this rule. No duplicative, overlapping, or conflicting Federal rules have been identified. In addition, no new reporting, record-keeping, or other compliance requirements are introduced by this final rule.
In compliance with section 604 of the RFA, NMFS prepared a final regulatory flexibility analysis (FRFA) for this final rule. The FRFA follows.
Public comments relating to socio-economic implications and potential impacts on small businesses are addressed in the responses to comments 2, 3, and 4 in the Comments and Responses section of this final rule. No changes to this final rule were made in response to public comments. No comments were received from the Office of Advocacy for the Small Business Administration.
NMFS agrees that the Council's choice of preferred alternatives will best achieve the Council's objectives for Amendment 35 while minimizing, to the extent practicable, the adverse effects on fishers, support industries, and associated communities.
This final rule will directly affect all commercial vessels that harvest black snapper, dog snapper, mahogany snapper, schoolmaster and/or golden tilefish under the FMP. The removal of the four snapper-grouper species discussed in this final rule will not directly apply to or affect charter vessel and headboat (for-hire) businesses. Any impact to the profitability or competitiveness of for-hire fishing businesses will be the result of changes in for-hire angler demand and will therefore be indirect in nature. Currently, federally permitted charter and headboat captains and crew can retain black snapper, dog snapper, mahogany snapper, schoolmaster and golden tilefish under the recreational bag limit; however, they cannot sell these fish. As such, charter and headboat captains and crew will only be affected as recreational anglers. The RFA does not consider recreational anglers, who will be directly affected by this final rule, to be small entities, so they are outside the scope of this analysis and only the effects on commercial vessels were analyzed.
As of April 27, 2016, there were 553 vessels with valid or renewable Federal South Atlantic snapper-grouper unlimited permits, 116 vessels with valid or renewable 225-lb (102-kg) trip-limited permits and 22 vessels with valid or renewable longline endorsements for golden tilefish. Data from the years of 2009 through 2013, supplemented by partial 2014 data, were used in Amendment 35, as well as the initial regulatory flexibility analysis (IRFA), and this data provided the basis for the Council's decision. Although all commercial snapper-grouper permit holders have the opportunity to fish for black snapper, dog snapper, mahogany snapper, and/or schoolmaster, on average, there were only four federally permitted vessels identified from 2009 through 2013 that commercially landed one or more of these species each year. The average annual vessel-level revenue for all species harvested by these four vessels over this period was approximately $101,000 (2013 dollars), of which $32 was from black snapper, dog snapper, mahogany snapper, and/or schoolmaster. During the same time period, on average, 22 vessels per year commercially harvested golden tilefish using longline gear and their annual average vessel-level revenue for all species was approximately $95,000 (2013 dollars), of which $55,000 was from golden tilefish. Thirty-seven vessels, on average (2009 through 2013), commercially harvested golden tilefish exclusively with non-longline gear and they earned an average of approximately $46,000 (2013 dollars) per vessel for all species harvested, of which $2,000 was from golden tilefish.
No other small entities that will be directly affected by this final rule have been identified.
The Small Business Administration (SBA) has established size criteria for all major industry sectors in the U.S., including commercial finfish harvesters (NAICS code 114111). A business primarily involved in finfish harvesting is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts not in excess of $20.5 million for all its affiliated operations worldwide. All of the vessels directly regulated by this final rule are believed to be small entities based on the SBA size criteria.
There are currently 669 vessels eligible to fish for the snapper-grouper species managed under the FMP. Based on the analysis included in the IRFA, NMFS expects only 63 of them will be affected by this final rule (approximately 9 percent). Because all of these commercial fishing businesses are believed to be small entities, the issue of disproportionate effects on small versus large entities does not arise in the present case.
Amendment 35 and this final rule remove black snapper, dog snapper, mahogany snapper, and schoolmaster from the FMP and the regulations. The state of Florida will subsequently extend its management of these species into Federal waters off Florida, for Florida-state registered vessels. Average revenues per vessel from 2009 through 2013 for these four snapper-grouper species accounted for less than 1 percent of average total revenues received by the vessels that commercially harvested these species. Almost all harvest (recreational and commercial) of these species occurs in state and Federal waters off the coast of south Florida. The level of harvest of these species is not expected to change under management by the state of Florida, thus no reduction in associated ex-vessel revenue or profit is expected from this final rule.
This final rule will also modify the golden tilefish longline endorsement regulations. Vessels that have Federal commercial snapper-grouper permits with golden tilefish longline endorsements, specifically those that harvest golden tilefish using both longline and hook-and-line gear, are expected to be negatively affected by this action because they will no longer
The following discussion analyzes the alternatives that were not selected as preferred by the Council. Only actions that would have direct economic effects on small entities merit inclusion in the following discussion.
Five alternatives were considered to remove species from the FMP. The first alternative, the no action alternative, would retain all current species in the FMP and would not be expected to have any economic effects. Under the no action alternative, species that do not require Federal management would remain in the FMP and potential cost savings and/or efficiency gains of management would go unrealized. All of the other alternatives were selected as preferred and will result in the removal of black snapper, dog snapper, mahogany snapper, and schoolmaster from Federal management.
Three alternatives, including the preferred alternative, were considered for modifying the golden tilefish endorsement regulations. The first alternative, the no action alternative, would not be expected to have any economic effects. The current golden tilefish endorsement regulations are, however, contrary to the original intent of the Council and unintentionally limit golden tilefish harvest opportunities and economic benefits for hook-and-line fishermen. The second alternative would revise the golden tilefish endorsement regulations so that any vessel with a valid or renewable Federal longline endorsement would not be permitted to harvest golden tilefish under the hook-and-line quota. Under the second alternative, longline endorsement holders that operate more than one vessel (with a Federal snapper-grouper vessel permit) would be able to transfer their golden tilefish longline endorsement to a different vessel and then continue to fish for golden tilefish under the hook-and-line quota in a single year. Only one vessel exhibited this behavior in 2014. Under the second alternative, the negative economic effects on the longline endorsement holders would be less than that expected through this final rule, as would the positive effects experienced by the hook-and-line component of the commercial sector. However, this alternative would be inconsistent with the original Council intent of establishing the longline endorsement in Amendment 18B, which was that vessels with a golden tile longline endorsement would not be eligible to fish for golden tilefish under the hook-and-line gear quota.
Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule or group of related rules for which an agency is required to prepare a FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as “small entity compliance guides.” The agency shall explain the actions a small entity is required to take to comply with a rule or group of rules. As part of this rulemaking process, NMFS prepared a fishery bulletin, which also serves as a small entity compliance guide. The fishery bulletin will be sent to all interested parties.
Acceptable biological catch, Annual catch limit, Commercial trip limit, Fisheries, Fishing, Quotas, Snapper-grouper, South Atlantic, Species table.
For the reasons set out in the preamble, 50 CFR part 622 is amended as follows:
16 U.S.C. 1801
(a) * * *
(3)
(a) * * *
(2) * * *
(ii) * * * Vessels that have valid or renewable golden tilefish longline endorsements any time during the fishing year, are not eligible to fish for golden tilefish using hook-and-line gear under this 500-lb (227-kg), gutted weight, trip limit.
(h)
(ii) If commercial landings exceed the ACL, and the combined commercial and recreational ACL of 169,896 lb (77,064 kg), round weight, is exceeded, and at least one of the species in the deep-water complex is overfished, based on the most recent Status of U.S. Fisheries Report to Congress, the AA will file a notification with the Office of the Federal Register, at or near the beginning of the following fishing year to reduce the commercial ACL for that following year by the amount of the commercial ACL overage in the prior fishing year.
(2)
(ii) If recreational landings for the deep-water complex, exceed the applicable recreational ACL, and the combined commercial and recreational ACL of 169,896 lb (77,064 kg), round weight, is exceeded, and at least one of the species in the deep-water complex is overfished, based on the most recent Status of U.S. Fisheries Report to Congress, the AA will file a notification with the Office of the Federal Register, to reduce the length of the recreational fishing season in the following fishing year to ensure recreational landings do not exceed the recreational ACL the following fishing year. When NMFS reduces the length of the following recreational fishing season and closes the recreational sector, the following closure provisions apply: The bag and possession limits for the deep-water complex in or from the South Atlantic EEZ are zero. Additionally, the recreational ACL will be reduced by the amount of the recreational ACL overage in the prior fishing year. The fishing season and recreational ACL will not be reduced if the RA determines, using the best scientific information available that no reduction is necessary.
(p)
(ii) If commercial landings for the other snappers complex, as estimated by the SRD, exceed the commercial ACL, and the combined commercial and recreational ACL of 1,513,883 lb (686,686 kg), round weight, is exceeded, and at least one of the species in the other snappers complex is overfished, based on the most recent Status of U.S. Fisheries Report to Congress, the AA will file a notification with the Office of the Federal Register to reduce the commercial ACL for that following year by the amount of the commercial ACL overage in the prior fishing year.
(2)
(ii) If recreational landings for the other snappers complex, as estimated by the SRD, exceed the recreational ACL, then during the following fishing year, recreational landings will be monitored for a persistence in increased landings, and if necessary, the AA will file a notification with the Office of the Federal Register, to reduce the length of the recreational fishing season and the recreational ACL by the amount of the recreational ACL overage, if at least one of the species in the other snappers complex is overfished based on the most recent Status of U.S. Fisheries Report to Congress, and the combined commercial and recreational ACL of 1,513,883 lb (686,686 kg), round weight, is exceeded during the same fishing year. NMFS will use the best scientific information available to determine if reducing the length of the recreational fishing season and recreational ACL is necessary. When the recreational sector is closed as a result of NMFS reducing the length of the recreational fishing season and the ACL, the bag and possession limits for any species in the other snappers complex in or from the South Atlantic EEZ are zero.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for certain Airbus Model A300B4-203 and A300B4-2C airplanes. This proposed AD was prompted by cracks found on pylon side panels (upper section) at rib 8. This proposed AD would require a detailed inspection for crack indications of the pylon side panels, a high frequency eddy current (HFEC) inspection to confirm any crack indications, modification of the pylon side panels, and repetitive inspections and repair if necessary. We are proposing this AD to detect and correct cracking of the pylon side panels. Such cracking could result in pylon structural failure and in-flight loss of an engine.
We must receive comments on this proposed AD by July 7, 2016.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
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•
•
•
For service information identified in this NPRM, contact Airbus SAS, Airworthiness Office—EAW, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; email
You may examine the AD docket on the Internet at
Dan Rodina, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-2125; fax 425-227-1149.
We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
We will post all comments we receive, without change, to
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2015-0201, dated October 7, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus Model A300B4-203 and A300B4-2C airplanes. The MCAI states:
Cracks were found on pylon side panels (upper section) at rib 8 on Airbus A300, A310 and A300-600 aeroplanes equipped with General Electric engines. Investigation of these findings indicated that this problem was likely to also affect aeroplanes of this type design with other engine installations.
This condition, if not detected and corrected, could lead to reduced strength of the pylon primary structure, possibly resulting in pylon structural failure and in-flight loss of an engine.
Prompted by these findings, EASA issued AD 2008-0181 [which corresponded to FAA AD 2010-06-04, Amendment 39-16228 (75 FR 11428, March 11, 2010; corrected May 4, 2010 (75 FR 23572))] to require repetitive detailed visual inspections and, depending on aeroplane configuration and/or findings, the accomplishment of applicable corrective action(s).
Since that [EASA] AD 2008-0181 was issued, a fleet survey and updated Fatigue and Damage Tolerance analyses have been performed in order to substantiate the second A300-600 Extended Service Goal (ESG2) exercise. The results of these analyses have shown that the risk for these aeroplanes is higher than initially determined and consequently, the threshold and interval were reduced to allow timely detection of these cracks and the accomplishment of applicable corrective action(s).
Consequently, EASA AD 2013-0136 was published to supersede EASA AD 2008-0181 and to require the inspections to be accomplished within reduced thresholds and intervals. Afterwards, [EASA] AD 2013-0136 was mistakenly revised [EASA AD 2013-0136R1 corresponds to FAA AD 2015-26-06, Amendment 39-18354 (81 FR January 14,2016)] to reduce the Applicability, because it was considered at the time that aeroplanes on which Airbus mod 03599 was embodied, were not concerned by the requirements of EASA AD 2013-0136.
Since EASA AD 2013-0136R1 was issued, a more thorough analysis determined that post-mod 03599 aeroplanes could be affected by this unsafe condition after all.
[During] further deeper review, a list of nineteen A300 aeroplanes was identified as
For the reasons described above this AD retains the requirements of EASA AD 2013-0136R1 and mandates these requirements for the 19 missing A300 aeroplanes MSNs.
You may examine the MCAI in the AD docket on the Internet at
Airbus has issued Service Bulletin A300-54-0075, Revision 04, dated May 26, 2015. The service information describes procedures for an inspection for crack indications of the pylons, a HFEC inspection to confirm cracking, modification of the pylon side panels, and repairs if cracks are found.
Airbus has also issued Service Bulletin A300-54-0081, dated August 11, 1993. This service information describes installation of a doubler on the left pylon 1 and right pylon 2, on pylon side panels (upper section) at Rib 8.
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
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 these same type designs.
Unlike the procedures described in Airbus Service Bulletin A300-54-0075, Revision 04, dated May 26, 2015, this proposed AD would not permit further flight if cracks are detected in the pylon or pylon side panels. We have determined that because of the safety implications and consequences associated with that cracking, any cracked pylon or pylon side panel must be repaired or modified before further flight. This difference has been coordinated with EASA.
We estimate that this proposed AD affects 4 airplanes of U.S. registry.
We estimate the following costs to comply with this proposed AD:
We estimate the following costs to do any necessary repairs that would be required based on the results of the proposed inspection. We have no way of determining the number of airplanes that might need this repair.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this 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.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by July 7, 2016.
None.
This AD applies to Airbus Model A300B4-203 and A300B4-2C airplanes, certificated in any category, manufacturer serial numbers 210, 212, 218, 220, 227, 234, 235, 236, 239, 247, 255, 256, 259, 261, 274, 277, 292, 299, and 302.
Air Transport Association (ATA) of America Code 54, Nacelles/Pylons.
This AD was prompted by cracks found on pylon side panels (upper section) at rib 8. We are proposing this AD to detect and correct cracking of the pylon side panels. Such cracking could result in pylon structural failure and in-flight loss of an engine.
Comply with this AD within the compliance times specified, unless already done.
At the applicable time specified in Airbus Service Bulletin A300-54-0075, Revision 04, dated May 26, 2015: Do a detailed inspection for crack indications of the pylons 1 and 2 side panels (upper section) at rib 8, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A300-54-0075, Revision 04, dated May 26, 2015.
If any crack indication is found during the inspection required by paragraph (g) of this AD: Before further flight, do a high frequency eddy current (HFEC) inspection to confirm the crack, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A300-54-0075, Revision 04, dated May 26, 2015.
If the inspection required by paragraph (g) of this AD reveals no crack indication, or if the HFEC inspection specified by paragraph (h) of this AD confirms no crack: Do the actions specified in either paragraph (i)(1) or (i)(2) of this AD.
(1) Repeat the inspection required by paragraph (g) of this AD at the applicable time specified in Airbus Service Bulletin A300-54-0075, Revision 04, dated May 26, 2015.
(2) At the applicable time specified in Airbus Service Bulletin A300-54-0081, dated August 11, 1993: Modify the pylons, in accordance with Airbus Service Bulletin 300-54-0081, dated August 11, 1993. Thereafter, repeat the HFEC inspection specified in paragraph (h) of this AD at the applicable interval specified in Airbus Service Bulletin A300-54-0075, Revision 04, dated May 26, 2015, and repair any crack before further flight using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or the European Aviation Safety Agency (EASA); or Airbus's EASA Design Organization Approval (DOA).
If any crack is confirmed during the inspection required by paragraph (h) of this AD, repair before further flight using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or EASA; or Airbus's EASA DOA.
This paragraph provides credit for actions required by paragraphs (g), (h), (i), and (j) of this AD, if those actions were performed before the effective date of this AD using the service information specified in paragraphs (k)(1) through (k)(4) of this AD.
(1) Airbus Service Bulletin A300-54-0075, dated August 11, 1993, which was incorporated by referenced in AD 2010-06-04, Amendment 39-16228 (75 FR 11428, March 11, 2010); corrected May 4, 2010 (75 FR 23572).
(2) Airbus Service Bulletin A300-54-0075, Revision 01, dated November 9, 2007, which is not incorporated by reference in this AD.
(3) Airbus Service Bulletin A300-54-0075, Revision 02, dated June 26, 2008, which is not incorporated by reference in this AD.
(4) Airbus Service Bulletin A300-54-0075, Revision 03, dated March 27, 2013, which is not incorporated by reference in this AD.
The following provisions also apply to this AD:
(1)
(2)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2015-0201, dated October 7, 2015, for related information. This MCAI may be found in the AD docket on the Internet at
(2) For service information identified in this AD, contact Airbus SAS, Airworthiness Office—EAW, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; email
Food and Drug Administration, HHS.
Proposed rule; extension of comment period.
The Food and Drug Administration (FDA) is extending the comment period for the proposed rule that appeared in the
FDA is extending the comment period on the proposed rule published April 25, 2016 (81 FR 24386). Submit either electronic or written comments by July 25, 2016.
You may submit comments as follows:
Submit electronic comments in the following way:
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• 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”).
Submit written/paper submissions as follows:
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• 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.”
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Rebecca Nipper, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 1540, Silver Spring, MD 20993-0002, 301-796-6527.
In the
The Agency has received requests for a 60-day extension of the comment period for the proposed rule. Each request conveyed concern that the current 30-day comment period does not allow sufficient time to develop a meaningful or thoughtful response to the proposed rule.
FDA has considered the requests and is extending the comment period for the proposed rule for 60 days, until July 25, 2016. The Agency believes that a 60-day extension allows adequate time for interested persons to submit comments without significantly delaying rulemaking on this important issue.
Bureau of Ocean Energy Management (BOEM), Interior.
Proposed rule; notice of extension of public comment period.
BOEM is extending the public comment period to submit comments on the proposed rule entitled “Air Quality Control, Reporting, and Compliance,” which was published in the
The comment period for comments on the substance of the proposed rule published on April 5, 2016 (81 FR 19717), has been extended. Written comments must be received by the extended due date of June 20, 2016. BOEM may not fully consider comments received after this date.
You may submit comments identified by the number 1010-AD82, by any of the following methods:
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Peter Meffert, Bureau of Ocean Energy Management, Office of Policy, Regulation and Analysis, at
BOEM published a proposed rule on Air Quality Control, Reporting, and Compliance on April 5, 2016. The proposed rule is intended to revise and replace BOEM's air quality regulations with a new set of regulations that reflect a number of policy changes with respect to the existing air quality regulatory program. The key policy changes in the proposed rule relate to: (1) Fulfilling BOEM's statutory responsibility under section 5(a)(8) of the Outer Continental Shelf Lands Act by addressing all relevant criteria and major precursor air pollutants and by cross-referencing the ambient air quality standards and benchmarks (AAQSB) for those pollutants to those of the U.S. Environmental Protection Agency; (2) formalizing the concept and application of the term “attributed emissions”; (3) changing the methods for determining the locations from which air emissions will be measured and evaluated; (4) modifying the process by which emission exemption threshold (EETs) are established and updated; (5) changing the circumstances when emission reduction measures (ERM), including Best Available Control Technology (BACT), are required, and establishing new criteria for the application of ERM; (6) revising the boundary at which BOEM determines air quality compliance to the State seaward boundary (SSB), rather than the coastline; (7) formalizing requirements for the consolidation of emissions from multiple facilities; (8) consistent with BOEM's existing regulatory authority, articulating a schedule for ensuring that plans, including previously approved plans, will be compliant with these updated regulations; (9) adding an air quality component to the submission of right-of-use and easement, right-of-way, and lease term pipeline applications; (10) expanding use of the offsets as an alternative in circumstances where BACT was previously required; and (11) adding a new requirement for all plans to be reviewed at least every 10 years, to ensure ongoing compliance with the National Ambient Air Quality Standards (NAAQS), as amended from time to time.
After publication of the proposed rule, BOEM received public comments requesting an extension.
On March 17, 2016, BOEM issued a press release to notify the public that the proposed rule would be issued and provided an internet link to an advance copy of the proposed rule. On April 5, 2016, BOEM issued the proposed rule with a requirement to submit comments on the substance of this rulemaking by June 6, 2016. BOEM is extending the comment period to June 20, 2016. With more than 90 days of public inspection, BOEM has concluded that interested parties will have sufficient opportunity to analyze the proposed rule and provide comment. Accordingly, written comments on the substance of this rulemaking must be submitted by the extended due date of June 20, 2016.
The proposed rule specified a separate, shorter period to submit comments to the Office of Management and Budget on the information collection (IC) burden in this rulemaking. That comment period ended on May 5, 2016, and will not be extended.
Environmental Protection Agency.
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to approve a State Implementation Plan (SIP) revision submitted by the State of New Hampshire that contains an ozone maintenance plan for New Hampshire's former 1-hour ozone nonattainment areas. The Clean Air Act requires that areas that are designated attainment for the 1997 8-hour ozone standard, and also had been previously designated either nonattainment or maintenance for the 1-hour ozone standard, develop a plan showing how the state will maintain the ozone standard for the area. The intended effect of this action is to propose approval of New Hampshire's maintenance plan. This action is being taken in accordance with the Clean Air Act.
Written comments must be received on or before June 22, 2016.
Submit your comments, identified by Docket ID No. EPA-R01-OAR-2012-0289 at
Anne Arnold, Air Quality Planning Unit, U.S. Environmental Protection Agency, Suite 100, Mail Code OEP05-02, Boston, MA 02109-3912, telephone number (617) 918-1047, fax number (617) 918-0047, email
In the Final Rules Section of this
Federal Emergency Management Agency, DHS.
Notice of proposed rulemaking.
The Federal Emergency Management Agency (FEMA) is proposing to remove the copy of the Financial Assistance/Subsidy Arrangement and the summary of the Financial Control Plan from the appendices of its National Flood Insurance Program regulations, as it is no longer necessary or appropriate to retain a contract, agreement, or any other arrangement between FEMA and private insurance companies in the Code of Federal Regulations.
Comments are due on or before July 22, 2016.
You may submit comments, identified by Docket ID: FEMA-2016-0012, by one of the following methods:
To avoid duplication, please use only one of these methods. All comments received will be posted without change to
Claudia Murphy, Director, Policyholder Services Division, Federal Insurance and Mitigation Administration, Federal Emergency Management Agency, 400 C Street SW., Washington, DC 20472, (202) 646-2775.
We encourage you to participate in this rulemaking by submitting comments and related materials. We will consider all comments and material received during the comment period.
If you submit a comment, identify the agency name and the docket ID for this rulemaking, indicate the specific section of this document to which each comment applies, and give the reason for each comment. You may submit your comments and material by electronic means, mail, or delivery to the address under the
Regardless of the method used for submitting comments or material, all submissions will be posted, without change, to the Federal e-Rulemaking Portal at
The National Flood Insurance Act of 1968 (NFIA), as amended (42 U.S.C. 4001
Pursuant to this authority, FEMA works closely with the insurance industry to facilitate the sale and servicing of flood insurance policies. An NFIP flood insurance policy, also known as the Standard Flood Insurance Policy (SFIP), can be purchased: (1) Directly from the Federal government through a direct servicing agent, or (2) from a participating Write Your Own (WYO) insurance company through the WYO Program. The SFIPs set out the terms and conditions of insurance.
FEMA established the WYO Program in 1983 to increase the NFIP policy count and geographic distribution of policies by taking advantage of the private insurance industry's marketing channels and existing policy base to sell flood insurance.
The NFIA authorizes FEMA to “enter into any contracts, agreements, or other arrangements” with private insurance companies to utilize their facilities and services in administering the NFIP, and on such terms and conditions as may be agreed upon.
In accordance with the Arrangement, WYO Companies retain a specific amount of policyholder premium for their operating and administrative expenses, for a commission allowance to meet commission or salaries of insurance agents, brokers, or other entities producing qualified flood insurance applications, and other related expenses. FEMA also reimburses WYO Companies for certain unallocated, allocated, and special allocated loss adjustment expenses as provided for in the Arrangement.
The Arrangement includes an arbitration provision applicable if any misunderstanding or dispute arises between FEMA and a WYO Company with reference to any factual issue under any provision of the Arrangement or with respect to FEMA's non-renewal of the Company's participation. The Arrangement also includes provisions related to information and annual statements, access to books and records, cash management and accounting, offset, errors and omissions, terms for the commencement and termination of the Arrangement, and other miscellaneous provisions.
Since the primary relationship between the Federal government and the WYO Companies is one of a fiduciary nature (that is, to ensure that any taxpayer funds are appropriately expended), FEMA established “A Plan to Maintain Financial Control for Business Written Under the Write Your Own Program,” also known as the “Financial Control Plan.”
In 1985, FEMA added a copy of the Financial Control Plan to the NFIP regulations at 44 CFR part 62, Appendix B. However, in 1999, FEMA removed the copy of the Financial Control Plan from the regulations and replaced it with a summary, thus allowing the Federal government and its industry partners the flexibility to make operational adjustments and corrections more efficiently and more quickly while retaining the broad framework necessary for sound financial controls.
In this rule, FEMA proposes to remove the copy of the Arrangement in 44 CFR part 62, Appendix A, and the summary of the Financial Control Plan in 44 CFR part 62, Appendix B. In addition, FEMA proposes to make conforming amendments to update citations to these appendices in Section 62.23.
FEMA proposes to remove the copy of the Arrangement in 44 CFR part 62, Appendix A, because it is no longer necessary to include a copy of the Arrangement in the Code of Federal Regulations (CFR), and the NFIA does not require FEMA to include a copy of the Arrangement in the CFR.
By removing the copy of the Arrangement from the appendix of Part 62, FEMA and its industry partners maintain the flexibility to negotiate operational adjustments and corrections to the Arrangement more quickly and efficiently. Because a copy of the Arrangement is currently in the CFR, FEMA must undergo rulemaking to update the Arrangement. Since 1985, when FEMA added a copy of the Arrangement to the CFR, FEMA has undergone rulemaking approximately 21 times to make corrections and updates to the Arrangement. Although
For example, under Article II(C) of the Arrangement, following a catastrophic event, WYO companies agreed to adjust combined flood and wind losses utilizing one adjuster under the NFIP-approved Single Adjuster Program (SAP) using procedures issued by FEMA. This practice proved functionally impractical. Rather than undergo rulemaking to remove the SAP requirement from the Arrangement, since 2012 FEMA has granted a limited waiver of this requirement, pursuant to FEMA's waiver authority in Section 62.23(k) of FEMA's regulations. FEMA communicated the exceptions to and under Section 62.23(k) through WYO Bulletins.
Once a copy of the Arrangement is removed from the CFR, FEMA will continue to enter into the Arrangement with WYO Companies, and in accordance with the terms of the current Arrangement, FEMA will continue to notify private insurance companies and make available to companies the terms for subscription or re-subscription of the Arrangement through a notice in the
Under the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12), FEMA is required to issue a rule to formulate revised expense reimbursements to property and casualty insurance companies participating in the WYO Program for their expenses servicing standard flood insurance policies, including how such companies shall be reimbursed in both catastrophic and non-catastrophic years. Sec. 100224, Public Law 112-141, 126 Stat. 936. FEMA is in the process of developing this rulemaking and will issue a notice of proposed rulemaking in the future.
FEMA proposes to remove the summary of the Financial Control Plan in 44 CFR part 62, Appendix B. As discussed, beginning in 1985, FEMA included a copy of the Financial Control Plan in regulation at 44 CFR part 62, Appendix B. In 1999 FEMA removed the copy of the Financial Control Plan from FEMA's regulations and replaced it with a summary of the Financial Control Plan. 64 FR 56174 (Oct. 18, 1999). FEMA proposes to remove the summary of the Financial Control Plan in Appendix B because this information is contained in either FEMA's Financial Control Plan,
Paragraphs (a) and (b) of Appendix B contain a general overview of the Arrangement and the Financial Control Plan. FEMA is removing this information from Appendix B because this information is also contained in the Arrangement, the Financial Control Plan, and FEMA's regulations at Section 62.23, and is therefore duplicative and unnecessary. Paragraph (c) of Appendix B describes the roles and responsibilities of the Standards Committee. FEMA is removing this information from Appendix B because this information describes internal procedural details of the Standards Committee, which do not need to be in regulation. In addition, paragraph (c) contains information related to the Standards Committee that is already codified in FEMA's regulations at Section 62.23 and in FEMA's Financial Control Plan. As a result, FEMA proposes to remove this information from Appendix B because it is duplicative and unnecessary. In paragraphs (d) and (e) of Appendix B, there is the Financial Control Plan Table of Contents, and information on where to obtain a copy of the Financial Control Plan. FEMA is removing this information from Appendix B because a copy of the Financial Control Plan is available on FEMA's Web site, and the NFIA does not require this information to be in regulation.
FEMA proposes to make conforming amendments to the language in 44 CFR 62.23 where FEMA references Appendix A and Appendix B of 44 CFR part 62, because those appendices will be removed. In paragraphs (a) and (i)(1) of Section 62.23, FEMA proposes to remove reference to Appendix A, because FEMA proposes to remove the copy of the Arrangement in Appendix A. In addition, in paragraphs (f) and (l)(2) of Section 62.23, FEMA proposes
Lastly, FEMA proposes to remove the example in Section 62.23(i)(1) which references the SAP. As discussed above, FEMA has granted a limited waiver of the SAP requirement, and this example is no longer relevant. In addition, the example references Appendix A, which FEMA is proposing to remove via this notice of proposed rulemaking.
Executive Orders 13563 and 12866 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has not been designated a “significant regulatory action” under section 3(f) of Executive Order 12866. Accordingly, the rule has not been reviewed by the Office of Management and Budget.
FEMA is issuing a proposed rule that would remove Appendix A and B from part 62 of 44 CFR. These Appendices contain a copy of the WYO Financial Assistance/Subsidy Arrangement (Arrangement) and a summary of the “Plan to Maintain Financial Control for Business Written Under the Write Your Own Program” (Financial Control Plan), respectively. In addition, FEMA proposes to make conforming amendments to update citations to these appendices in Section 62.23.
Since 1983, FEMA has entered into a standard Arrangement with WYO companies to sell NFIP insurance policies under their own names and adjust and pay SFIP claims.
FEMA proposes to remove the copy of the Arrangement in 44 CFR part 62, Appendix A, because the NFIA does not require FEMA to include a copy of the Arrangement in the CFR, and therefore, it is no longer necessary. In 1985, FEMA added a copy of the Arrangement to the regulations to inform the public of the procedural details of the WYO Program. However, since that time there have been technological advances for disseminating information to the public, and there are now more efficient ways to inform the public of the procedural details of the WYO Program. For example, FEMA now posts a copy of the Arrangement on its Web site. This serves the purpose of promoting awareness and disseminating program information, without needing to go through the rulemaking process. This rulemaking does not impose any changes to the current Arrangement with WYO Companies; FEMA believes there would not be any costs imposed on participating WYO companies as a result of this proposed rule. FEMA would continue to enter into the Arrangement with WYO companies, and make available the terms for subscription or re-subscription through
One of the benefits associated with this rule is enhanced flexibility for FEMA and its industry partners to negotiate operational adjustments to the Arrangement more quickly and efficiently in order to be more responsive to the needs of industry partners and the operation of the NFIP. Additionally there is less confusion generated from inconsistences that result from current practice. Finally, the elimination of the administrative burden that accompanies repeated updates to the CFR and any posted departures from the CFR onto FEMA's Web site regarding Program requirements are an additional benefit. FEMA believes there would be no economic impact associated with implementing the proposed rule.
Additionally, we are proposing to remove a summary of the Financial Control Plan; the plan itself was removed in 1985. FEMA does not anticipate any economic impacts from removing the summary.
The Regulatory Flexibility Act of 1980 (5 U.S.C. 601
In accordance with the Regulatory Flexibility Act, an IFRA must contain: (1) A description of the reasons why the action by the agency is being considered; (2) A succinct statement of the objectives of, and legal basis for, the proposed rule; (3) A description—and, where feasible, an estimate of the number—of small entities to which the proposed rule will apply; (4) A description of the projected reporting, record keeping, and other compliance requirements of the proposed rule, including an estimate of the classes of small entities that will be subject to the requirements and the types of professional skills necessary for preparation of the report or record; (5) An identification, to the extent practicable, of all relevant Federal rules that may duplicate, overlap, or conflict with the proposed rule; and (6) A description of significant alternatives to the rule.
FEMA proposes to remove the copy of the Arrangement, because it is no longer necessary to include a copy of the Arrangement in the CFR, and the NFIA does not require FEMA to include a copy of the Arrangement in the CFR. Moreover, by removing the copy of the Arrangement from the CFR, FEMA and its industry partners would benefit from enhanced flexibility to negotiate operational adjustments and corrections to the Arrangement more quickly and
FEMA proposes to remove the copy of the Arrangement from the CFR, because the NFIA does not require FEMA to include a copy of the Arrangement in the CFR. FEMA proposes to remove the summary of the Financial Control Plan in the CFR because this information is contained in either FEMA's Financial Control Plan, or 44 CFR 62.23, and thus reprinting elsewhere in the CFR is duplicative and unnecessary. Finally, FEMA proposes to make conforming amendments to the language in 44 CFR 62.23 where FEMA references Appendix A and Appendix B of 44 CFR part 62, because those appendices would be removed.
The NFIA authorizes FEMA to “enter into any contracts, agreements, or other arrangements” with private insurance companies to utilize their facilities and services in administering the NFIP, and on such terms and conditions as may be agreed upon.
“Small entity” is defined in 5 U.S.C. 601. The term “small entity” can have the same meaning as the terms “small business”, “small organization” and “small governmental jurisdiction.” Section 601(3) defines a “small business” as having the same meaning as “small business concern” under Section 3 of the Small Business Act. This includes any small business concern that is independently owned and operated, and is not dominant in its field of operation. Section 601(4) defines a “small organization” as any not-for-profit enterprises that are independently owned and operated, and are not dominant in their field of operation. Section 601(5) defines small governmental jurisdictions as governments of cities, counties, towns, townships, villages, school districts, or special districts with a population of less than 50,000. No small organization or governmental jurisdiction are party to the WYO program and therefore would not be affected.
The SBA stipulates in its size standards the largest an insurance firm that is “for profit” may be and still be classified as a “small entity.”
There are currently a total of 79 companies participating in the WYO Program; these 79 companies are subject to the terms of the Arrangement and the standards and requirements in the Financial Control Plan. FEMA researched each WYO company to determine the NAICS code, number of employees, and revenue for the individual companies. FEMA used the open-access database,
FEMA believes that the rule would impose no burdens on any participating company because it is removing a redundant section of the CFR and not substantively changing to the Arrangement or the Financial Control Plan itself. Therefore, FEMA does not anticipate that there would be a significant economic impact on a substantial number of small entities as a result of this proposed rule.
The proposed rule would not impose any compliance costs on WYO companies. The WYO Arrangement in 44 CFR part 62, Appendix A is a copy of the Arrangement that FEMA enters into separately with each WYO Company. FEMA would continue to enter into the Arrangement with WYO Companies, and in accordance with the terms of the current Arrangement, FEMA would continue to notify private insurance companies and make available to companies the terms for subscription or re-subscription of the Arrangement through
As the record of regulatory changes to the Arrangement shows, required changes will be implemented regardless of the regulatory process. Current channels of notification and negotiation would remain unaffected by this rule;
As part of the Arrangement, WYO companies agree to adhere to the standards and requirements in the Financial Control Plan. The Financial Control Plan has been removed from the regulations since 1985. Removing the summary would have no economic impact. FEMA does not believe this proposed rule would have a significant economic impact on a substantial number of small entities.
There are no relevant Federal rules that may duplicate, overlap, or conflict with the proposed rule.
Given that this rule has no direct compliance costs, no less burdensome alternatives to the proposed rule are available. In the absence of this proposed rule, small entities would continue to experience the negative repercussions of inconsistences between the written Arrangement and updates that FEMA has communicated through bulletins to provide exceptions to certain parts. Small entities would also continue to experience burdens associated with alternate, less than ideal measures that have been implemented in lieu of updates to the Arrangement in the CFR.
FEMA invites all interested parties to submit data and information regarding the potential economic impact that would result from adoption of the proposals in this NPRM. FEMA will consider all comments received in the public comment process.
Pursuant to Section 201 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 2 U.S.C. 1531), each Federal agency “shall, unless otherwise prohibited by law, assess the effects of Federal regulatory actions on State, local, and tribal governments, and the private sector (other than to the extent that such regulations incorporate requirements specifically set forth in law).” Section 202 of the Act (2 U.S.C. 1532) further requires that “before promulgating any general notice of proposed rulemaking that is likely to result in the promulgation of any rule that includes any Federal mandate that may result in expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year, and before promulgating any final rule for which a general notice of proposed rulemaking was published, the agency shall prepare a written statement” detailing the effect on State, local, and tribal governments and the private sector. The proposed rule would not result in such an expenditure, and thus preparation of such a statement is not required.
Under the National Environmental Policy Act of 1969 (NEPA), as amended, 42 U.S.C. 4321
Under the Paperwork Reduction Act of 1995 (PRA), as amended, 44 U.S.C. 3501-3520, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the agency obtains approval from the Office of Management and Budget (OMB) for the collection and the collection displays a valid OMB control number.
The collections associated with this regulation are as follows: (1) OMB Control Number 1660-0038, Write Your Own Company Participation Criteria, 44 CFR 62 Appendix A, which establishes the criteria to return to or participate in the WYO program; (2) OMB control number 1660-0086, the National Flood Insurance Program—Mortgage Portfolio Protection Program (MPPP), 44 CFR part 62.23 (l)(2) and Appendix B, which is a program lenders can use to bring their mortgage loan portfolios into compliance with flood insurance purchase requirements; and (3) OMB control number 1660-0020, WYO Program, 44 CFR 62.23 (f) and Appendix B, the Federal Insurance and Mitigation Administration program that requires each WYO Company to submit financial data on a monthly basis into the National Flood Insurance Program's Transaction Record Reporting and Processing Plan (TRRPP) system as referenced in 44 CFR 62.23(h)(4). Each of these collections are still required by Part 62 and will not be impacted by the removal of the Arrangement from the regulation because the existing information collections cover requirements in the regulations, not requirements in the Appendices.
Under the Privacy Act of 1974, 5 U.S.C. 552a, an agency must determine whether implementation of a proposed regulation will result in a system of records. A record is any item, collection, or grouping of information about an individual that is maintained by an agency, including, but not limited to, his/her education, financial transactions, medical history, and criminal or employment history and that contains his/her name, or the identifying number, symbol, or other identifying particular assigned to the individual, such as a finger or voice print or a photograph.
The E-Government Act of 2002, 44 U.S.C. 3501 note, also requires specific procedures when an agency takes action to develop or procure information technology that collects, maintains, or disseminates information that is in an identifiable form. This Act also applies when an agency initiates a new collection of information that will be collected, maintained, or disseminated using information technology if it includes any information in an identifiable form permitting the physical or online contacting of a specific individual. A Privacy Threshold Analysis was completed. This rule does not require a Privacy Impact Analysis or System of Records Notice at this time.
Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, 65 FR 67249, November 9, 2000, applies to agency regulations that have Tribal implications, that is, regulations 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. Under this Executive Order, to the extent practicable and permitted by law, no agency shall promulgate any regulation that has Tribal implications, that imposes substantial direct compliance costs on Indian Tribal governments, and that is not required by statute, unless funds necessary to pay the direct costs incurred by the Indian Tribal government or the Tribe in complying with the regulation are provided by the Federal Government, or the agency consults with Tribal officials.
This proposed rule does not have Tribal implications. Currently, Indian Tribal governments cannot participate in the WYO Program as WYO companies, and thus are not affected by this proposed rule. To participate in the WYO program, a company must be a licensed property or casualty insurance company and meet the requirements in FEMA regulations at 44 CFR 62.24.
Executive Order 13132, Federalism, 64 FR 43255, August 10, 1999, sets forth principles and criteria that agencies must adhere to in formulating and implementing policies that have federalism implications, that is, regulations that 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. Federal agencies must closely examine the statutory authority supporting any action that would limit the policymaking discretion of the States, and to the extent practicable, must consult with State and local officials before implementing any such action.
FEMA has reviewed this proposed rule under Executive Order 13132 and has determined that this rule does 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, and therefore does not have federalism implications as defined by the Executive Order. This rule does not have federalism implications, because participation as a WYO Company is voluntary and does not affect State policymaking discretion. Moreover, currently, States cannot participate in the WYO Program as WYO companies, and thus are not affected by this proposed rule. To participate in the WYO program, a company must be a licensed property or casualty insurance company and meet the requirements in FEMA regulations at 44 CFR 62.24. In accordance with Section 6 of Executive Order 13132, FEMA determines that this rule will not have federalism implications sufficient to warrant the preparation of a federalism impact statement.
Pursuant to Executive Order 11988, each agency is required to provide leadership and take action to reduce the risk of flood loss, to minimize the impact of floods on human safety, health and welfare, and to restore and preserve the natural and beneficial values served by floodplains in carrying out its responsibilities for (1) acquiring, managing, and disposing of Federal lands and facilities; (2) providing Federally undertaken, financed, or assisted construction and improvements; and (3) conducting Federal activities and programs affecting land use, including but not limited to water and related land resources planning, regulating, and licensing activities. In carrying out these responsibilities, each agency must evaluate the potential effects of any actions it may take in a floodplain; to ensure that its planning programs and budget requests reflect consideration of flood hazards and floodplain management; and to prescribe procedures to implement the policies and requirements of the Executive Order.
Before promulgating any regulation, an agency must determine whether the proposed regulations will affect a floodplain(s), and if so, the agency must consider alternatives to avoid adverse effects and incompatible development in the floodplain(s). If the head of the agency finds that the only practicable alternative consistent with the law and with the policy set forth in Executive Order 11988 is to promulgate a regulation that affects a floodplain(s), the agency must, prior to promulgating the regulation, design or modify the regulation in order to minimize potential harm to or within the floodplain, consistent with the agency's floodplain management regulations and prepare and circulate a notice containing an explanation of why the action is proposed to be located in the floodplain. The changes proposed in this rule would not have an effect on land use, floodplain management, or wetlands.
Pursuant to Executive Order 11990, each agency must provide leadership and take action to minimize the destruction, loss or degradation of wetlands, and to preserve and enhance the natural and beneficial values of wetlands in carrying out the agency's responsibilities for (1) acquiring, managing, and disposing of Federal lands and facilities; and (2) providing Federally undertaken, financed, or assisted construction and improvements; and (3) conducting Federal activities and programs affecting land use, including but not limited to water and related land resources planning, regulating, and licensing activities. Each agency, to the extent permitted by law, must avoid undertaking or providing assistance for new construction located in wetlands unless the head of the agency finds (1) that there is no practicable alternative to such construction, and (2) that the proposed action includes all practicable measures to minimize harm to wetlands which may result from such use. In making this finding the head of the agency may take into account economic, environmental and other pertinent factors.
In carrying out the activities described in the Executive Order, each agency must consider factors relevant to a proposal's effect on the survival and
Pursuant to Executive Order 12898, —Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, February 16, 1994, as amended by Executive Order 12948, 60 FR 6381, February 1, 1995, FEMA incorporates environmental justice into its policies and programs. The Executive Order requires each Federal agency to conduct its programs, policies, and activities that substantially affect human health or the environment in a manner that ensures that those programs, policies, and activities do not have the effect of excluding persons from participation in programs, denying persons the benefits of programs, or subjecting persons to discrimination because of race, color, or national origin.
This rulemaking will not have a disproportionately high or adverse effect on human health or the environment. This rulemaking will not have a disproportionately high or adverse effect on human health or the environment. Therefore the requirements of Executive Order 12898 do not apply to this rule.
Under the Congressional Review of Agency Rulemaking Act (CRA), 5 U.S.C. 801-808, before a rule can take effect, the Federal agency promulgating the rule must submit to Congress and to the Government Accountability Office (GAO) a copy of the rule, a concise general statement relating to the rule, including whether it is a major rule, the proposed effective date of the rule, a copy of any cost-benefit analysis, descriptions of the agency's actions under the Regulatory Flexibility Act and the Unfunded Mandates Reform Act, and any other information or statements required by relevant executive orders.
FEMA will send this rule to the Congress and to GAO pursuant to the CRA if the rule is finalized. The rule is not a major rule within the meaning of the CRA. It will not have an annual effect on the economy of $100,000,000 or more, it will not result in a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions, and it will not have significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets.
Claims, Flood insurance, and Reporting and recordkeeping requirements.
For the reasons discussed in the preamble, the Federal Emergency Management Agency proposes to amend 44 CFR Chapter I as follows:
42 U.S.C. 4001
(a), * * * Arrangements entered into by WYO Companies or other insurers under this subpart must be in the form and substance of the standard arrangement, titled “Financial Assistance/Subsidy Arrangement.”
(f) * * * In furtherance of this end, the Federal Insurance Administrator has established “A Plan to Maintain Financial Control for Business Written Under the Write Your OwnProgram.” * * *
(i) * * *
(1) WYO Companies will adjust claims in accordance with general Company standards, guided by NFIP Claims manuals. The Arrangement provides that claim adjustments shall be binding upon the FIA.
(l) * * *
(2) * * * Participating WYO Companies must also maintain evidence of compliance with paragraph (l)(3) of this section for review during the audits and reviews required by the WYO Financial Control Plan.
Surface Transportation Board, Department of Transportation.
Supplemental Notice of Proposed Rulemaking; correction.
This document corrects the Supplemental Notice of Proposed Rulemaking (SNPR) served on April 29, 2016, and published in the
The SNPR is corrected as of May 23, 2016. Comments on the SNPR are due by May 31, 2016. Reply comments are due by June 28, 2016.
Allison Davis at (202) 245-0378. Assistance for the hearing impaired is available through the Federal Information Relay Service (FIRS) at (800) 877-8339.
A corrected decision was served on May 13, 2016, and is available on the Surface Transportation Board's Web site at
In the Supplemental Notice of Proposed Rulemaking beginning on page 81 FR 27069 in the issue of May 5, 2016 of the
• In the preamble, on page 27070, in 1st column, in footnote 3, correct “49 U.S.C. 721” to read “49 U.S.C. 722(c)”.
• In the preamble, on page 27076, in the 3rd column, correct the statement “all six of the Class I carriers” to read “all seven of the Class I carriers.”
• In the preamble, on page 27079, in Table 1, on the 3rd line correct the statement “60 or more railcars” to “50 or more railcars.”
• In the amendatory language, on page 27081, in the 3rd column, in the proposed rule 49 CFR 1250.2(12)(ii) correct the statement “versus cars actually and on constructive placement” to “versus cars actually placed and on constructive placement.”
Additional information is contained in the Board's decision, which is available on our Web site at
By the Board, Chairman Elliott, Vice Chairman Miller, and Commissioner Begeman.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Proposed rule; request for comments.
NMFS proposes management measures for the 2016 summer flounder, scup, and black sea bass recreational fisheries. NMFS is also proposing a change to the commercial scup incidental possession limit, and two minor corrections to the summer flounder minimum mesh size regulations. The implementing regulations for these fisheries require NMFS to publish recreational measures for the fishing year and to provide an opportunity for public comment. The intent of these measures is to constrain recreational catch to established limits and prevent overfishing of the summer flounder, scup, and black sea bass resources. The intent of the commercial scup regulatory change is to reduce unnecessary discards by allowing more incidentally caught scup to be retained by vessels. The regulatory corrections are intended to clarify the original purpose of the regulation.
Comments must be received by 5 p.m. local time, on June 7, 2016.
You may submit comments on this document, identified by NOAA-NMFS-2016-0029, by either of the following methods:
• Go to
• Click the “Comment Now!” icon, complete the required fields
• Enter or attach your comments.
Copies of the Supplemental Information Report (SIR) and other supporting documents for the recreational harvest measures are available from Dr. Christopher M. Moore, Executive Director, Mid-Atlantic Fishery Management Council, Suite 201, 800 N. State Street, Dover, DE 19901. The recreational harvest measures document is also accessible via the Internet at:
Elizabeth Scheimer, Fisheries Management Specialist, (978) 281-9236.
The summer flounder, scup, and black sea bass fisheries are managed cooperatively under the provisions of the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan (FMP) developed by the Mid-Atlantic Fishery Management Council (Council) and the Atlantic States Marine Fisheries Commission (Commission), in consultation with the New England and South Atlantic Fishery Management Councils. The management units specified in the FMP include summer flounder (
The Council process for recommending recreational management measures to NMFS for rulemaking is generically described below. All meetings are open to the public and the materials utilized during such meetings, as well as any documents created to summarize the meeting results, are public information and posted on the Council's Web site (
The FMP established monitoring committees for the three fisheries, consisting of representatives from the
The Council's Demersal Species Committee and the Commission's Summer Flounder, Scup, and Black Sea Bass Management Board (Board) then consider the monitoring committees' recommendations and any public comment in making their recommendations to the Council and the Commission, respectively. The Council reviews the recommendations of the Demersal Species Committee, makes its own recommendations, and forwards them to NMFS for review. The Commission similarly adopts recommendations for the states. NMFS is required to review the Council's recommendations to ensure that they are consistent with the targets specified for each species in the FMP and all applicable laws and Executive Orders before ultimately implementing measures for Federal waters. Commission measures are final at the time they are adopted.
In this rule, NMFS proposes management measures for the 2016 summer flounder, scup, and black sea bass recreational fisheries consistent with the recommendations of the Council. All minimum fish sizes discussed are total length measurements of the fish,
Typically, the Council and Commission consider modifications to all of the Federal commercial management measures in conjunction with the specifications. In 2015, the Council and Commission postponed decision making on changes to the scup commercial measures until a more thorough analysis could be completed. After considering the full suite of commercial management measures in Federal waters, the Council recommends, and this rule proposes, changing the commercial scup incidental possession limit from 500 lb (227 kg) to 1,000 lb (454 kg) from November 1, 2016, through April 30, 2017. This incidental possession limit applies to vessels using mesh smaller than 5.0 inches (12.7 cm).
NMFS is proposing the following measures that would apply in the Federal waters of the EEZ. These measures apply to all federally permitted party/charter vessels with applicable summer flounder, scup, or black sea bass permits, regardless of where they fish, unless the state in which they land implements measures that are more restrictive. These measures are intended to achieve, but not exceed, the previously-established recreational harvest limits for these fisheries (December 28, 2015; 80 FR 80689). For summer flounder, we are proposing the use of state-by-state or regional conservation equivalency measures, which are the status quo measures, and no changes to the scup or black sea bass recreational management measures. Although unlikely, given the Board's February 2016 decisions on black sea bass measures, NMFS may implement more restrictive black sea bass measures for Federal waters if states fail to implement measures that, when paired with the Council's recommended measures, provide the necessary conservation to ensure the 2016 recreational harvest limit will not be exceeded. These measures, as recommended by the Council, would be a 14-inch (35.6-cm) minimum fish size, a 3-fish per person possession limit, and an open season of July 15-September 15, 2016.
NMFS proposes to implement the Council and Commission's recommendation to use conservation equivalency to manage the 2016 summer flounder recreational fishery. The 2016 recreational harvest limit for summer flounder is 5.42 million lb (2,457 mt) and projected landings for 2015 are approximately 4.62 million lb (2,096 mt). These 2015 projected landings are based on preliminary Marine Recreational Information Program estimates through Wave 6 (November and December 2015). As a result, maintaining the 2015 measures is expected to effectively constrain the 2016 recreational landings and prevent the recreational harvest limit from being exceeded.
Conservation equivalency, as established by Framework Adjustment 2 (July 29, 2001; 66 FR 36208), allows each state to establish its own recreational management measures (possession limits, minimum fish size, and fishing seasons) to achieve its state harvest limit partitioned by the Commission from the coastwide recreational harvest limit, as long as the combined effect of all of the states' management measures achieves the same level of conservation as would Federal coastwide measures. Framework Adjustment 6 (July 26, 2006; 71 FR 42315) allowed states to form regions for conservation equivalency in order to minimize differences in regulations for anglers fishing in adjacent waters.
The Council and Board annually recommend that either state- or region-specific recreational measures be developed (conservation equivalency) or that coastwide management measures be implemented to ensure that the recreational harvest limit will not be exceeded. Even when the Council and Board recommend conservation equivalency, the Council must specify a set of coastwide measures that would apply if conservation equivalency is not approved for use in Federal waters.
When conservation equivalency is recommended, and following confirmation that the proposed state or regional measures developed through the Commission's technical and policy review processes achieve conservation equivalency, NMFS may waive the permit condition found at § 648.4(b), which requires Federal permit holders to comply with the more restrictive management measures when state and Federal measures differ. In such a situation, federally permitted summer flounder charter/party permit holders and individuals fishing for summer flounder in the EEZ would then be subject to the recreational fishing measures implemented by the state in which they land summer flounder, rather than the coastwide measures.
In addition, the Council and the Board must recommend precautionary default measures when recommending conservation equivalency. The Commission would require adoption of the precautionary default measures by any state that either does not submit a summer flounder management proposal to the Commission's Summer Flounder Technical Committee, or that submits measures that would exceed the Commission-specified harvest limit for that state.
Much of the conservation equivalency measures development process happens at both the Commission and the individual state level. The selection of appropriate data and analytical techniques for technical review of potential state conservation equivalent
The Commission has implemented an addendum to its Summer Flounder FMP (Addendum XXVII) to continue regional conservation equivalency for fishing year 2016. The Commission has adopted the following regions: (1) Massachusetts; (2) Rhode Island; (3) Connecticut and New York; (4) New Jersey; (4) Delaware, Maryland, and Virginia; and (5) North Carolina. In order to provide the maximum amount of flexibility and to continue to adequately address the state-by-state differences in fish availability, each state in a region is required by the Council and Commission to establish fishing seasons of the same length, with identical minimum fish sizes and possession limits. The Commission will need to certify that these measures, in combination, are the conservation equivalent of coastwide measures that would be expected to result in the recreational harvest limit being achieved, but not exceeded. More information on this addendum is available from the Commission (
Once the states and regions select their final 2016 summer flounder management measures through their respective development, analytical, and review processes and submit them to the Commission, the Commission will conduct further review and evaluation of the submitted proposals, ultimately notifying NMFS as to which proposals have been approved or disapproved. NMFS has no overarching authority in the development of state or Commission management measures, but is an equal participant along with all the member states in the review process. NMFS retains the final authority either to approve or to disapprove the use of conservation equivalency in place of the coastwide measures in Federal waters, and will publish its determination as a final rule in the
States that do not submit conservation equivalency proposals, or whose proposals are disapproved by the Commission, will be required by the Commission to adopt the precautionary default measures. In February 2016, the Commission's Summer Flounder Board convened and approved a suite of measures and/or analytical techniques for measures development that should achieve conservation equivalency. Thus, it is unlikely that the precautionary default measures will be necessary for 2016. However, if states are initially assigned precautionary default measures, they may subsequently receive Commission approval of revised state measures. In that case, NMFS would publish a notice in the
The 2016 precautionary default measures recommended by the Council and Board are for a 20.0-inch (50.8-cm) minimum fish size, a possession limit of two fish, and an open season of May 1 through September 30, 2016.
In this action, NMFS proposes to implement conservation equivalency with a precautionary default backstop, as previously outlined, for states that either fail to submit conservation equivalent measures or whose measures are not approved by the Commission. NMFS proposes the alternative of coastwide measures (18-inch (45.7-cm) minimum size, 4-fish possession limit, May 1-September 30 open fishing season), if conservation equivalency is not approved in the final rule.
The 2016 scup recreational harvest limit is 6.09 million lb (2,763 mt) and 2015 recreational landings are currently estimated at 4.88 million lb (2,214 mt). The Council recommended maintaining the existing management measures, as no changes are needed to ensure the 2016 recreational harvest limit is not exceeded, and further liberalization of the management measures is not requested or advisable. As a result, no changes to the current scup management measures (9-inch or 22.9 cm minimum fish size, 50-fish per person possession limit, and year-round season) are proposed.
The 2016 black sea bass recreational harvest limit is 2.82 million lb (1,280 mt), while the 2015 projected landings are 3.62 million lb (1,642 mt). These 2015 projected landings are based on preliminary Marine Recreational Information Program estimates through Wave 6 (November and December 2015). 2016 management measures must reduce landings by 22-percent relative to 2015 in order to constrain catch within the 2016 recreational harvest limit. Recreational black sea bass catch occurs primarily in state waters in the states of New Jersey through Massachusetts (
Since 2011, the management measures in the northern region have been more restrictive than in Federal waters. The northern states, through the Commission process, are expected to implement measures to achieve a 22-percent reduction in landings from each state. The southern region states (Delaware through Cape Hatteras, North Carolina) are expected to implement state waters measures that are identical to the proposed Federal measures. The northern states' reduction, in combination with the Council's recommendation of maintaining the status quo measures in Federal waters and state waters from Delaware to North Carolina, are intended to achieve, but not exceed, the recreational harvest limit and recreational annual catch limit in 2016.
Accountability measures for the black sea bass recreational fishery utilize a rolling three-year average comparison of catch to the average of the same three years' ACLs. Because the average catch from 2012 through 2014 exceeds the average annual catch limit for those years by 37.9 percent, an accountability measure is applicable to the 2016 fishery. The 2016 accountability measures are the same as those implemented in 2015 (12.5-inch (31.8-cm) minimum size, 15-fish possession limit, and 201-day fishing season). Continuing these regulations preserves the accountability measures that were applied last year; as such, no further accountability measures are necessary for 2015.
We are proposing no changes to the current Federal waters measures (12.5-inch (31.8-cm) minimum size, 15-fish possession limit, and open seasons of May 15-September 21 and October 22-December 31), consistent with the Council's recommendation. These measures maintain the accountability measures implemented in 2015. This proposal is contingent upon the northern region, established under the Commission's Addendum XXVII, implementing the required reduction in their state regulations. If the northern region's measures do not meet the required reduction, NMFS is proposing the Council's default recommendation of a 14-inch (35.6-cm) minimum size, a 3-fish possession limit, and an open
The Council initiated a review of the scup commercial management measures in 2015 and is recommending an increase in the incidental possession limit in the winter season. Currently, the regulations require vessels retaining more than 500 lb (227 kg) of scup from November 1 through April 30, or more than 200 lb (91 kg) from May 1 through October 31, to use mesh larger than 5 inches (12.7 cm). The Council is recommending, and this rule proposes, to raise the incidental limit to 1,000 lb (454 kg) for the November-April season for vessels using mesh smaller than 5 inches (12.7 cm) to minimize regulatory discards without compromising the scup stock. Vessels using mesh larger than 5 inches (12.7 cm) may continue to land up to the targeted commercial fishery possession limit according to the applicable Federal and state rules.
This rule would also correct two errors in the commercial summer flounder regulations.
The summer flounder minimum mesh size regulations at § 648.108(a)(1) require that any vessel landing or possessing more than 100 lb (45 kg) of summer flounder from May 1 through October 31, or 200 lb (91 kg) of summer flounder from November 1 through April 30, use at least 5.5-inch (14-cm) diamond or 6.0-inch (15-cm) square mesh “throughout the body, extension(s), and codend portion of the net.” However, the turtle excluding device (TED) regulations require summer flounder trawls fishing in the sea turtle protection area to have a TED extension with webbing no larger than 3.5 inches (9-cm). This rule would eliminate the conflict between these two regulations by specifying that the minimum mesh size restrictions do not apply to extensions needed to comply with the TED regulations.
The flynet program exemption from the summer flounder minimum mesh requirements can be found at § 648.108(b)(2)(i)-(iii). The Regional Administrator's authority to terminate the exemption after review is incorrectly listed at § 648.108(b)(3) and should be referenced at § 648.108(b)(2)(iv), which this rule proposes to do.
Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the Assistant Administrator has determined that this proposed rule is consistent with the Summer Flounder, Scup, and Black Sea Bass FMP, other provisions of the Magnuson-Stevens Act, and other applicable law, subject to further consideration after public comment.
This proposed rule has been determined to be not significant for purposes of Executive Order 12866.
The Chief Council for Regulation of the Department of Commerce certified to the Chief Council for Advocacy of the Small Business Administration that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities.
The Council conducted an evaluation of the potential socioeconomic impacts of the proposed measures in conjunction with a SIR. Because no regulatory changes are proposed that would affect the recreational black sea bass or scup fisheries, they are not considered in the evaluation. There were 547 federally permitted summer flounder charter/party vessels, all of which are considered “small” by the Small Business Administration's size standards. The commercial scup incidental possession limit change could potentially affect 649 commercial entities that had revenues generated from scup during the 2012-2014 period. Of these, 642 entities are categorized as small and 7 are categorized as large. Scup represented approximately 0.06 percent of the average receipts of the small entities considered and 0.34 percent of the average receipts of the large entities considered over the 2012-2014 time period.
The proposed measure would continue the use of conservation equivalency for summer flounder, maintain the existing scup and black sea bass recreational management measures, and increase the commercial incidental scup possession limit from 500 lb (227 kg) to 1,000 lb (454 kg). The proposed action would result in status quo measures for all three recreational fisheries in Federal waters. Further, the scup possession limit change is intended to allow vessels catching scup in the prosecution of other fisheries to keep 500 lb (227 kg) more than they are currently allowed, rather than discarding them. This is not likely to change fishing behavior, but could result in a slightly positive economic impact for those vessels. Collectively, analysis conducted by the Council indicates that these measures would have a minimal, potentially slight positive impact on regulated entities.
Because this rule will not have a significant economic impact on a substantial number of small entities, an initial regulatory flexibility analysis is not required and none has been prepared.
There are no new reporting or recordkeeping requirements contained in any of the alternatives considered for this action.
Fisheries, Fishing, Reporting and recordkeeping requirements.
For the reasons set out in the preamble, 50 CFR part 648 is proposed to be amended as follows:
16 U.S.C. 1801
(a) The Regional Administrator has determined that the recreational fishing measures proposed to be implemented by the states of Maine through North Carolina for 2016 are the conservation equivalent of the season, minimum size, and possession limit prescribed in §§ 648.102, 648.103, and 648.105(a), respectively. This determination is based on a recommendation from the Summer Flounder Board of the Atlantic States Marine Fisheries Commission.
(a)
(a)
Administrative Conference of the United States.
Notice.
Pursuant to the Federal Advisory Committee Act (5 U.S.C. App.), the Assembly of the Administrative Conference of the United States will hold a meeting to consider two proposed recommendations and to conduct other business. This meeting will be open to the public.
The meeting will take place on Friday, June 10, 2016, 9:00 a.m. to 12:30 p.m. The meeting may adjourn early if all business is finished.
The meeting will be held at the Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581 (Main Conference Room).
Shawne McGibbon, General Counsel (Designated Federal Officer), Administrative Conference of the United States, Suite 706 South, 1120 20th Street NW., Washington, DC 20036; Telephone 202-480-2088; email
The Administrative Conference of the United States makes recommendations to federal agencies, the President, Congress, and the Judicial Conference of the United States regarding the improvement of administrative procedures (5 U.S.C. 594). The membership of the Conference, when meeting in plenary session, constitutes the Assembly of the Conference (5 U.S.C. 595).
Additional information about the proposed recommendations and the order of the agenda, as well as other materials related to the meeting, can be found at the 65th Plenary Session page on the Conference's Web site:
Forest Service, USDA.
Notice of meeting.
The Prince of Wales Resource Advisory Committee (RAC) will meet in Craig, Alaska. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with Title II of the Act. RAC information can be found at the following Web site:
The meeting will be held June 20, 2016, at 10:00 a.m.
All RAC meetings are subject to cancellation. For status of meeting prior to attendance, please contact the person listed under
The meeting will be held at Craig Ranger District, 504 9th Street, Craig, Alaska. If you wish to attend via teleconference, please contact the person listed under
Written comments may be submitted as described under
Amy Manuel, RAC Coordinator, by phone at 907-228-6200 or via email at
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 between 8:00 a.m. and 8:00 p.m., Eastern Standard Time, Monday through Friday.
The purpose of the meeting is to review and recommend projects authorized under Title II of the Act.
The meeting is open to the public. The agenda will include time for people to make oral statements of three minutes or less. Individuals wishing to make an oral statement should request in writing by June 15, 2016, to be scheduled on the agenda. Anyone who would like to bring related matters to the attention of the committee may file written statements with the committee staff before or after the meeting. Written comments and requests for time to make oral comments must be sent to Matthew Anderson, Designated Federal Officer, P.O. Box 500, Craig, Alaska 99921; by email to
Forest Service, USDA.
Notice of meeting.
The Prince of Wales Resource Advisory Committee (RAC) will meet in Craig, Alaska. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with Title II of the Act. RAC information can be found at the following Web site:
The meeting will be held June 27, 2016, at 10:00 a.m.
All RAC meetings are subject to cancellation. For status of meeting prior to attendance, please contact the person listed under
The meeting will be held at Craig Ranger District, 504 9th Street, Craig, Alaska. If you wish to attend via teleconference, please contact the person listed under
Written comments may be submitted as described under
Amy Manuel, RAC Coordinator, by phone at 907-228-6200 or via email at
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 between 8:00 a.m. and 8:00 p.m., Eastern Standard Time, Monday through Friday.
The purpose of the meeting is to review and recommend projects authorized under Title II of the Act.
The meeting is open to the public. The agenda will include time for people to make oral statements of three minutes or less. Individuals wishing to make an oral statement should request in writing by June 22, 2016, to be scheduled on the agenda. Anyone who would like to bring related matters to the attention of the committee may file written statements with the committee staff before or after the meeting. Written comments and requests for time to make oral comments must be sent to Matthew Anderson, Designated Federal Officer, P.O. Box 500, Craig, Alaska 99921; by email to
Forest Service, USDA.
Notice of meeting.
The Eastern Arizona Resource Advisory Committee (RAC) will meet in Springerville, Arizona. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (Pub. L. 110-343) (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with title II of the Act. The meeting is open to the public. The purpose of the meeting is to review and recommend projects authorized under title II of the Act.
The meeting will be held July 12, 2016 beginning at 9 a.m. until 4 p.m., and continuing if necessary, on July 13, 2016 at 9 a.m. until approximately 4 p.m.
All RAC meetings are subject to cancellation. For status of meeting prior to attendance, please contact the person listed under
The meeting will be held at the Apache-Sitgreaves National Forests Supervisor's Office conference room, located at 30 South Chiricahua Drive, Springerville, Arizona 85938.
Written comments may be submitted as described under
Marta Call, RAC Program Coordinator, Eastern Arizona Resource Advisory Committee by phone at 928-333-6336 or via email at
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 between 8:00 a.m. and 8:00 p.m., Eastern Standard Time, Monday through Friday.
Additional RAC information, including the meeting agenda and the meeting summary/minutes can be found at the following Web site:
Forest Service, USDA.
Notice of meeting.
The Tri-County Resource Advisory Committee (RAC) will meet in Deer Lodge, Montana. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with Title II of the Act. RAC information can be found at the following Web site:
The meeting will be held June 28, 2016, from 5:00 p.m. to 9:00 p.m.
All RAC meetings are subject to cancellation. For status of meeting prior to attendance, please contact the person listed under
The meeting will be held at the USDA Service Center, 1002 Hollenbeck Lane, Deer Lodge, Montana.
Written comments may be submitted as described under
Breck Hudson, RAC Coordinator, by phone at 406-683-3935 or via email at
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 between 8:00 a.m. and 8:00 p.m., Eastern Standard Time, Monday through Friday.
The purpose of the meeting is to review and recommend projects for Title II funding.
The meeting is open to the public. The agenda will include time for people to make oral statements of three minutes or less. Individuals wishing to make an oral statement should request in writing by June 24, 2016, to be scheduled on the agenda. Anyone who would like to bring related matters to the attention of the committee may file written statements with the committee staff before or after the meeting. Written comments and requests for time to make oral comments must be sent to Breck Hudson, RAC Coordinator, 420 Barrett Street, Dillon, Montana 59725; by email to
Forest Service, USDA.
Notice of meeting.
The Prince of Wales Resource Advisory Committee (RAC) will meet in Craig, Alaska. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with Title II of the Act. RAC information can be found at the following Web site:
The meeting will be held June 13, 2016, at 10:00 a.m.
All RAC meetings are subject to cancellation. For status of meeting prior to attendance, please contact the person listed under
The meeting will be held at Craig Ranger District, 504 9th Street, Craig, Alaska. If you wish to attend via
Written comments may be submitted as described under
Amy Manuel, RAC Coordinator, by phone at 907-228-6200 or via email at
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 between 8:00 a.m. and 8:00 p.m., Eastern Standard Time, Monday through Friday.
The purpose of the meeting is to review and recommend projects authorized under Title II of the Act.
The meeting is open to the public. The agenda will include time for people to make oral statements of three minutes or less. Individuals wishing to make an oral statement should request in writing by June 8, 2016, to be scheduled on the agenda. Anyone who would like to bring related matters to the attention of the committee may file written statements with the committee staff before or after the meeting. Written comments and requests for time to make oral comments must be sent to Matthew Anderson, Designated Federal Officer, P.O. Box 500, Craig, Alaska 99921; by email to
Rural Housing Service, USDA.
Notice.
The Rural Housing Service (RHS), an agency within the USDA Rural Development mission area herein referred to as the Agency announces the availability of funding under the Rural Community Development Initiative (RCDI) program. Applicants must provide matching funds in an amount at least equal to the Federal grant. These grants will be made to qualified intermediary organizations that will provide financial and technical assistance to recipients to develop their capacity and ability to undertake projects related to housing, community facilities, or community and economic development that will support the community.
This Notice lists the information needed to submit an application for these funds. This Notice contains revised evaluation criteria that are streamlined, in order to enhance program efficiency and delivery.
The deadline for receipt of an application is 4 p.m. local time, July 22, 2016. The application date and time are firm. The Agency will not consider any application received after the deadline. Applicants intending to mail applications must provide sufficient time to permit delivery on or before the closing deadline date and time. Acceptance by the United States Postal Service or private mailer does not constitute delivery. Facsimile (FAX), electronic mail and postage due applications will not be accepted.
Entities wishing to apply for assistance may download the application documents and requirements delineated in this Notice from the RCDI Web site:
Application information for electronic submissions may be found at
Applicants may also request paper application packages from the Rural Development office in their state. A list of Rural Development State offices contacts can be found via
The Rural Development office for the state in which the applicant is located. A list of Rural Development State Office contacts is provided at the following link:
The paperwork burden has been cleared by the Office of Management and Budget (OMB) under OMB Control Number 0575-0180.
Congress first authorized the RCDI in 1999 (Pub. L. 106-78, which was amended most recently by the Consolidated Appropriations Act, 2016 (Pub. L. 114-113)). The RCDI was authorized to develop the capacity and ability of qualified private, nonprofit community-based housing and community development organizations, low-income rural communities, and federally recognized Native American Tribes to undertake projects related to housing, community facilities, or community and economic development in rural areas. Strengthening the recipient's capacity in these areas will benefit the communities they serve. The RCDI structure requires the intermediary (grantee) to provide a program of financial and technical assistance to recipients. The recipients will, in turn, provide programs to their communities (beneficiaries).
Of particular note this year, the Agency is encouraging applications for projects based in or servicing high poverty areas. This emphasis will support Rural Development's (RD) mission of improving the quality of life for rural Americans and commitment to
Congress, in the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), appropriated $4,000,000 in Fiscal Year (FY) 2016 for the RCDI program. The amount of funding received in the FY 2016 Appropriations Act can also be found at the following link:
Qualified private, nonprofit and public (including tribal) intermediary organizations proposing to carry out financial and technical assistance programs will be eligible to receive the grant funding.
The intermediary will be required to provide matching funds in an amount at least equal to the RCDI grant.
A grant will be the type of assistance instrument awarded to successful applications.
The respective minimum and maximum grant amount per intermediary is $50,000 and $250,000.
Grant funds must be utilized within 3 years from date of the award.
A grantee that has an outstanding RCDI grant over 3 years old, as of the application due date in this Notice, is not eligible to apply for this round of funding.
The intermediary must provide a program of financial and technical assistance to one or more of the following: A private, nonprofit community-based housing and development organization, a low-income rural community or a federally recognized tribe.
Applicants must certify compliance with sections 743 and 744 of the Consolidated Appropriations Act, 2016, Public Law 114-113. These provisions state:
SEC. 743.
(a) None of the funds appropriated or otherwise made available by this or any other Act may be available for a contract, grant, or cooperative agreement with an entity that requires employees or contractors of such entity seeking to report fraud, waste, or abuse to sign internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or contractors from lawfully reporting such waste, fraud, or abuse to a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information.
(b) The limitation in subsection (a) shall not contravene requirements applicable to Standard Form 312, Form 4414, or any other form issued by a Federal department or agency governing the nondisclosure of classified information.
SEC. 744.
(a) No funds appropriated in this or any other Act may be used to implement or enforce the agreements in Standard Forms 312 and 4414 of the Government or any other nondisclosure policy, form, or agreement if such policy, form, or agreement does not contain the following provisions: “These provisions are consistent with and do not supersede, conflict with, or otherwise alter the employee obligations, rights, or liabilities created by existing statute or Executive order relating to (1) classified information, (2) communications to Congress, (3) the reporting to an Inspector General of a violation of any law, rule, or regulation, or mismanagement, a gross waste of funds, an abuse of authority, or a substantial and specific danger to public health or safety, or (4) any other whistleblower protection. The definitions, requirements, obligations, rights, sanctions, and liabilities created by controlling Executive orders and statutory provisions are incorporated into this agreement and are controlling.”: Provided, That notwithstanding the preceding provision of this section, a nondisclosure policy form or agreement that is to be executed by a person connected with the conduct of an intelligence or intelligence-related activity, other than an employee or officer of the United States Government, may contain provisions appropriate to the particular activity for which such document is to be used. Such form or agreement shall, at a minimum, require that the person will not disclose any classified information received in the course of such activity unless specifically authorized to do so by the United States Government. Such nondisclosure forms shall also make it clear that they do not bar disclosures to Congress, or to an authorized official of an executive agency or the Department of Justice, that are essential to reporting a substantial violation of law.
(b) A nondisclosure agreement may continue to be implemented and enforced notwithstanding subsection (a) if it complies with the requirements for such agreement that were in effect when the agreement was entered into.
(c) No funds appropriated in this or any other Act may be used to implement or enforce any agreement entered into during fiscal year 2014 which does not contain substantially similar language to that required in subsection (a).
Applicants must meet all of the following eligibility requirements by the application deadline. Applications which fail to meet any of these requirements by the application deadline will be deemed ineligible and will not be evaluated further, and will not receive a Federal award.
(a) Qualified private, nonprofit, (including faith-based and community organizations and philanthropic foundations), in accordance with 7 CFR part 16, and public (including tribal) intermediary organizations are eligible applicants. Definitions that describe eligible organizations and other key terms are listed below.
(b) The recipient must be a nonprofit community-based housing and development organization, low-income rural community, or federally recognized tribe based on the RCDI definitions of these groups.
(c) Private nonprofit, faith or community-based organizations must provide a certificate of incorporation and good standing from the Secretary of the State of incorporation, or other similar and valid documentation of current nonprofit status. For low-income rural community recipients, the Agency requires evidence that the entity is a public body and census data verifying that the median household income of the community where the office receiving the financial and technical assistance is located is at, or below, 80 percent of the State or national median household income, whichever is higher. For federally recognized tribes, the Agency needs the page listing their name from the current
(d) Any corporation (1) that has been convicted of a felony criminal violation under any Federal law within the past 24 months or (2) that has any unpaid Federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability; is not eligible for financial assistance provided with funds appropriated by the Consolidated Appropriations Act, 2016, unless a Federal agency has considered suspension or debarment of the corporation and has made a determination that this further action is not necessary to protect the interests of the Government.
There is a matching requirement of at least equal to the amount of the grant. If this matching funds requirement is not met, the application will be deemed ineligible. See section D, Application and Submission Information, for required pre-award and post award matching funds documentation submission.
The intermediary must provide matching funds at least equal to the amount of the grant. Verification of matching funds must be submitted with
Matching funds are cash or confirmed funding commitments and must be at least equal to the grant amount and committed for a period of not less than the grant performance period. These funds can only be used for eligible RCDI activities. Matching funds must be used to support the overall purpose of the RCDI program.
In-kind contributions such as salaries, donated time and effort, real and nonexpendable personal property and goods and services cannot be used as matching funds.
Grant funds and matching funds must be used in equal proportions. This does not mean funds have to be used equally by line item.
The request for advance or reimbursement and supporting documentation must show that RCDI fund usage does not exceed the cumulative amount of matching funds used.
Grant funds will be disbursed pursuant to relevant provisions of 2 CFR parts 200 and 400. Verification of matching funds must be submitted with the application. See Section D, other program requirements, for matching funds documentation and pre-award requirements.
The intermediary is responsible for demonstrating that matching funds are available, and committed for a period of not less than the grant performance period to the RCDI proposal. Matching funds may be provided by the intermediary or a third party. Other Federal funds may be used as matching funds if authorized by statute and the purpose of the funds is an eligible RCDI purpose.
RCDI funds will be disbursed on an advance or reimbursement basis. Matching funds cannot be expended prior to execution of the RCDI Grant Agreement.
(a) The recipient and beneficiary, but not the intermediary, must be located in an eligible rural area. The physical location of the recipient's office that will be receiving the financial and technical assistance must be in an eligible rural area. If the recipient is a low-income community, the median household income of the area where the office is located must be at or below 80 percent of the State or national median household income, whichever is higher. The applicable Rural Development State Office can assist in determining the eligibility of an area.
A listing of Rural Development State Office contacts can be found at the following link:
(b) RCDI grantees that have an outstanding grant over 3 years old, as of the application due date in this Notice, will not be eligible to apply for this round of funding. Grant and matching funds must be utilized in a timely manner to ensure that the goals and objectives of the program are met.
(c) Individuals cannot be recipients.
(d) The intermediary must provide a program of financial and technical assistance to the recipient.
(e) The intermediary organization must have been legally organized for a minimum of 3 years and have at least 3 years prior experience working with private nonprofit community-based housing and development organizations, low-income rural communities, or tribal organizations in the areas of housing, community facilities, or community and economic development.
(f) Proposals must be structured to utilize the grant funds within 3 years from the date of the award.
(g) Each applicant, whether singularly or jointly, may only submit one application for RCDI funds under this Notice. This restriction does not preclude the applicant from providing matching funds for other applications.
(h) Recipients can benefit from more than one RCDI application; however, after grant selections are made, the recipient can only benefit from multiple RCDI grants if the type of financial and technical assistance the recipient will receive is not duplicative. The services described in multiple RCDI grant applications must have separate and identifiable accounts for compliance purposes.
(i) The intermediary and the recipient cannot be the same entity. The recipient can be a related entity to the intermediary, if it meets the definition of a recipient, provided the relationship does not create a Conflict of Interest that cannot be resolved to Rural Development's satisfaction.
(j) If the recipient is a low-income rural community, identify the unit of government to which the financial and technical assistance will be provided,
Fund uses must be consistent with the RCDI purpose. A nonexclusive list of eligible grant uses includes the following:
(a) Provide technical assistance to develop recipients' capacity and ability to undertake projects related to housing, community facilities, or community and economic development,
(b) Develop the capacity of recipients to conduct community development programs,
(c) Develop the capacity of recipients to conduct development initiatives,
(d) Develop the capacity of recipients to increase their leveraging ability and access to alternative funding sources by providing training and staffing.
(e) Develop the capacity of recipients to provide the technical assistance component for essential community facilities projects.
(f) Assist recipients in completing pre-development requirements for housing, community facilities, or community and economic development projects by providing resources for professional services,
(g) Improve recipient's organizational capacity by providing training and resource material on developing strategic plans, board operations, management, financial systems, and information technology.
(h) Purchase of computers, software, and printers, limited to $10,000 per award, at the recipient level when directly related to the technical assistance program being undertaken by the intermediary.
(i) Provide funds to recipients for training-related travel costs and training expenses related to RCDI.
The following is a list of ineligible grant uses:
(a) Pass-through grants, and any funds provided to the recipient in a lump sum that are not reimbursements.
(b) Funding a revolving loan fund (RLF).
(c) Construction (in any form).
(d) Salaries for positions involved in construction, renovations, rehabilitation, and any oversight of these types of activities.
(e) Intermediary preparation of strategic plans for recipients.
(f) Funding prostitution, gambling, or any illegal activities.
(g) Grants to individuals.
(h) Funding a grant where there may be a conflict of interest, or an appearance of a conflict of interest, involving any action by the Agency.
(i) Paying obligations incurred before the beginning date without prior Agency approval or after the ending date of the grant agreement.
(j) Purchasing real estate.
(k) Improvement or renovation of the grantee's, or recipient's office space or for the repair or maintenance of privately owned vehicles.
(l) Any purpose prohibited in 2 CFR part 200 or 400.
(m) Using funds for recipient's general operating costs.
(n) Using grant or matching funds for Individual Development Accounts.
(o) Purchasing vehicles.
The following are examples of eligible and ineligible purposes under the RCDI program. (These examples are illustrative and are not meant to limit the activities proposed in the application. Activities that meet the objectives of the RCDI program and meet the criteria outlined in this Notice will be considered eligible.)
(a) The intermediary must work directly with the recipient, not the ultimate beneficiaries. As an example:
The intermediary provides training to the recipient on how to conduct homeownership education classes. The recipient then provides ongoing homeownership education to the residents of the community—the ultimate beneficiaries. This “train the trainer” concept fully meets the intent of this initiative. The intermediary is providing technical assistance that will build the recipient's capacity by enabling them to conduct homeownership education classes for the public.
This is an eligible purpose. However, if the intermediary directly provided homeownership education classes to individuals in the recipient's service area, this would not be an eligible purpose because the recipient would be bypassed.
(b) If the intermediary is working with a low-income community as the recipient, the intermediary must provide the technical assistance to the entity that represents the low-income community and is identified in the application. Examples of entities representing a low-income community are a village board or a town council.
If the intermediary provides technical assistance to the Board of the low-income community on how to establish a cooperative, this would be an eligible purpose. However, if the intermediary works directly with individuals from the community to establish the cooperative, this is not an eligible purpose.
The recipient's capacity is built by learning skills that will enable them to support sustainable economic development in their communities on an ongoing basis.
(c) The intermediary may provide technical assistance to the recipient on how to create and operate a revolving loan fund. The intermediary may not monitor or operate the revolving loan fund. RCDI funds, including matching funds, cannot be used to fund revolving loan funds.
(d) The intermediary may work with recipients in building their capacity to provide planning and leadership development training. The recipients of this training would be expected to assume leadership roles in the development and execution of regional strategic plans. The intermediary would work with multiple recipients in helping communities recognize their connections to the greater regional and national economies.
(e) The intermediary could provide training and technical assistance to the recipients on developing emergency shelter and feeding, short-term housing, search and rescue, and environmental accident, prevention, and cleanup program plans. For longer term disaster and economic crisis responses, the intermediary could work with the recipients to develop job placement and training programs, and develop coordinated transit systems for displaced workers.
Entities wishing to apply for assistance may download the application documents and requirements delineated in this Notice from the RCDI Web site:
Application information for electronic submissions may be found at
Applicants may also request paper application packages from the Rural Development office in their state. A list of Rural Development State office contacts can be found via
If the applicant is ineligible or the application is incomplete, the Agency will inform the applicant in writing of the decision, reasons therefore, and its appeal rights and no further evaluation of the application will occur.
A complete application for RCDI funds must include the following:
(a) A summary page, double-spaced between items, listing the following: (This information should not be presented in narrative form.)
(1) Applicant's name,
(2) Applicant's address,
(3) Applicant's telephone number,
(4) Name of applicant's contact person, email address and telephone number,
(5) Applicant's fax number,
(6) County where applicant is located,
(7) Congressional district number where applicant is located,
(8) Amount of grant request, and
(9) Number of recipients.
(b) A detailed Table of Contents containing page numbers for each component of the application.
(c) A project overview, no longer than one page, including the following items, which will also be addressed separately and in detail under “Building Capacity and Expertise” of the “Evaluation Criteria.”
(1) The type of technical assistance to be provided to the recipients and how it will be implemented.
(2) How the capacity and ability of the recipients will be improved.
(3) The overall goals to be accomplished.
(4) The benchmarks to be used to measure the success of the program. Benchmarks should be specific and quantifiable.
(d) Organizational documents, such as a certificate of incorporation and a current good standing certification from the Secretary of State where the applicant is incorporated and other similar and valid documentation of current non-profit status, from the intermediary that confirms it has been legally organized for a minimum of 3 years as the applicant entity.
(e) Verification of source and amount of matching funds,
The verification must show that matching funds are available for the duration of the grant performance period. The verification of matching funds must be submitted with the application or the application will be considered incomplete.
The applicant will be contacted by the Agency prior to grant award to verify that the matching funds provided with the application continue to be available. The applicant will have 15 days from the date contacted to submit verification that matching funds continue to be available.
If the applicant is unable to provide the verification within that timeframe, the application will be considered ineligible. The applicant must maintain bank statements on file or other documentation for a period of at least 3 years after grant closing except that the records shall be retained beyond the 3-year period if audit findings have not been resolved.
(f) The following information for each recipient:
(1) Recipient's entity name,
(2) Complete address (mailing and physical location, if different),
(3) County where located,
(4) Number of Congressional district where recipient is located,
(5) Contact person's name, email address and telephone number and,
(6) Form RD 400-4, “Assurance Agreement.” If the Form RD 400-4 is not submitted for the applicant and each recipient, the recipient will be considered ineligible. No information pertaining to that recipient will be included in the income or population scoring criteria and the requested funding may be adjusted due to the deletion of the recipient.
(g) Submit evidence that each recipient entity is eligible. Documentation must be submitted to verify recipient eligibility. Acceptable documentation varies depending on the type of recipient:
(1) Nonprofits—provide a current valid letter confirming non-profit status from the Secretary of the State of incorporation, a current good standing certification from the Secretary of the State of incorporation, or other valid documentation of current nonprofit status of each recipient.
A nonprofit recipient must provide evidence that it is a valid nonprofit when the intermediary applies for the RCDI grant. Organizations with pending requests for nonprofit designations are not eligible.
(2) Low-income rural community—provide evidence the entity is a public body (copy of Charter, relevant Acts of Assembly, relevant court orders (if created judicially) or other valid documentation), a copy of the 2010 census data to verify the population, and 2010 American Community Survey (ACS) 5-year estimates (2006-2010 data set) data as evidence that the median household income is at, or below, 80 percent of either the State or national median household income. We will only accept data and printouts from
(3) Federally recognized tribes—provide the page listing their name from the
(h) Each of the “Evaluation Criteria” must be addressed specifically and individually by category. Present these criteria in narrative form. Documentation must be limited to five pages per criterion. The “Population and Income” criteria for recipient locations can be provided in the form of a list; however, the source of the data must be included on the page(s).
(i) A timeline identifying specific activities and proposed dates for completion.
(j) A detailed project budget that includes the RCDI grant amount and matching funds. This should be a line-item budget, by category. Categories such as salaries, administrative, other, and indirect costs that pertain to the proposed project must be clearly defined. Supporting documentation listing the components of these categories must be included. The budget should be dated: Year 1, year 2, year 3, as applicable.
(k) The indirect cost category in the project budget should be used only when a grant applicant has a federally negotiated indirect cost rate. A copy of the current rate agreement must be provided with the application. Non-federal entities that have never received a negotiated indirect cost rate, except for those non-Federal entities described in Appendix VII to Part 200—States and Local Government and Indian Tribe Indirect Cost Proposals, paragraph (d)(1)(B), may use the de minimis rate of 10% of modified total direct costs (MTDC).
(l) Form SF-424, “Application for Federal Assistance.” (Do not complete Form SF-424A, “Budget Information.” A separate line-item budget should be presented as described in Letter (J) of this section.)
(m) Form SF-424B, “Assurances—Non-Construction Programs.”
(n) Form AD-1047, “Certification Regarding Debarment, Suspension, and Other Responsibility Matters—Primary Covered Transactions.”
(o) Form AD-1048, “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion—Lower Tier Covered Transactions.”
(p) Form AD-1049, “Certification Regarding Drug-Free Workplace Requirements.”
(q) Certification of Non-Lobbying Activities.
(r) Standard Form LLL, “Disclosure of Lobbying Activities,” if applicable.
(s) Form RD 400-4, “Assurance Agreement,” for the applicant and each recipient.
(t) Identify and report any association or relationship with Rural Development employees. (A statement acknowledging whether or not a relationship exists is required).
(u) Form AD-3030, “Representations Regarding Felony Conviction and Tax Delinquent Status for Corporate Applicants,” if you are a corporation. A corporation is any entity that has filed articles of incorporation in one of the 50 States, the District of Columbia, the Federated States of Micronesia, the Republic of Palau, and the Republic of the Marshall Islands, or the various territories of the United States including American Samoa, Guam, Midway Islands, Northern Mariana Islands, Puerto Rico, or the U.S. Virgin Islands. Corporations include both for profit and non-profit entities.
Grant applicants must obtain a Dun and Bradstreet Data Universal Numbering System (DUNS) number and register in the System for Award Management (SAM) prior to submitting a pre-application pursuant to 2 CFR 25.200(b). In addition, an entity applicant must maintain registration in SAM at all times during which it has an active Federal award or an application or plan under consideration by the Agency. Similarly, all recipients of Federal financial assistance are required to report information about first-tier subawards and executive compensation in accordance to 2 CFR part 170. So long as an entity applicant does not have an exception under 2 CFR 170.110(b), the applicant must have the necessary processes and systems in place to comply with the reporting requirements should the applicant receive funding. See 2 CFR 170.200(b).
An applicant, unless excepted under 2 CFR 25.110(b), (c), or (d), is required to:
(a) Be registered in SAM before submitting its application;
(b) Provide a valid DUNS number in its application; and
(c) Continue to maintain an active SAM registration with current information at all times during which it has an active Federal award or an application or plan under consideration by a Federal awarding agency.
The Federal awarding agency may not make a federal award to an applicant until the applicant has complied with all applicable DUNS and SAM requirements and, if an applicant has not fully complied with the requirements by the time the Federal awarding agency is ready to make a Federal award, the Federal awarding agency may determine that the applicant is not qualified to receive a Federal award and use that determination as a basis for making a Federal award to another applicant.
As required by the Office of Management and Budget (OMB), all grant applications must provide a DUNS number when applying for Federal grants, on or after October 1, 2003. Organizations can receive a DUNS number at no cost by calling the dedicated toll-free number at 1-866-705-5711 or via Internet at
The DUNS number should be identified in the “Organizational DUNS” field on Standard Form (SF) 424, “Application for Federal Assistance.” Since there are no specific fields for a Commercial and Government Entity (CAGE) code and expiration date, they may be identified anywhere on the Form SF 424. If the applicant does not provide the CAGE code and expiration date and the DUNS number in the application, it will not be considered for funding. The required forms and certifications can be downloaded from the RCDI Web site at:
The deadline for receipt of an application is 4 p.m. local time, July 22, 2016. The application date and time are firm. The Agency will not consider any application received after the deadline. You may submit your application in paper form or electronically through
To submit a paper application, the original application package must be submitted to the Rural Development State Office where the applicant's headquarters is located.
A listing of Rural Development State Offices contacts can be found via
Applicants may file an electronic application at
Technical difficulties submitting an application through
First time
In order to register with System for Award Management (SAM), your organization will need a DUNS number. Be sure to complete the Marketing Partner ID (MPID) and Electronic Business Primary Point of Contact fields during the SAM registration process.
These are mandatory fields that are required when submitting grant applications through
Meeting expenses. In accordance with 31 U.S.C. 1345, “Expenses of Meetings,” appropriations may not be used for travel, transportation, and subsistence expenses for a meeting. RCDI grant funds cannot be used for these meeting-related expenses. Matching funds may, however, be used to pay for these expenses.
RCDI funds may be used to pay for a speaker as part of a program, equipment to facilitate the program, and the actual room that will house the meeting.
RCDI funds cannot be used for meetings; they can, however, be used for travel, transportation, or subsistence expenses for program-related training and technical assistance purposes. Any training not delineated in the application must be approved by the Agency to verify compliance with 31 U.S.C. 1345. Travel and per diem expenses (including meals and incidental expenses) will be allowed in accordance with 2 CFR parts 200 and 400.
Applications will be evaluated using the following criteria and weights:
The applicant must demonstrate how they will improve the recipients' capacity, through a program of financial and technical assistance, as it relates to the RCDI purposes.
Capacity-building financial and technical assistance should provide new functions to the recipients or expand existing functions that will enable the recipients to undertake projects in the areas of housing, community facilities, or community and economic development that will benefit the community. Capacity-building financial and technical assistance may include, but is not limited to: Training to conduct community development programs,
The program of financial and technical assistance that is to be provided, its delivery, and the measurability of the program's effectiveness will determine the merit of the application.
All applications will be competitively ranked with the applications providing
The narrative response must contain the following items. This list also contains the points for each item.
(1) Describe the nature of financial and technical assistance to be provided to the recipients and the activities that will be conducted to deliver the technical assistance; (10 Points)
(2) Explain how financial and technical assistance will develop or increase the recipient's capacity. Indicate whether a new function is being developed or if existing functions are being expanded or performed more effectively; (7 Points)
(3) Identify which RCDI purpose areas will be addressed with this assistance: Housing, community facilities, or community and economic development; (3 Points)
(4) Describe how the results of the technical assistance will be measured. What benchmarks will be used to measure effectiveness? Benchmarks should be specific and quantifiable; (5 Points)
(5) Demonstrate that it has conducted programs of financial and technical assistance and achieved measurable results in the areas of housing, community facilities, or community and economic development in rural areas; (10 Points)
(6) Provide in a chart or excel spreadsheet, the organization name, point of contact, address, phone number, email address, and the type and amount of the financial and technical assistance the applicant organization has provided to the following for the last 3 years: (5 Points)
(i) Nonprofit organizations in rural areas.
(ii) Low-income communities in rural areas (also include the type of entity,
(iii) Federally recognized tribes or any other culturally diverse organizations.
The applicant can receive up to 15 points for soundness of approach. The overall proposal will be considered under this criterion.
Applicants must list the page numbers in the application that address these factors.
The maximum 15 points for this criterion will be based on the following:
(1) The proposal fits the objectives for which applications were invited, is clearly stated, and the applicant has defined how this proposal will be implemented. (7 Points)
(2) The ability to provide the proposed financial and technical assistance based on prior accomplishments. (6 Points)
(3) Cost effectiveness will be evaluated based on the budget in the application. The proposed grant amount and matching funds should be utilized to maximize capacity building at the recipient level. (2 Points)
Population is based on the average population from the 2010 census data for the communities in which the recipients are located. The physical address, not mailing address, for each recipient must be used for this criterion. Community is defined for scoring purposes as a city, town, village, county, parish, borough, or census-designated place where the recipient's office is physically located.
The applicant must submit the census data from the following Web site in the form of a printout of the applicable “Fact Sheet” to verify the population figures used for each recipient. The data can be accessed on the Internet at
The average population of the recipient locations will be used and will be scored as follows:
The average of the median household income for the communities where the recipients are physically located will determine the points awarded. The physical address, not mailing address, for each recipient must be used for this criterion. Applicants may compare the average recipient median household income to the State median household income or the national median household income, whichever yields the most points. The national median household income to be used is $51,914.
The applicant must submit the income data in the form of a printout of the applicable information from the following Web site to verify the income for each recipient. The data being used is from the 2010 American Community Survey (ACS) 5-year estimates (2006-2010 data set). The data can be accessed on the Internet at
(1) This criterion will be addressed by the Agency, not the applicant.
(2) Up to 10 points may be awarded by the Rural Development State Director to any application(s) that benefits their state regardless of whether the applicant is headquartered in their state. The total points awarded under this criterion, to all applications, will not exceed 10.
(3) When an intermediary submits an application that will benefit a state that is not the same as the state in which the intermediary is headquartered, it is the intermediary's responsibility to notify the State Director of the state which is receiving the benefit of their application. In such cases, State Directors awarding points to applications benefiting their state must notify the reviewing state in writing.
(4) Assignment of any points under this criterion requires a written justification and must be tied to and awarded based on how closely the
This criterion will be addressed by the Agency, not the applicant. The Agency Administrator may award up to 20 points to any application to the extent that the application supports Strategic Goal One in the USDA Strategic Plan 2014-2018. This plan can be found at the following link:
Points may be awarded to applications that meet at least one of the following six criteria below (note: the maximum points can be given to any one of the following six criteria):
(1) The project is based in a census tract with poverty greater than or equal to 20% (should provide the address and census tract in which the recipient is located);
(2) The project is based in a community (village, town, city, or Census Designated Place) that is 75% CF grant eligible (rural community having a population of 5,000 or less and median household income (MHI) of 60% or less of the state's non-metropolitan median household income (NMHI) (should provide address, population (2010 census) and MHI (ACS 2006-2010 dataset) data in which the recipient is located);
(3) The project's service area includes at least one census tract with poverty greater than or equal to 20% (should provide the address and census tract in which the recipient will conduct or deliver approved project activity);
(4) The project's service area includes at least one community (village, town, city, or Census Designated Place) that is 75% CF grant eligible (rural community having a population of 5,000 or less and MHI of 60% or less of the state's NMHI) (should provide address, population (2010 census) and MHI (ACS 2006-2010 dataset) data in which the recipient will conduct or deliver approved project activity);
(5) The project serves a StrikeForce area (see link below) (should identify the StrikeForce area).
(6) The project serves a Promise Zone (see link below) (should identify the specific Promise Zone) and eligible applicant provides evidence of partnership with a Promise Zone Lead Applicant organization.
For a listing of StrikeForce areas and designated Promise Zones, click on the following link:
Applications will be rated and ranked on a national basis by a review panel based on the “Evaluation Criteria” contained in this Notice.
If there is a tied score after the applications have been rated and ranked, the tie will be resolved by reviewing the scores for ”Building Capacity and Expertise” and the applicant with the highest score in that category will receive a higher ranking. If the scores for “Building Capacity and Expertise” are the same, the scores will be compared for the next criterion, in sequential order, until one highest score can be determined.
The Agency will screen each application to determine eligibility during the period immediately following the application deadline. Listed below are examples of reasons for rejection from previous funding rounds. The following reasons for rejection are not all inclusive; however, they represent the majority of the applications previously rejected.
(1) Recipients were not located in eligible rural areas based on the definition in this Notice.
(2) Applicants failed to provide evidence of recipient's status,
(3) Applicants failed to provide evidence of committed matching funds or matching funds were not committed for a period at least equal to the grant performance period.
(4) Application did not follow the RCDI structure with an intermediary and recipients.
(5) Recipients were not identified in the application.
(6) Intermediary did not provide evidence it had been incorporated for at least 3 years as the applicant entity.
(7) Applicants failed to address the “Evaluation Criteria.”
(8) The purpose of the proposal did not qualify as an eligible RCDI purpose.
(9) Inappropriate use of funds (
(10) The applicant proposed providing financial and technical assistance directly to individuals.
(11) The application package was not received by closing date and time.
Within the limit of funds available for such purpose, the awarding official of the Agency shall make grants in ranked order to eligible applicants under the procedures set forth in this Notice.
Successful applicants will receive a selection letter by mail containing instructions on requirements necessary to proceed with execution and performance of the award.
This letter is not an authorization to begin performance. In addition, selected applicants will be requested to verify that components of the application have not changed at the time of selection and on the award obligation date, if requested by the Agency.
The award is not approved until all information has been verified, and the awarding official of the Agency has signed Form RD 1940-1, “Request for Obligation of Funds” and the grant agreement.
Unsuccessful applicants will receive notification including appeal rights by mail.
Grantees will be required to do the following:
(a) Execute a Rural Community Development Initiative Grant Agreement.
(b) Execute Form RD 1940-1, “Request for Obligation of Funds.”
(c) Use Form SF 270, “Request for Advance or Reimbursement,” to request reimbursements. Provide receipts for expenditures, timesheets and any other documentation to support the request for reimbursement.
(d) Provide financial status and project performance reports on a quarterly basis starting with the first full quarter after the grant award.
(e) Maintain a financial management system that is acceptable to the Agency.
(f) Ensure that records are maintained to document all activities and expenditures utilizing RCDI grant funds and matching funds. Receipts for expenditures will be included in this documentation.
(g) Provide annual audits or management reports on Form RD 442-2, “Statement of Budget, Income and Equity,” and Form RD 442-3, “Balance Sheet,” depending on the amount of Federal funds expended and the outstanding balance.
(h) Collect and maintain data provided by recipients on race, sex, and national origin and ensure recipients collect and maintain the same data on
(i) Provide a final project performance report.
(j) Identify and report any association or relationship with Rural Development employees.
(k) The intermediary and recipient must comply with Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, Section 504 of the Rehabilitation Act of 1973, Executive Order 12250, Age Act of 1975, Executive Order 13166 Limited English Proficiency and 7 CFR part 1901, subpart E.
(l) The grantee must comply with policies, guidance, and requirements as described in the following applicable Code of Federal Regulations, and any successor regulations:
(i) 2 CFR parts 200 and 400 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements For Federal Awards).
(ii) 2 CFR parts 417 and 180 (Government-wide Debarment and Suspension (Nonprocurement).
(m) Form AD-3031, “Assurance Regarding Felony Conviction or Tax Delinquent Status for Corporate Applicants,” Must be signed by corporate applicants who receive an award under this Notice.
After grant approval and through grant completion, you will be required to provide the following, as indicated in the Grant Agreement:
(a) SF-425, “Federal Financial Report” and SF-PPR, “Performance Progress Report” will be required on a quarterly basis (due 30 working days after each calendar quarter). The Performance Progress Report shall include the elements described in the grant agreement.
(b) Final financial and performance reports will be due 90 calendar days after the period of performance end date.
(c) A summary at the end of the final report with elements as described in the grant agreement to assist in documenting the annual performance goals of the RCDI program for Congress.
Contact the Rural Development office in the State where the applicant's headquarters is located. A list of Rural Development State Offices contacts can be found via
Survey on Ensuring Equal Opportunity for Applicants, OMB No. 1894-0010 (applies to nonprofit applicants only—submission is optional).
No reimbursement will be made for any funds expended prior to execution of the RCDI Grant Agreement unless the intermediary is a non-profit or educational entity and has requested and received written Agency approval of the costs prior to the actual expenditure.
This exception is applicable for up to 90 days prior to grant closing and only applies to grantees that have received written approval but have not executed the RCDI Grant Agreement.
The Agency cannot retroactively approve reimbursement for expenditures prior to execution of the RCDI Grant Agreement.
Agency—The Rural Housing Service (RHS) or its successor.
Beneficiary—Entities or individuals that receive benefits from assistance provided by the recipient.
Capacity—The ability of a recipient to implement housing, community facilities, or community and economic development projects.
Conflict of interest—A situation in which a person or entity has competing personal, professional, or financial interests that make it difficult for the person or business to act impartially. Regarding use of both grant and matching funds, Federal procurement standards prohibit transactions that involve a real or apparent conflict of interest for owners, employees, officers, agents, or their immediate family members having a financial or other interest in the outcome of the project; or that restrict open and free competition for unrestrained trade. Specifically, project funds may not be used for services or goods going to, or coming from, a person or entity with a real or apparent conflict of interest, including, but not limited to, owner(s) and their immediate family members. An example of conflict of interest occurs when the grantee's employees, board of directors, or the immediate family of either, have the appearance of a professional or personal financial interest in the recipients receiving the benefits or services of the grant.
Federally recognized tribes—Tribal entities recognized and eligible for funding and services from the Bureau of Indian Affairs, based on the most recent notice in the
Financial assistance—Funds, not to exceed $10,000 per award, used by the intermediary to purchase supplies and equipment to build the recipient's capacity.
Funds—The RCDI grant and matching money.
Intermediary—A qualified private, nonprofit (including faith-based and community organizations and philanthropic organizations), or public (including tribal) organization that provides financial and technical assistance to multiple recipients.
Low-income rural community—An authority, district, economic development authority, regional council, or unit of government representing an incorporated city, town, village, county, township, parish, or borough whose income is at or below 80 percent of either the state or national Median Household Income as measured by the 2010 Census.
Matching funds—Cash or confirmed funding commitments. Matching funds must be at least equal to the grant amount and committed for a period of not less than the grant performance period.
Recipient—-The entity that receives the financial and technical assistance from the Intermediary. The recipient must be a nonprofit community-based housing and development organization, a low-income rural community or a federally recognized Tribe.
Rural and rural area—Any area other than (i) a city or town that has a population of greater than 50,000 inhabitants; and (ii) the urbanized area contiguous and adjacent to such city or town.
Technical assistance—Skilled help in improving the recipient's abilities in the areas of housing, community facilities, or community and economic development.
In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Agencies, offices, and employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex,
Persons with disabilities who require alternative means of communication for program information (
To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, AD-3027, found online at
(1)
(2)
(3)
Individuals who are deaf, hard of hearing, or have speech disabilities and you wish to file either an EEO or program complaint please contact USDA through the Federal Relay Service at (800) 877-8339 or (800) 845-6136 (in Spanish).
Persons with disabilities who wish to file a program complaint, please see information above on how to contact us by mail directly or by email.
If you require alternative means of communication for program information (
All adverse determinations regarding applicant eligibility and the awarding of points as part of the selection process are appealable pursuant to 7 CFR part 11. Instructions on the appeal process will be provided at the time an applicant is notified of the adverse decision.
In the event the applicant is awarded a grant that is less than the amount requested, the applicant will be required to modify its application to conform to the reduced amount before execution of the grant agreement. The Agency reserves the right to reduce or withdraw the award if acceptable modifications are not submitted by the awardee within 15 working days from the date the request for modification is made. Any modifications must be within the scope of the original application.
Rural Housing Service, USDA.
Notice.
This Request for Proposal (RFP) announces an availability of funds and the timeframe to submit proposals for Farm Labor Housing Technical Assistance (FLH-TA) grants. Section 516(i) of the Housing Act of 1949, as amended (Act), authorizes the Rural Housing Service (RHS) to provide financial assistance (grants) to eligible private and public non-profit agencies to encourage the development of domestic and migrant farm labor housing projects. This RFP requests proposals from qualified private and public non-profit agencies to provide technical assistance to groups who qualify for FLH loans and grants.
Work performed under these grants is expected to result in an increased submission of quality applications for FLH loans and grants under the Section 514 and Section 516 programs and as a result an increase in the availability of decent, safe, and sanitary housing for farm laborers.
The deadline for receipt of all applications in response to this RFP is 5:00 p.m., Eastern Daylight Time, on July 22, 2016. The application closing deadline is firm as to date and hour. RHS will not consider any application that is received after the closing deadline. Applicants intending to mail applications must provide sufficient time to permit delivery on or before the closing deadline. Acceptance by a post office or private mailer does not constitute delivery. Facsimile (FAX), Cash on Delivery (COD), and postage due applications will not be accepted.
Applications should be submitted to the USDA—Rural Housing Service; Attention: Mirna Reyes-Bible, Finance and Loan Analyst, Multi-Family Housing Preservation and Direct Loan Division, STOP 0781 (Room 1243-S), USDA Rural Development, 1400 Independence Avenue SW., Washington, DC 20250-0781. RHS will date and time stamp incoming applications to evidence timely receipt and, upon request, will provide the applicant with a written acknowledgement of receipt.
Mirna Reyes-Bible, Finance and Loan Analyst, Multi-Family Housing Preservation and Direct Loan Division, STOP 0781 (Room 1243-S), USDA Rural Development, 1400 Independence Avenue SW., Washington, DC 20250-0781, telephone: (202) 720-1753 (this is not a toll free number), or via email:
The technical assistance grants authorized under Section 516 of the Act are for the purpose of encouraging the development of domestic and migrant FLH projects under Sections 514 and 516 of the Act. RHS regulations for Section 514 and Section 516 FLH program are published at 7 CFR part 3560. Further requirements for technical assistance grants can be found at 7 CFR part 3560, subpart L. Proposals must demonstrate the capacity to provide the intended technical assistance.
RHS will publish on its Web site,
The RHS has the authority under the Act to utilize up to 10 percent of its Section 516 appropriations for FLH-TA grants. The disbursement of grant funds during the grant period will be contingent upon the applicant making progress in meeting the minimum performance requirements as described in the Scope of Work section of this Notice, and the Grant Agreement including, but not limited to, the submission of loan application packages.
(1) Applicants shall conduct outreach to broad-based non-profit organizations, non-profit organizations of farmworkers, federally recognized Indian tribes, agencies or political subdivisions of State or local Government, public agencies (such as housing authorities) and other eligible FLH organizations to further the Section 514 and Section 516 FLH programs. Outreach will consist of a minimum of 12 informational presentations to the general public annually to inform them about the Section 514 Section and 516 FLH programs.
(2) Applicants shall conduct at least 12 one-on-one meetings annually with groups who are interested in applying for FLH loans or grants and assist such groups with the loan and grant application process.
(3) Applicants shall assist loan and grant applicants secure funding from other sources for the purpose of leveraging those funds with RHS funds.
(4) Applicants shall provide technical assistance during the development and construction phase of FLH proposals selected for funding.
(5) When submitting a grant proposal, applicants need not identify the geographic location of the places they intend to target for their outreach activities, however, applicants must commit to targeting at least five areas within the grant proposal's region. All targeted areas must be distinct market areas and not be overlapping. At least four of the targeted areas must be in different States. If the proposal is selected for funding, the applicant will be required to consult with each Rural Development State Director in the proposal's region for the purpose of developing their list of targeted areas. When determining which areas to target, consideration will be given to (a) the total number of farmworkers in the area, (b) the number of farmworkers in that area who lack adequate housing, (c) the percentage of the total number of farmworkers that are without adequate housing, and (d) areas which have not recently had a Section 514 or Section 516 loan or grant funded for new construction. In addition, if selected for funding, the applicant will be required to revise their Statement of Work to identify the geographic location of the targeted areas and will submit their revised Statement of Work to the National Office approval. When submitted for approval, the applicant must also submit a summary of their consultation with the Rural Development State Directors. At grant closing, the revised Statement of Work will be attached to, and become a part of, the grant agreement.
(6) During the grant period, each applicant must submit a minimum number of loan application packages to the Agency for funding consideration. The minimum number shall be the greater of (a) at least nine loan application packages for the Eastern and Western Regions and at least seven for the Central Region or, (b) a total number of loan application packages that is equal to 70 percent of the number of areas the applicant's proposal committed to targeting. Fractional percentages shall be rounded up to the next whole number. For example, if the applicant's proposal committed to targeting 13 areas, then the applicant must submit at least 10 loan application packages during the grant period (13 areas × 70 percent = 9.1 rounded up to 10). The disbursement of grant funds during the grant period will be contingent upon the applicant making progress in meeting this minimum performance requirement. More than one application package for the same market area will not be considered unless the applicant submits documentation of the need for more than one FLH facility.
(7) Provide training to applicants of FLH loans and grants to assist them in their ability to manage FLH.
The application process will be in two phases; the initial application (or proposal) and the submission of a formal application. Only those proposals that are selected for funding will be invited to submit formal applications. All proposals must include the following:
(1) A summary page listing the following items. This information should be double-spaced between items and not be in narrative form.
a. Applicant's name,
b. Applicant's Taxpayer Identification Number,
c. Applicant's address,
d. Applicant's telephone number,
e. Name of applicant's contact person, telephone number, and address,
f. Amount of grant requested,
g. The FLH-TA grant region for which the proposal is submitted (
h.
(2) A narrative describing the applicant's ability to meet the eligibility requirements stated in this Notice. If the applicant intends to have other agencies working on their behalf, the narrative must identify those agencies and address their ability to meet the stated eligibility requirements.
(3) A detailed Statement of Work covering a 3-year period that contains measurable monthly and annual accomplishments. The applicant's Statement of Work is a critical component of the selection process. The Statement of Work must include an outreach component describing the applicant's activities to inform potentially eligible groups about the Section 514 and Section 516 FLH program. The outreach component must include a schedule of their planned outreach activities and must be included in a manner so that performance can be measured. In addition, the outreach activities must be coordinated with the appropriate RHS State Office and meet the minimum performance requirements as stated in the Scope of Work section of this Notice. The Statement of Work must state
(4) An organizational plan that includes a staffing chart complete with name, job title, salary, hours, timelines, and descriptions of employee duties to achieve the objectives of the grant program.
(5) Organizational documents and financial statements to evidence the applicant's status as a properly organized private or public non-profit agency and the financial ability to carry out the objectives of the grant program. If other agencies will be working on behalf of the applicant, working agreements between the applicant and those agencies must be submitted as part of the proposal and any associated cost must be included in the applicant's budget. Organizational and financial statements must also be submitted as part of the application for any agencies that will be working on behalf of the applicant to document the eligibility of those organizations.
(6) A detailed budget plan projecting the monthly and annual expenses the applicant will incur. Costs will be limited to those that are allowed under 2 CFR part 200.
(7) To insure that funds are equitably distributed and that there is no duplication of efforts on related projects, all applicants are to submit a list of projects they are currently involved with, whether publicly or privately supported, that are or may be, related to the objectives of this grant. In addition, the same disclosure must be provided for any agencies that will be working on behalf of the applicant.
(8) The applicant must include a narrative describing its knowledge, demonstrated ability, or practical experience in providing training and technical assistance to applicants of loans or grants for the development of multi-family or farmworker housing. The applicant must identify the type of assistance that was applied for (loan or grant, tax credits, leveraged funding, etc.), the number of times they have provided such assistance, and the success ratio of their applications. In addition, information must be provided concerning the number of housing units, their size, their design, and the amount of grant and loan funds that were secured.
(9) A narrative describing the applicant's knowledge and demonstrated ability in estimating development and construction costs of multi-family or farm labor housing and for obtaining the necessary permits and clearances.
(10) A narrative describing the applicant's ability and experience in overcoming community opposition to FLH and describing the methods and techniques that they will use to overcome any such opposition, should it occur.
(11) A separate one-page information sheet listing each of the “Application Scoring Criteria” contained in this Notice, followed by the page numbers of all relevant material and documentation that is contained in the proposal that supports these criteria.
The initial application (or proposal) evaluation process designed for this RFP will consist of two phases. The first phase will evaluate the applicant's Statement of Work and the degree to which it sets forth measurable objectives that are consistent with the objectives of FLH-TA grant program. The second phase will evaluate the applicant's knowledge and ability to provide the management necessary for carrying out a FLH-TA grant program. Proposals will only compete against other proposals within the same region. Selection points will be awarded as follows:
The Statement of Work will be evaluated to determine the degree to which it outlines efficient and measurable monthly and annual outcomes as follows:
a. The minimum performance requirements of this Notice require that the applicant commit to targeting at least five areas (at least four of which are in different States). The more areas the applicant commits to targeting, the more scoring points they will be awarded. As stated earlier in this Notice, the more areas the applicant commits to the more loan application packages must be submitted. The amount will be established in the Statement of Work. The number of areas within the region that the applicant has committed to targeting for outreach activities:
a. RHS wants the applicant to cover as much of the grant region as possible. RHS does not want the applicant's efforts to be concentrated in a limited number of States. For this reason, additional points will be awarded to grant proposals that target areas in more than four States (the minimum requirement is four). Applications only compete within their grant region. The grant proposal commits to targeting areas in the following number of States:
a. The number of successful multi-family or FLH loan or grant applications the applicant entity has assisted in developing and packaging:
b. The number of groups seeking loans or grants for the development of multi-family or FLH projects that the applicant entity has provided training and technical assistance.
c. The number of multi-family or FLH projects for which the applicant entity has assisted in estimating development and construction costs and obtaining the necessary permits and clearances:
d. The number of times the applicant entity has encountered community opposition
e. The number of times the applicant entity has been able to leverage funding from two or more sources for the development of a multi-family or FLH project.
f. The number of FLH projects that the applicant entity has assisted with on-going management (
The National Office will rank all pre-applications by region and distribute funds to the regions in rank order and within funding limits.
Tie Breakers—In the event two or more proposals within a region are scored with an equal amount of points, selections will be made in the following order:
(1) If an applicant has already had a proposal selected, their proposal will not be selected.
(2) If all or none of the applicants with equivalent scores have already had a proposal selected, the lowest cost proposal will be selected.
(3) If two or more proposals have equivalent scores, all or none of the applicants have already had a proposal selected, and the cost is the same, a proposal will be selected by a random lottery drawing.
RHS will notify all applicants whether their pre-applications have been accepted or rejected and provide appeal rights under 7 CFR part 11, as appropriate.
The reporting requirements contained in this Notice have been approved by the Office of Management and Budget (OMB) under Control Number 0575-0181.
The U.S. Department of Agriculture prohibits discrimination in all of its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, political beliefs, genetic information, reprisal, or because all or part of an individual's income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at (202) 720-2600 (voice and TDD).
To file a complaint of discrimination, write to USDA, Assistant Secretary for Civil Rights, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue SW., STOP 9410, Washington, DC 20250-9410, or call toll free at (866) 632-9992 (English) or (800) 877-8339 (TDD) or (866) 377-8642 (English Federal—Relay) or (800) 845-6136 (Spanish Federal—Relay). “USDA is an equal opportunity provider, employer, and lender.”
On January 8, 2016, GE Generators (Pensacola) L.L.C., operator of Subzone 249A, submitted a notification of proposed production activity to the Foreign-Trade Zones (FTZ) Board for its facility in Pensacola, Florida.
The notification was processed in accordance with the regulations of the FTZ Board (15 CFR part 400), including notice in the
Enforcement and Compliance, International Trade Administration, Department of Commerce.
On April 7, 2016, the United States Court of International Trade (the CIT or the Court) issued final judgment in
Effective April 18, 2016.
Michael J. Heaney or Robert James, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-4475 or (202) 482-0649, respectively.
On January 20, 2010, the Department published its
On October 12, 2011, the Court remanded the matter.
Upon consideration of the First Redetermination, on April 8, 2013, the Court affirmed our assignment of a separate rate to Foshan Shunde.
On June 20, 2014, the Court rejected the corroboration analysis conducted by the Department in its Second Redetermination. The Court remanded the Department's corroboration of Foshan Shunde's AFA rate for further consideration.
On October 10, 2014, the Department filed its Third Redetermination, in which it, under protest, assigned a revised AFA rate of 72.29 percent to Foshan Shunde.
In its decision in
Because there is now a final court decision, the Department amends the
For Foshan Shunde, the cash deposit rate will remain the rate established in the
In the event the Court's ruling is not appealed, or if appealed and upheld by the Federal Circuit, the Department will instruct U.S. Customs and Border Protection (CBP) to assess antidumping duties on entries of the subject merchandise exported by Since Hardware and Foshan Shunde using the revised assessment rate calculated by the Department in the
This notice is issued and published in accordance with sections 516(A)(e), 751(a)(1), and 777(i)(1) of the Act.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (the Department) completed its administrative review of the countervailing duty (CVD) order on multilayered wood flooring (wood flooring) from the People's Republic of China (PRC). The period of review (POR) is January 1, 2013, through December 31, 2013. We find that the mandatory respondents, Dalian Penghong Floor Products Co., Ltd. (Penghong) and The Lizhong Wood Industry Limited Company of Shanghai (Lizhong) (also known as “Shanghai Lizhong Wood Products Co., Ltd.”), received countervailable subsidies during the POR. The final net subsidy rates are listed below in “Final Results of Administrative Review.” We are also rescinding the review for five companies that timely certified that they made no shipments of subject merchandise during the POR.
Effective May 23, 2016.
Mary Kolberg, AD/CVD Operations, Office I, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-1785.
On January 11, 2016, the Department published the
We issued an additional supplemental questionnaire to Lizhong on January 12, 2016, and received a response on January 22, 2016.
Multilayered wood flooring is composed of an assembly of two or more layers or plies of wood veneer(s)
While HTSUS subheadings are provided for convenience and customs purposes, the written product description remains dispositive.
A full description of the scope of the order is contained in the memorandum from Christian Marsh, Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations, to Paul Piquado, Assistant Secretary for Enforcement and Compliance, “Decision Memorandum for Final Results of Countervailing Duty Administrative Review: Multilayered Wood Flooring from the People's Republic of China” dated concurrently with this notice (Decision Memorandum), which is hereby adopted by this notice.
All issues raised in the parties' briefs are addressed in the Decision Memorandum. A list of the issues raised is attached to this notice at Appendix I. The Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at
We received timely filed no-shipment certifications from Zhejiang Shuimojiangnan New Material Technology Co., Ltd., Tongxiang Jisheng Import and Export Co., Ltd., Jiangsu Guyu International Trading Co., Ltd., Jiangsu Mingle Flooring Co., Ltd., Shenyang Senwang Wooden Industry Co., Ltd., Changbai Mountain, and Linyi Bonn.
We conducted this review in accordance with section 751(a)(1)(A) of the Tariff Act of 1930, as amended (the Act). For each of the subsidy programs found to be countervailable, we find that there is a subsidy,
In accordance with 19 CFR 351.221(b)(4)(i), we calculated a countervailable subsidy rate for each of the mandatory respondents, Penghong and Lizhong.
For the non-selected respondents, we followed the Department's practice, which is to base the subsidy rates on an average of the subsidy rates calculated for those companies selected for individual review, excluding
We find the countervailable subsidy rates for the producers/exporters under review to be as follows:
Consistent
In accordance with section 751(a)(1) of the Act, the Department intends to instruct CBP to collect cash deposits of estimated countervailing duties in the amounts shown above on shipments of subject merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this review. For all non-reviewed firms, we will instruct CBP to continue to collect cash deposits at the most recent company specific or all-others rate applicable to the company. Accordingly, the cash deposit rates that will be applied to companies covered by the
This notice serves as a final reminder to parties subject to administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.
We are issuing and publishing these results in accordance with sections 751(a)(l) and 777(i)(l) of the Act and 19 CFR 351.213.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of SEDAR 49 post-workshop webinar for Gulf of Mexico Data-limited Species.
The SEDAR 49 assessment of the Gulf of Mexico Data-limited Species will consist of two in-person workshops and a series of webinars. See
The SEDAR 49 post-workshop webinar will be held from 1 p.m. to 3 p.m. on June 7, 2016.
The meeting will be held via webinar. The webinar is open to members of the public. Those interested in participating should contact Julie A. Neer at SEDAR (see
Julie A. Neer, SEDAR Coordinator; (843) 571-4366; email:
The Gulf of Mexico, South Atlantic, and Caribbean Fishery Management Councils, in conjunction with NOAA Fisheries and the Atlantic and Gulf States Marine Fisheries Commissions have implemented the Southeast Data, Assessment and Review (SEDAR) process, a multi-step method for determining the status of fish stocks in the Southeast Region. SEDAR is a multi-step process including: (1) Data/Assessment Workshop, and (2) a series of webinars. The product of the Data/Assessment Workshop is a report which compiles and evaluates potential datasets and recommends which datasets are appropriate for assessment analyses, and describes the fisheries, evaluates the status of the stock, estimates biological benchmarks, projects future population conditions, and recommends research and monitoring needs. Participants for SEDAR Workshops are appointed by the Gulf of Mexico, South Atlantic, and Caribbean Fishery Management Councils and NOAA Fisheries Southeast Regional Office, HMS Management Division, and Southeast Fisheries Science Center. Participants include data collectors and database managers; stock assessment scientists, biologists, and researchers; constituency representatives including fishermen, environmentalists, and NGO's; International experts; and staff of Councils, Commissions, and state and federal agencies.
The items of discussion in the SEDAR 49 post-workshop webinar are as follows:
1. Panelists will review the recommendations from the Data Workshop, and finalize any data issues still outstanding.
2. Participants will recommend the most appropriate data sets for use in the assessment modeling.
Although non-emergency issues not contained in this agenda may come
These meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to the Council office (see
The times and sequence specified in this agenda are subject to change.
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; public meeting.
The New England Fishery Management Council (Council) is scheduling a public meeting of its Scallop
This meeting will be held on Tuesday, June 7, 2016 at 9:30 a.m.
Thomas A. Nies, Executive Director, New England Fishery Management Council; telephone: (978) 465-0492.
The Advisory Panel will review the general workload for 2016 based on Council priorities and a draft action plan for Scallop Framework 28 (FW28) and potentially identify recommendations for prioritizing work items in upcoming actions. The Advisory Panel will also review progress on potential management measures that may be included in FW28, including: (1) Measures to restrict the possession of shell stock inshore of 42°20′ N.; (2) Modifications to the process for setting scallop fishery annual catch limits (ACL flowchart); (3) Measures to modify scallop access areas consistent with potential changes to habitat and groundfish mortality closed areas; and (4) Development of gear modifications to further protect small scallops. The Advisory Panel will provide research recommendations for the 2017/18 Scallop Research Set-Aside (RSA) federal funding announcement and potentially discuss other RSA policies and program details. The Advisory Panel will give a brief update on the required five-year review of the limited access general category IFQ program. Other business may be discussed.
Although non-emergency issues not contained in this agenda may come before this group for discussion, those issues may not be the subject of formal action during this meeting. Action will be restricted to those issues specifically listed in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Act, provided the public has been notified of the Council's intent to take final action to address the emergency.
This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Thomas A. Nies, Executive Director, at (978) 465-0492, at least 5 days prior to the meeting date.
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meetings.
The North Pacific Fishery Management Council (Council) and its advisory committees will meet June 6 through June 14, 2016.
The Council will begin its plenary session at 8 a.m. in the Pavilion Room, Kodiak Convention Center on Wednesday, June 8, continuing through Tuesday, June 14, 2016. The Scientific and Statistical Committee (SSC) will begin at 8 a.m. in the Harbor Room, Kodiak Best Western on Monday, June 6 and continue through Wednesday, June 8, 2016. The Council's Advisory Panel (AP) will begin at 8 a.m. at the Elks Lodge on Tuesday, June 7, and continue through Saturday, June 11, 2016. The Enforcement Committee will meet in the Stellar Room, Kodiak Convention Center (time and date to be determined). The Legislative Committee will meet in the Pavilion Room (time and date to be determined).
The Council meeting will be held at the Kodiak Harbor Convention Center, 236 Rezanof Drive, Kodiak, AK 99615. The SSC will meet at the Kodiak Best Western, 236 Rezanof Drive, Kodiak, AK 99615. The AP will meet at the Elks Lodge, 102 W. Marine Way, Kodiak, AK 99615.
David Witherell, Council staff; telephone: (907) 271-2809.
The Advisory Panel will address most of the same agenda issues as the Council except B reports.
The SSC agenda will include the following issues:
The Agenda is subject to change, and the latest version will be posted at
These meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Shannon Gleason at (907) 271-2809 at least 7 working days prior to the meeting date.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of a public meeting.
The Gulf of Mexico Fishery Management Council will hold a meeting of its Data Collection Technical Committee.
The meeting will convene Monday, June 6, 2016, from 8:30 a.m.-5 p.m.
The meeting will take place at the Council's office.
Dr. John Froeschke, Fishery Biologist-Statistician, Gulf of Mexico Fishery Management Council;
The items of discussion on the agenda are as follows:
The Data Collection Technical Committee will meet to discuss options to implement electronic reporting of fisheries data in the Gulf of Mexico for-hire sector and provide recommendations to the Gulf Council at the June 2016 Council meeting. The objectives are to improve timeliness and data quality of fisheries data from the federal for-hire sector that will be used to support fisheries science and management. The Committee will receive an overview of the electronic reporting program for federally permitted headboats and a presentation describing decision points (
The Agenda is subject to change, and the latest version along with other meeting materials will be posted on the Council's file server. To access the file server, the URL is
The meeting will be webcast over the internet. A link to the webcast will be available on the Council's Web site,
Although other non-emergency issues not on the agenda may come before the Technical Committee for discussion, in accordance with the Magnuson-Stevens Fishery Conservation and Management Act, those issues may not be the subject of formal action during this meeting. Actions of the Technical Committee will be restricted to those issues specifically identified in the agenda and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the Council's intent to take action to address the emergency.
This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Kathy Pereira at the Gulf Council Office (see
National Marine Fisheries Service (NMFS), National Oceanic and
Notice; public meeting.
The New England Fishery Management Council (Council) is scheduling a public meeting of its Groundfish Committee to consider actions affecting New England fisheries in the exclusive economic zone (EEZ). Recommendations from this group will be brought to the full Council for formal consideration and action, if appropriate.
This meeting will be held on Thursday, June 9, 2016 at 9 a.m.
The meeting will be held at the Hilton Garden Inn, 100 Boardman Street, Boston, MA 02128; phone: (617) 567-6789; fax: (617) 461-0798.
Thomas A. Nies, Executive Director, New England Fishery Management Council; telephone: (978) 465-0492.
The committee will receive an update from the Plan Development Team (PDT) on Committee tasking regarding estimated discards and associated CVs and a draft white paper examining the groundfish monitoring program; and make recommendations to the Council. They will also review PDT work to date on developing a sub-ACL for the scallop fishery for northern windowpane flounder and allocating the northern windowpane flounder stock to sectors in the groundfish fishery; and make recommendations to the Council regarding the development of alternatives. The committee will also review PDT work to date on this action that considers revising the Georges Bank haddock sub-ACL and associated accountability measures; and make recommendations to the Council regarding the development of alternatives. Other business will be discussed as necessary.
Although non-emergency issues not contained in this agenda may come before this group for discussion, those issues may not be the subject of formal action during this meeting. Action will be restricted to those issues specifically listed in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Act, provided the public has been notified of the Council's intent to take final action to address the emergency.
This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Thomas A. Nies, Executive Director, at (978) 465-0492, at least 5 days prior to the meeting date.
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of SEDAR Data Best Practices Standing Panel Webinar.
The SEDAR Data Best Practices Panel will develop, review, and evaluate best practice recommendations for SEDAR Data Workshops. See
The SEDAR Data Best Practices Standing Panel webinar will be held on Monday, June 6, 2016, from 10 a.m. to 12 p.m. (EST).
Julia Byrd, SEDAR Coordinator, 4055 Faber Place Drive, Suite 201, North Charleston, SC 29405; phone: (843) 571-4366; email:
The Gulf of Mexico, South Atlantic, and Caribbean Fishery Management Councils, in conjunction with NOAA Fisheries and the Atlantic and Gulf States Marine Fisheries Commissions, have implemented the Southeast Data, Assessment and Review (SEDAR) process, a multi-step method for determining the status of fish stocks in the Southeast Region. SEDAR is a three-step process including: (1) Data Workshop; (2) Assessment Process utilizing webinars; and (3) Review Workshop. The product of the Data Workshop is a data report which compiles and evaluates potential datasets and recommends which datasets are appropriate for assessment analyses. The product of the Assessment Process is a stock assessment report which describes the fisheries, evaluates the status of the stock, estimates biological benchmarks, projects future population conditions, and recommends research and monitoring needs. The assessment is independently peer reviewed at the Review Workshop. The product of the Review Workshop is a Summary documenting panel opinions regarding the strengths and weaknesses of the stock assessment and input data. Participants for SEDAR Workshops are appointed by the Gulf of Mexico, South Atlantic, and Caribbean Fishery Management Councils and NOAA Fisheries Southeast Regional Office, Highly Migratory Species Management Division, and Southeast Fisheries Science Center. Participants include: Data collectors and database managers; stock assessment scientists, biologists, and researchers; constituency representatives including fishermen, environmentalists, and non-governmental organizations (NGOs); international experts; and staff of Councils, Commissions, and state and federal agencies.
The SEDAR Data Best Practices Standing Panel is charged with developing, reviewing, and evaluating best practice recommendations for SEDAR Data Workshops. This will be the second meeting of this group. The items of discussion for this webinar are as follows:
1. Finalize terms of reference, incorporating SEDAR Steering Committee feedback as necessary, that specify the Panel's purpose and approach.
2. Begin discussions on SEDAR Data Best Practices living document.
3. Other business.
Although non-emergency issues not contained in this agenda may come before this group for discussion, those issues may not be the subject of formal action during this meeting. Action will be restricted to those issues specifically
This meeting is accessible to people with disabilities. Requests for auxiliary aids should be directed to the SAFMC office (see
The times and sequence specified in this agenda are subject to change.
16 U.S.C. 1801
Proposed collection; comment request.
The United States Patent and Trademark Office (USPTO), as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on this extension of a continuing information collection, as required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)).
Written comments must be submitted on or before July 22, 2016.
You may submit comments by any of the following methods:
•
•
•
Requests for additional information should be directed to Raul Tamayo, Senior Legal Advisor, Office of Patent Legal Administration, United States Patent and Trademark Office, P.O. Box 1450, Alexandria, VA 22313-1450; by telephone at 571-272-7728; or by email to
The United States Patent and Trademark Office (USPTO) is required by 35 U.S.C. 131 to examine an application for patent and, when appropriate, issue a patent. The USPTO is also required to publish patent applications, with certain exceptions, promptly after the expiration of a period of eighteen months from the earliest filing date for which a benefit is sought under Title 35, United States Code (“eighteen-month publication”). Certain situations may arise which require that additional information be supplied in order for the USPTO to further process the patent or application. The USPTO administers the statutes through various sections of the rules of practice in 37 CFR part 1.
The information in this collection can be used by the USPTO to continue the processing of the patent or application to ensure that applicants are complying with the patent regulations and to aid in the prosecution of the application.
The forms associated with this collection may be downloaded from the USPTO Web site in Portable Document Format (PDF), filled out electronically, and then either printed for mailing or submitted to the USPTO online through EFS-Web. The “EFS-Web only” items in this collection must be submitted to the USPTO online through EFS-Web. In addition, the USPTO provides an electronic interface on its Web site that the public can use to submit the information associated with the Electronic Applicant Initiated Interview Request Form.
The public may submit the paper forms and petitions in this collection to the USPTO by mail through the United States Postal Service. If the submission is sent by first-class mail, the public may also include a signed certification of the date of mailing in order to receive credit for timely filing. Therefore, the USPTO estimates that approximately 167,161 submissions per year may be mailed. The USPTO estimates that the average submission will be mailed in a standard flat-rate priority mail envelope at a cost of $6.45, resulting in a total postage cost of $1,078,188.45.
Therefore, the USPTO estimates that the total annual (non-hour) cost burden for this collection will be $420,815,258.45, with $1,078,188.45 in postage costs and $419,737,070.00 in filing fees.
(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 (including hours and cost) of the proposed collection of information;
(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 respondents,
Comments submitted in response to this notice will be summarized or included in the request for OMB approval of this information collection; they also will become a matter of public record.
Bureau of Consumer Financial Protection.
Notice and request for comment.
In accordance with the Paperwork Reduction Act of 1995 (PRA), the Bureau of Consumer Financial Protection (Bureau) is requesting to renew the Office of Management and Budget (OMB) approval for an existing information collection titled, “Policy to Encourage Trial Disclosure Programs; Information Collection.”
Written comments are encouraged and must be received on or before June 22, 2016 to be assured of consideration.
You may submit comments, identified by the title of the information collection, OMB Control Number (see below), and docket number (see above), by any of the following methods:
•
•
Documentation prepared in support of this information collection request is available at
Bureau of Consumer Financial Protection.
Notice and request for comment.
In accordance with the Paperwork Reduction Act of 1995 (PRA), the Bureau of Consumer Financial Protection (Bureau) is requesting to renew the Office of Management and Budget (OMB)
Written comments are encouraged and must be received on or before June 22, 2016 to be assured of consideration.
You may submit comments, identified by the title of the information collection, OMB Control Number (see below), and docket number (see above), by any of the following methods:
•
•
Documentation prepared in support of this information collection request is available at
Department of the Air Force, Department of Defense.
Notice; withdrawal.
The Department of the Air Force is withdrawing the notice, Meeting of the U.S. Air Force Academy Board of Visitors Notice of Meeting that published May 17, 2016 at 81 FR 30521.
This withdrawal is effective May 23, 2016.
The Department of the Air Force is withdrawing the meeting notice of the U.S. Air Force Academy Board of Visitors that published May 17, 2016 at 81 FR 30521. The Department received notification from the OPR on 18 May 2016 that the location of the meeting was changed by the Congressional office. The Department will publish a new notice with the updated information in the
Office of the Secretary of Defense, Reserve Forces Policy Board, Department of Defense.
Notice of Federal Advisory Committee meeting.
The Department of Defense (DoD) is publishing this notice to announce that the following Federal Advisory Committee meeting of the Reserve Forces Policy Board (RFPB) will take place.
Wednesday, June 8, 2016 from 9:00 a.m. to 4:30 p.m.
The address is the Pentagon, Room 3E863, Arlington, VA.
Mr. Alex Sabol, Designated Federal Officer, (703) 681-0577 (Voice), (703) 681-0002 (Facsimile), Email:
This meeting notice is being published under the provisions of the Federal Advisory Committee Act of 1972 (FACA) (5 U.S.C., Appendix, as amended), the Government in the Sunshine Act of 1976 (5 U.S.C. 552b, as amended), and 41 CFR 102-3.150.
The Office of the Under Secretary of Defense for Personnel and Readiness, Defense Language and National Security Education Office (DLNSEO), DoD.
Meeting notice.
The Department of Defense is publishing this notice to announce that the following Federal advisory committee meeting of the National Security Education Board (NSEB) will take place. This meeting is open to the public.
Monday, June 6, 2016, from 10:30 a.m. to 4:45 p.m.
Liaison Capitol Hill Hotel, 415 New Jersey Avenue NW., Washington, DC 20001.
Alison Patz, telephone (571) 256-0771,
This meeting is being held under the provisions of the Federal Advisory Committee Act of 1972 (5 U.S.C.,
Pursuant to 41 CFR 102-3.140 and section 10(a)(3) of the Federal Advisory Committee Act of 1972, the public or interested organizations may submit written statements to the Department of Defense National Security Education Board about its mission and functions. Written statements may be submitted at any time or in response to the stated agenda of the planned meeting.
All written statements shall be submitted to the Designated Federal Official for the National Security Education Board, and this individual will ensure that the written statements are provided to the membership for their consideration. Contact information for the Designated Federal Official can be obtained from the GSA's FACA Database—
Statements being submitted in response to the agenda mentioned in this notice must be received by the Designated Federal Official at the address listed in
The Designated Federal Official will review all timely submissions with the National Security Education Board and ensure they are provided to all members of the National Security Education Board before the meeting that is the subject of this notice.
Office of the Assistant Secretary of Defense for Health Affairs, DoD.
Notice.
In compliance with the
Consideration will be given to all comments received by July 22, 2016.
You may submit comments, identified by docket number and title, by any of the following methods:
•
•
Any associated form(s) for this collection may be located within this same electronic docket and downloaded for review/testing. Follow the instructions at
To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to the SNPMIS Project Officer (Mr. Jack Smith, Solution Delivery Division (SDD) Clinical Systems Division) at 5109 Leesburg Pike, Sky 6, Suite 817, Falls Church, VA 22042-2902 or call 703-681-7156.
Information is collected from the individual to whom the record pertains, reports from physicians and other medical department personnel, reports and information from other sources including educational institutions, medical institutions, public and private health, and welfare agencies. Information from the family may be collected during an intake meeting, a meeting to develop a service plan, as a result of provision of services, performance of an evaluation, or other coordination activities. The EDIS clinic or Department of Defense Dependents School (DoDDS) school must obtain permission from the family before information is collected from or provided to an external agency, and prior to conducting evaluations or providing services. Before information is released to an external agency the parents must sign a Health Insurance Portability and Accountability Act (HIPAA) release.
Personally identifiable information (PII) and protected health information (PHI) that is collected by the system includes: Name, Social Security Number (SSN), Family member prefix (FMP), Birth Date, Race/Ethnicity, Gender, Marital Status, Spouse Information, Child Information, Disability Information, Home, Personal Cell, and Work Phone Numbers—Child and Parents, Emergency Contact, Education Information: Child's School Address; Individual educational program plans, Sponsor Name, Sponsor SSN Sponsor and Spouse rank or title, Sponsor's unit, Other child care locations, Provider's name and title that evaluate and provide intervention, Medical Information: Clinics and medical summaries, EDIS process and activities data including referral, evaluation, eligibility, and service plans.
Department of the Navy, DoD.
Notice of partially closed meeting.
The U.S. Naval Academy Board of Visitors will meet to make such inquiry, as the Board shall deem necessary, into the state of morale and discipline, the curriculum, instruction, physical equipment, fiscal affairs, and academic methods of the Naval Academy. The executive session of this meeting from 11:00 a.m. to 12:00 p.m. on September 12, 2016, will include discussions of new and pending administrative/minor disciplinary infractions and non-judicial punishment proceedings involving midshipmen attending the Naval Academy to include but not limited to individual honor/conduct violations within the Brigade; the disclosure of which would constitute a clearly unwarranted invasion of personal privacy. For this reason, the executive session of this meeting will be closed to the public.
The open session of the meeting will be held on September 12, 2016, from 9:00 a.m. to 11:00 a.m. The executive session held from 11:00 a.m. to 12:00 p.m. will be the closed portion of the meeting.
The meeting will be held at the Library of Congress, Washington, DC. The meeting will be handicap accessible.
Lieutenant Commander Eric Madonia, USN, Executive Secretary to the Board of Visitors, Office of the Superintendent, U.S. Naval Academy, Annapolis, MD 21402-5000, 410-293-1503.
This notice of meeting is provided per the Federal Advisory Committee Act, as amended (5 U.S.C. App.). The executive session of the meeting from 11:00 a.m. to 12:00 p.m. on September 12, 2016, will consist of discussions of new and pending administrative/minor disciplinary infractions and non-judicial punishments involving midshipmen attending the Naval Academy to include but not limited to, individual honor/conduct violations within the Brigade. The discussion of such information cannot be adequately segregated from other topics, which precludes opening the executive session of this meeting to the public. Accordingly, the Department of the Navy/Assistant for Administration has determined in writing that the meeting shall be partially closed to the public because the discussions during the executive session from 11:00 a.m. to 12:00 p.m. will be concerned with matters protected under sections 552b(c)(5), (6), and (7) of title 5, United States Code.
5 U.S.C. 552b.
Office of Innovation and Improvement, Department of Education.
Notice.
Teacher Quality Partnership Grant Program.
Notice inviting applications for new awards for fiscal year (FY) 2016.
In the FY 2016 TQP competition, we are especially interested in supporting TQP projects that serve or are designed to serve tribal communities and rural areas, given the need for effective educators serving these communities. On November 5, 2009, pursuant to Executive Order 13175, President Obama issued a memorandum requiring each Federal agency to prepare a detailed plan of action the agency would take to consult with tribal officials when developing policies that have implications for tribal communities. Consistent with its responsibilities under the President's memorandum, the U.S. Department of Education (Department) conducted two consultation sessions by teleconference with tribal officials about the TQP program, on January 19 and 21, 2016. During these consultations, we provided participants with an overview of the TQP program and the current TQP grantees, and facilitated a discussion around potential opportunities and challenges that this grant program may provide for tribal communities. In addition, the Department solicited feedback and questions from tribal communities over a two-week period following the calls.
During this outreach, the Department received numerous comments and questions from participants. Some of these concerns were of a general nature and could affect all applicants, regardless of whether or not they serve Tribal communities. For example, participants were concerned about forming the necessary eligible partnership needed to apply, what entity should lead that effort, and what entity should serve as the lead applicant for the eligible partnership. Participants also expressed concern about whether their local LEAs or BIE-funded schools would meet the definition of a high-need LEA, as that term is defined in section 200 of HEA.
Some concerns raised by participants reflected the unique challenges facing tribal communities. For example, participants raised issues related to the status of Bureau of Indian Education-funded schools (
Answers to these and other questions will be addressed in the upcoming TQP pre-application Webinars. Additionally, responses to questions and concerns addressed during the consultations also can be found in this notice inviting applications, and in the TQP Frequently Asked Questions (FAQ) document found at
We appreciate the dialogue with tribal leaders and the opportunity to gain insight into tribal communities. Due to the detailed statutory requirements for the TQP program in sections 200-204 of the HEA, the Department has limited flexibility to address all of the concerns raised during our consultation process. The consultations nevertheless confirmed that rural communities and tribal communities could greatly benefit from the TQP program, and therefore we have decided to encourage applications from rural and tribal communities through adoption of a competitive preference priority and an invitational priority that focus on the specific teaching needs of these communities.
Each of the two absolute priorities constitutes its own funding category. Assuming that applications in each funding category are of sufficient quality, the Secretary intends to award grants under each absolute priority.
Applications will be peer reviewed and scored based on the TQP program's selection criteria. Applications will be scored and placed in rank order by absolute priority; thus, applications that address each priority will be scored and ranked separately to create two funding slates. Applications that do not clearly identify the priority being addressed will not be reviewed.
These priorities are from section 202(d) and (e) of the HEA, and are:
Under this priority, an eligible partnership must carry out an effective pre-baccalaureate teacher preparation program or a fifth-year initial licensing program that includes all of the following:
(a)
(1) Preparing—
(i) New or prospective teachers to meet the applicable State certification and licensure requirements, including any requirements for certification obtained through alternative routes to certification, or, with regard to special education teachers, the qualifications described in section 612(a)(14)(C) of the Individuals with Disabilities Education Act (IDEA), (including teachers in rural school districts, special educators, and teachers of students who are limited English proficient);
(ii) Such teachers and, as applicable, early childhood educators, to understand empirically-based practice and scientifically valid research related to teaching and learning and the applicability of such practice and research, including through the effective use of technology, instructional techniques, and strategies consistent with the principles of universal design for learning, and through positive behavioral interventions and support strategies to improve student achievement; and
(iii) As applicable, early childhood educators to be highly competent; and
(2) Promoting strong teaching skills and, as applicable, techniques for early childhood educators to improve children's cognitive, social, emotional, and physical development.
In addressing paragraph (a) of this priority, applicants may either discuss their implementation of reforms within all teacher preparation programs that the partner institution of higher education administers and that would be assisted under this TQP grant, or selected teacher preparation programs that need particular assistance and that would receive the TQP grant funding.
(b)
(1) Implementing teacher preparation program curriculum changes that improve, evaluate, and assess how well all prospective and new teachers develop teaching skills;
(2) Using empirically-based practice and scientifically valid research, where applicable, about teaching and learning so that all prospective teachers and, as applicable, early childhood educators—
(i) Understand and can implement research-based teaching practices in classroom instruction;
(ii) Have knowledge of student learning methods;
(iii) Possess skills to analyze student academic achievement data and other measures of student learning and use such data and measures to improve classroom instruction;
(iv) Possess teaching skills and an understanding of effective instructional strategies across all applicable content areas that enable general education and special education teachers and early childhood educators to—
(A) Meet the specific learning needs of all students, including students with disabilities, students who are limited English proficient, students who are gifted and talented, students with low literacy levels, and, as applicable, children in ECE programs; and
(B) Differentiate instruction for such students;
(v) Can effectively participate as a member of the individualized education program team, as defined in section 614(d)(1)(B) of the IDEA; and
(vi) Can successfully employ effective strategies for reading instruction using the essential components of reading instruction;
(3) Ensuring collaboration with departments, programs, or units of a partner institution outside of the teacher preparation program in all academic content areas to ensure that prospective teachers receive training in both teaching and relevant content areas in order to meet the applicable State certification and licensure requirements, including any requirements for certification obtained through alternative routes to certification, or, with regard to special education teachers, the qualifications described in section 612(a)(14)(C) of the IDEA, which may include training in multiple subjects to teach multiple grade levels as may be needed for individuals preparing to teach in rural communities and for individuals preparing to teach students with disabilities;
(4) Developing and implementing an induction program;
(5) Developing admissions goals and priorities aligned with the hiring objectives of the high-need LEA in the eligible partnership; and
(6) Implementing program and curriculum changes, as applicable, to ensure that prospective teachers have the requisite content knowledge, preparation, and degree to teach Advanced Placement or International Baccalaureate courses successfully.
(c)
(1) Incorporate year-long opportunities for enrichment, including—
(i) Clinical learning in classrooms in high-need schools served by the high-need LEA in the eligible partnership, and identified by the eligible partnership; and
(ii) Closely supervised interaction between prospective teachers and faculty, experienced teachers, principals, other administrators, and school leaders at ECE programs (as applicable), elementary schools, or secondary schools, and providing support for such interaction;
(2) Integrate pedagogy and classroom practice and promote effective teaching skills in academic content areas;
(3) Provide high-quality teacher mentoring;
(4) Be offered over the course of a program of teacher preparation;
(5) Be tightly aligned with course work (and may be developed as a fifth-year of a teacher preparation program);
(6) Where feasible, allow prospective teachers to learn to teach in the same LEA in which the teachers will work, learning the instructional initiatives and curriculum of that LEA;
(7) As applicable, provide training and experience to enhance the teaching skills of prospective teachers to better prepare such teachers to meet the unique needs of teaching in rural or urban communities; and
(8) Provide support and training for individuals participating in an activity for prospective or new teachers described in this paragraph, or paragraphs (a) and (b), or (d), and for individuals who serve as mentors for such teachers, based on each individual's experience. Such support may include—
(i) With respect to a prospective teacher or a mentor, release time for such individual's participation;
(ii) With respect to a faculty member, receiving course workload credit and compensation for time teaching in the eligible partnership's activities; and
(iii) With respect to a mentor, a stipend, which may include bonus, differential, incentive, or performance pay, based on the mentor's extra skills and responsibilities.
(d)
(e)
(f)
(1) Individuals from underrepresented populations;
(2) Individuals to teach in rural communities and teacher shortage areas, including mathematics, science, special education, and the instruction of limited English proficient students; and
(3) Mid-career professionals from other occupations, former military personnel, and recent college graduates with a record of academic distinction.
(g)
(1) To implement literacy programs that incorporate the essential components of reading instruction;
(2) To use screening, diagnostic, formative, and summative assessments to determine students' literacy levels, difficulties, and growth in order to improve classroom instruction and improve student reading and writing skills;
(3) To provide individualized, intensive, and targeted literacy instruction for students with deficiencies in literacy skills; and
(4) To integrate literacy skills in the classroom across subject areas.
Under this priority, an eligible partnership must carry out an effective teaching residency program that includes all of the following activities:
(a) Supporting a teaching residency program described in paragraph II (a) for high-need subjects and areas, as determined by the needs of the high-need LEA in the partnership;
(b) Placing graduates of the teaching residency program in cohorts that facilitate professional collaboration, both among graduates of the teaching residency program and between such graduates and mentor teachers in the receiving school;
(c) Ensuring that teaching residents who participate in the teaching residency program receive—
(1) Effective pre-service preparation as described in paragraph II;
(2) Teacher mentoring;
(3) Support required through the induction program as the teaching residents enter the classroom as new teachers; and
(4) The preparation described in paragraphs (c)(1), (2), and (3) of Absolute Priority 2.
II. Teaching Residency Programs.
(a)
(1) The integration of pedagogy, classroom practice, and teacher mentoring;
(2) Engagement of teaching residents in rigorous graduate-level course work leading to a master's degree while undertaking a guided teaching apprenticeship;
(3) Experience and learning opportunities alongside a trained and experienced mentor teacher—
(i) Whose teaching shall complement the residency program so that classroom clinical practice is tightly aligned with coursework;
(ii) Who shall have extra responsibilities as a teacher leader of the teaching residency program, as a mentor for residents, and as a teacher coach during the induction program for new teachers; and for establishing, within the program, a learning community in which all individuals are expected to continually improve their capacity to advance student learning; and
(iii) Who may be relieved from teaching duties as a result of such additional responsibilities;
(4) The establishment of clear criteria for the selection of mentor teachers based on measures of teacher effectiveness and the appropriate subject area knowledge. Evaluation of teacher effectiveness must be based on, but not limited to, observations of the following—
(i) Planning and preparation, including demonstrated knowledge of content, pedagogy, and assessment, including the use of formative and diagnostic assessments to improve student learning;
(ii) Appropriate instruction that engages students with different learning styles;
(iii) Collaboration with colleagues to improve instruction;
(iv) Analysis of gains in student learning, based on multiple measures that are valid and reliable and that, when feasible, may include valid, reliable, and objective measures of the influence of teachers on the rate of student academic progress; and
(v) In the case of mentor candidates who will be mentoring new or prospective literacy and mathematics coaches or instructors, appropriate skills in the essential components of reading instruction, teacher training in literacy instructional strategies across core subject areas, and teacher training in mathematics instructional strategies, as appropriate;
(5) Grouping of teaching residents in cohorts to facilitate professional collaboration among such residents;
(6) The development of admissions goals and priorities—
(i) That are aligned with the hiring objectives of the LEA partnering with the program, as well as the instructional initiatives and curriculum of such agency, in exchange for a commitment by such agency to hire qualified graduates from the teaching residency program; and
(ii) Which may include consideration of applicants that reflect the communities in which they will teach as well as consideration of individuals from underrepresented populations in the teaching profession; and
(7) Support for residents, once the teaching residents are hired as teachers of record, through an induction program, professional development, and networking opportunities to support the residents through not less than the residents' first two years of teaching.
(b)
(1)
(i) Be a recent graduate of a four-year IHE or a mid-career professional from outside the field of education possessing strong content knowledge or a record of professional accomplishment; and
(ii) Submit an application to the teaching residency program.
(2)
(i) Strong content knowledge or record of accomplishment in the field or subject area to be taught;
(ii) Strong verbal and written communication skills, which may be demonstrated by performance on appropriate tests; and
(iii) Other attributes linked to effective teaching, which may be determined by interviews or performance assessments, as specified by the eligible partnership.
(c)
(1)
(2)
(3)
(i) Serve as a full-time teacher for a total of not less than three academic years immediately after successfully completing the teaching residency program;
(ii) Fulfill the requirement under paragraph (c)(3)(i) of this priority by teaching in a high-need school served by the high-need LEA in the eligible partnership and teach a subject or area that is designated as high-need by the partnership;
(iii) Provide to the eligible partnership a certificate, from the chief administrative officer of the LEA in which the resident is employed, of the employment required under paragraph (c)(3)(i) and (ii) of this priority at the beginning of, and upon completion of, each year or partial year of service;
(iv) Meet the applicable State certification and licensure requirements, including any requirements for certification obtained through alternative routes to certification, or, with regard to special education teachers, the qualifications described in section 612(a)(14)(C) of the IDEA, when the applicant begins to fulfill the service obligation under this clause; and
(v) Comply with the requirements set by the eligible partnership under paragraph (e) of this priority if the applicant is unable or unwilling to complete the service obligation required by the paragraph.
(d)
(1)
(2)
(3)
If an applicant chooses to address the competitive preference priority, the project narrative section of its application must identify its response to this competitive preference priority. The Department will not review or award points under this competitive preference priority if the applicant fails to clearly identify its response in its application. Under 34 CFR 75.105(c)(2)(i) we award up to an additional fifteen points to an application, depending on how well the application addresses the competitive preference priority. An applicant is not required to address both paragraphs (a) and (b) of the competitive preference priority in order to receive the full 15 points.
Only applicants that are highly rated on the selection criteria for Absolute Priority 1 or Absolute Priority 2 will be eligible to receive competitive preference points.
The priority is:
Projects that are designed to improve academic outcomes for one or both of the following groups of students:
(a) Students who are members of federally-recognized Indian Tribes.
(b) Students served by rural LEAs (as defined in this notice).
Within this competitive preference priority, we are particularly interested in applications that address the following invitational priority.
This priority is:
(a) Under this priority, the Department invites applicants to propose a TQP project that will provide project participants with specific coursework, experiences, and professional development to enable them to gain cultural competencies and content knowledge, and related pedagogical skills, to support the learning needs of American Indian and Alaska Native students, rural students, or both.
(b) In responding to this invitational priority, applicants are encouraged to include the following elements in their proposed projects:
(1) An identification of the proposed population(s) to be served in the partner high-need LEA(s), including data that document a high number or high concentration of American Indian and Alaska Native and/or rural students to be served, as well as data regarding how the project will address the unique challenges of serving the identified population(s).
(2) A description of how the project will promote collaboration across partner institutions of higher education to ensure that TQP project participants who intend to teach American Indian and Alaska Native and/or rural students have access to coursework, experiences, and professional development that will build both cultural competency and content knowledge to teach students in the identified population(s) effectively.
(3) A description of how the grantee will align its proposed TQP project activities with the appropriate State licensure standards and, how it will implement strategies that translate those standards into classroom practice with regard to the identified population(s).
(i)(A) For which not less than 20 percent of the children served by the agency are children from low-income families;
(B) That serves not fewer than 10,000 children from low-income families;
(C) That meets the eligibility requirements for funding under the Small, Rural School Achievement (SRSA) Program under section 5211(b) of the ESEA; or
(D) That meets eligibility requirements for funding under the Rural and Low-Income School (RLIS) Program under section 6211(b) of the ESEA; and—
(ii)(A) For which there is a high percentage of teachers not teaching in the academic subject areas or grade levels in which the teachers were trained to teach; or
(B) For which there is a high teacher turnover rate or a high percentage of teachers with emergency, provisional, or temporary certification or licensure.
Information on how an applicant may demonstrate that a partner LEA meets this definition is included in the application package.
(i) The school is in the highest quartile of schools in a ranking of all schools served by an LEA, ranked in descending order by percentage of students from low-income families enrolled in such schools, as determined by the LEA based on one of the following measures of poverty:
(A) The percentage of students aged 5 through 17 in poverty counted in the most recent census data approved by the Secretary.
(B) The percentage of students eligible for a free or reduced price school lunch under the Richard B. Russell National School Lunch Act.
(C) The percentage of students in families receiving assistance under the State program funded under Part A of Title IV of the Social Security Act.
(D) The percentage of students eligible to receive medical assistance under the Medicaid program.
(E) A composite of two or more of the measures described in paragraphs (A) through (D).
(ii) In the case of—
(A) An elementary school, the school serves students not less than 60 percent of whom are eligible for a free or reduced price school lunch under the Richard B. Russell National School Lunch Act; or
(B) Any other school that is not an elementary school, the other school serves students not less than 45 percent of whom are eligible for a free or reduced price school lunch under the Richard B. Russell National School Lunch Act.
(iii) The Secretary may, upon approval of an application submitted by an eligible partnership seeking a grant under this title, designate a school that does not qualify as a high-need school under this definition, as a high-need school for the purpose of this title. The Secretary shall base the approval of an application for designation of a school under this clause on a consideration of the information required under section 200 (II)(B)(ii) of the HEA, and may also take into account other information submitted by the eligible partnership.
Information on how an applicant may demonstrate that a partner LEA meets this definition is included in the application package.
(i) Whose graduates exhibit strong performance on State determined qualifying assessments for new teachers through—
(A) Demonstrating that 80 percent or more of the graduates of the program who intend to enter the field of teaching have passed all of the applicable State qualification assessments for new teachers, which shall include an assessment of each prospective teacher's subject matter knowledge in the content area in which the teacher intends to teach; or
(B) Being ranked among the highest-performing teacher preparation programs in the State as determined by the State—
(1) Using criteria consistent with the requirements for the State Report Card under section 205(b) of the HEA before the first publication of the report card; and
(2) Using the State report card on teacher preparation required under section 205(b), after the first publication of such report card and for every year thereafter; and
(ii) That requires—
(A) Each student in the program to meet high academic standards or demonstrate a record of success, as determined by the institution (including prior to entering and being accepted into a program), and participate in intensive clinical experience;
(B) Each student in the program preparing to become a teacher who meets the applicable State certification and licensure requirements, including any requirements for certification obtained through alternative routes to certification, or, with regard to special education teachers, the qualifications described in section 612(a)(14)(C) of the IDEA; and
(C) Each student in the program preparing to become an early childhood educator to meet degree requirements,
For purposes of paragraph (ii)(C) of this definition, the term “highly competent,” under section 200(12) of the HEA, when used with respect to an early childhood educator, means an educator—
(a) With specialized education and training in development and education of young children from birth until entry into kindergarten;
(b) With—
(i) A baccalaureate degree in an academic major in the arts and sciences; or
(ii) An associate's degree in a related educational area; and
(c) Who has demonstrated a high level of knowledge and use of content and pedagogy in the relevant areas associated with quality ECE.
Definitions for the following terms that also apply to this program are in section 200 of the HEA: “arts and sciences,” “induction program,” “limited English proficient,” “professional development,” “scientifically valid research,” and “teacher mentoring.”
The regulations in 34 CFR part 79 apply to all applicants except federally-recognized Indian tribes.
The regulations in 34 CFR part 86 apply to IHEs only.
Contingent upon the availability of funds and the quality of applications, we may make additional awards in FY 2017 from the list of unfunded applications from this competition.
The Department is not bound by any estimates in this notice.
1.
(1) Must include:
(i) A high-need LEA;
(ii)(A) A high-need school or consortium of high-need schools served by the high-need LEA, or
(B) As applicable, a high-need ECE program;
(iii) A partner institution;
(iv) A school, department, or program of education within such partner institution, which may include an existing teacher professional development program with proven outcomes within a four-year IHE that provides intensive and sustained collaboration between faculty and LEAs consistent with the requirements of title II of the HEA;
(v) A school or department of arts and sciences within such partner institution; and
(2) May include any of the following—
(i) The Governor of the State.
(ii) The State educational agency.
(iii) The State board of education.
(iv) The State agency for higher education.
(v) A business.
(vi) A public or private nonprofit educational organization.
(vii) An educational service agency.
(viii) A teacher organization.
(ix) A high-performing LEA, or a consortium of such LEAs, that can serve as a resource to the partnership.
(x) A charter school (as defined in section 5210 of the ESEA).
(xi) A school or department within the partner institution that focuses on psychology and human development.
(xii) A school or department within the partner institution with comparable expertise in the disciplines of teaching, learning, and child and adolescent development.
(xiii) An entity operating a program that provides alternative routes to State certification of teachers. Any of the mandatory or optional entities in the partnership may be the fiscal agent of the grant.
So that the Department can confirm the eligibility of the LEA(s) that an applicant proposes to serve, applicants must include information in their applications that demonstrates that each LEA to be served by the project is a “high-need LEA” (as defined in this notice and in section 200(10) of the HEA).
Applicants should review the application package for additional information on determining whether an LEA meets the definition of “high-need LEA.”
Additionally, applicants must also partner with a school or department of arts and sciences within the partner institution. More information on eligible partnerships can be found in the TQP FAQ document found on the program Web site at
2.a.
Under section 203(c) of the HEA (20 U.S.C. 1022b), each grant recipient must provide, from non-Federal sources, an amount equal to 100 percent of the amount of the grant, which may be provided in cash or in-kind, to carry out the activities supported by the grant. Grantees must budget their matching contributions on an annual basis relative to each annual award of TQP Grant Program funds.
The HEA also authorizes the Secretary to waive this matching requirement for
b.
3. Other:
All applicants must meet the following general application requirements in order to be considered for funding. Except as specifically noted in this section, the general application requirements are from section 202 of the HEA (20 U.S.C. 1022a).
Each eligible partnership desiring a grant under this program must submit an application that contains—
(a) A needs assessment of the partners in the eligible partnership with respect to the preparation, ongoing training, professional development, and retention of general education and special education teachers, principals, and, as applicable, early childhood educators;
(b) A description of the extent to which the program to be carried out with grant funds, as described in Absolute Priority 1 or Absolute Priority 2, in this notice, and, if the applicant chooses to do so, a Partnership Grant for the Development of Leadership Program, as described in section 202(f) of the HEA, will prepare prospective and new teachers with strong teaching skills;
(c) A description of how such a program will prepare prospective and new teachers to understand and use research and data to modify and improve classroom instruction;
(d) A description of—
(1) How the eligible partnership will coordinate strategies and activities assisted under the grant with other teacher preparation or professional development programs, and
(2) How the activities of the partnership will be consistent with State, local, and other education reform activities that promote teacher quality and student academic achievement;
(e) An assessment that describes the resources available to the eligible partnership, including—
(1) The integration of funds from other related sources;
(2) The intended use of the grant funds; and
(3) The commitment of the resources of the partnership to the activities assisted under this program, including financial support, faculty participation, and time commitments, and to the continuation of the activities when the grant ends.
(f) A description of—
(1) How the eligible partnership will meet the purposes of the TQP Grant Program as specified in section 201 of the HEA;
(2) How the partnership will carry out the activities required under Absolute Priority 1 or Absolute Priority 2, as described in this notice, based on the needs identified in paragraph (a), with the goal of improving student academic achievement;
(4) The partnership's evaluation plan under section 204(a) of the HEA;
(5) How the partnership will align the teacher preparation program with the—
(i) State early learning standards for ECE programs, as appropriate, and with the relevant domains of early childhood development; and
(ii) Student academic achievement standards and academic content standards under section 1111(b)(1) of the ESEA as amended by ESSA, established by the State in which the partnership is located;
(6) How the partnership will prepare general education teachers to teach students with disabilities, including training related to participation as a member of individualized education program teams, as defined in section 614(d)(1)(B) of the IDEA;
(7) How the partnership will prepare general education and special education teachers to teach students who are limited English proficient;
(8) How faculty at the partner institution will work during the term of the grant, with teachers who meet the applicable State certification and licensure requirements, including any requirements for certification obtained through alternative routes to certification, or, with regard to special education teachers, the qualifications described in section 612(a)(14)(C) of the Individuals with Disabilities Education Act, in the classrooms of high-need schools served by the high-need LEA in the partnership to—
(i) Provide high-quality professional development activities to strengthen the content knowledge and teaching skills of elementary school and secondary school teachers; and
(ii) Train other classroom teachers to implement literacy programs that incorporate the essential components of reading instruction;
(9) How the partnership will design, implement, or enhance a year-long and rigorous teaching preservice clinical program component;
(10) How the partnership will support in-service professional development strategies and activities; and
(11) How the partnership will collect, analyze, and use data on the retention of all teachers and early childhood educators in schools and ECE programs located in the geographic area served by the partnership to evaluate the effectiveness of the partnership's teacher and educator support system.
(g) With respect to the induction program required as part of the activities carried out under Absolute Priority 1 or Absolute Priority 2—
(1) A demonstration that the schools and departments within the IHE that are part of the induction program will effectively prepare teachers, including providing content expertise and expertise in teaching, as appropriate;
(2) A demonstration of the eligible partnership's capability and commitment to, and the accessibility to and involvement of faculty in, the use of empirically-based practice and scientifically valid research on teaching and learning;
(3) A description of how the teacher preparation program will design and implement an induction program to support, through not less than the first two years of teaching, all new teachers who are prepared by the teacher preparation program in the partnership and who teach in the high-need LEA in the partnership, and, to the extent practicable, all new teachers who teach in such high-need LEA, in the further development of the new teachers' teaching skills, including the use of mentors who are trained and compensated by such program for the mentors' work with new teachers; and
(4) A description of how faculty involved in the induction program will
1.
If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.
Individuals with disabilities can obtain a copy of the application package in an accessible format (
2.
Notice of Intent to Apply: June 22, 2016.
The Department will be able to develop a more efficient process for reviewing grant applications if it has a better understanding of the number of entities that intend to apply for funding under this competition. Therefore, the Secretary strongly encourages each potential applicant to notify the Department of its intent to submit an application for funding by completing the FY 16 Intent to Apply survey at
Applicants that fail to complete the FY 16 Intent to Apply survey may still apply for funding.
Page Limit: The application narrative (Part III of the application) is where you, the applicant, address the selection criteria that reviewers use to evaluate your application. We recommend that you limit the application narrative (Part III) to no more than 50 pages, using the following standards:
• A “page” is 8.5″ x 11″, on one side only, with 1” margins at the top, bottom, and both sides.
• Double space (no more than three lines per vertical inch) all text in the application narrative, including titles, headings, footnotes, quotations, references, and captions. However, you may single space all text in charts, tables, figures, and graphs.
• Use a font that is either 12 point or larger or no smaller than 10 pitch (characters per inch).
• Use one of the following fonts: Times New Roman, Courier, Courier New, or Arial. An application submitted in any other font (including Times Roman or Arial Narrow) will not be accepted.
The recommended page limit does not apply to Part I, the cover sheet; Part II, the budget section, including the narrative budget justification; Part IV, the assurances and certifications; or the one-page abstract, the resumes, the bibliography, or the letters of support. However, the recommended page limit does apply to all of the application narrative (Part III).
b.
Because we plan to post the project narrative section of funded TQP Grant Program applications on our Web site, you may wish to request confidentiality of business information.
Consistent with Executive Order 12600, please designate in your application any information that you believe is exempt from disclosure under Exemption 4. In the appropriate Appendix section of your application, under “Other Attachments Form,” please list the page number or numbers on which we can find this information. For additional information please see 34 CFR 5.11(c).
3.
Applications Available: May 23, 2016.
Deadline for Notice of Intent to Apply: June 22, 2016.
Date of Pre-Application Webinars: The TQP program intends to hold Webinars designed to provide technical assistance to interested applicants. Details regarding the dates and times of these Webinars will be provided on the TQP Web site at
Deadline for Transmittal of Applications: July 7, 2016.
Applications for grants under this program must be submitted electronically using the Grants.gov Apply site (Grants.gov). For information (including dates and times) about how to submit your application electronically, or in paper format by mail or hand delivery, if you qualify for an exception to the electronic submission requirement, please refer to
We do not consider an application that does not comply with the deadline requirements.
Individuals with disabilities who need an accommodation or auxiliary aid in connection with the application process should contact the person listed under
Deadline for Intergovernmental Review: September 20, 2016.
4.
5.
6.
a. Have a Data Universal Numbering System (DUNS) number and a Taxpayer Identification Number (TIN);
b. Register both your DUNS number and TIN with the System for Award Management (SAM) (formerly the Central Contractor Registry), the Government's primary registrant database;
c. Provide your DUNS number and TIN on your application; and
d. Maintain an active SAM registration with current information while your application is under review by the Department and, if you are awarded a grant, during the project period.
You can obtain a DUNS number from Dun and Bradstreet at the following Web site:
A DUNS number can be created within one to two business days.
If you are a corporate entity, agency, institution, or organization, you can obtain a TIN from the Internal Revenue Service. If you are an individual, you can obtain a TIN from the Internal Revenue Service or the Social Security Administration. If you need a new TIN, please allow two to five weeks for your TIN to become active.
The SAM registration process can take approximately seven business days, but may take upwards of several weeks, depending on the completeness and accuracy of the data you enter into the SAM database. Thus, if you think you might want to apply for Federal financial assistance under a program administered by the Department, please allow sufficient time to obtain and register your DUNS number and TIN. We strongly recommend that you register early.
Once your SAM registration is active, it may be 24 to 48 hours before you can access the information in, and submit an application through,
If you are currently registered with SAM, you may not need to make any changes. However, please make certain that the TIN associated with your DUNS number is correct. Also note that you will need to update your registration annually. This may take three or more business days.
Information about SAM is available at
In addition, if you are submitting your application via
7.
Applications for grants under this program must be submitted electronically unless you qualify for an exception to this requirement in accordance with the instructions in this section.
a.
We will reject your application if you submit it in paper format unless, as described elsewhere in this section, you qualify for one of the exceptions to the electronic submission requirement
You may access the electronic grant application for the TQP Grant Program at
Please note the following:
• When you enter the
• Applications received by
• The amount of time it can take to upload an application will vary depending on a variety of factors, including the size of the application and the speed of your Internet connection. Therefore, we strongly recommend that you do not wait until the application deadline date to begin the submission process through
• You should review and follow the Education Submission Procedures for submitting an application through
• You will not receive additional point value because you submit your application in electronic format, nor will we penalize you if you qualify for an exception to the electronic submission requirement, as described elsewhere in this section, and submit your application in paper format.
• You must submit all documents electronically, including all information you typically provide on the following forms: The Application for Federal Assistance (SF 424), the Department of Education Supplemental Information for SF 424, Budget Information—Non-Construction Programs (ED 524), and all necessary assurances and certifications.
• You must upload any narrative sections and all other attachments to your application as files in a read-only, non-modifiable Portable Document Format (PDF). Do not upload an interactive or fillable PDF file. If you upload a file type other than a read-only, non-modifiable PDF (
• Your electronic application must comply with any page-limit requirements described in this notice.
• After you electronically submit your application, you will receive from
Once your application is successfully validated by
These emails do not mean that your application is without any disqualifying errors. While your application may have been successfully validated by
• We may request that you provide us original signatures on forms at a later date.
If you are prevented from electronically submitting your application on the application deadline date because of technical problems with the
If you submit an application after 4:30:00 p.m., Washington, DC time, on the application deadline date, please contact the person listed under
The extensions to which we refer in this section apply only to the unavailability of, or technical problems with, the
• You do not have access to the Internet; or
• You do not have the capacity to upload large documents to the
• No later than two weeks before the application deadline date (14 calendar days or, if the fourteenth calendar day before the application deadline date falls on a Federal holiday, the next business day following the Federal holiday), you mail or fax a written statement to the Department, explaining which of the two grounds for an exception prevents you from using the Internet to submit your application.
If you mail your written statement to the Department, it must be postmarked no later than two weeks before the application deadline date. If you fax your written statement to the Department, we must receive the faxed statement no later than two weeks before the application deadline date.
Address and mail or fax your statement to: Mia Howerton, U.S. Department of Education, 400 Maryland Avenue SW., Room 4w205, Washington, DC 20202-5960. FAX: (202) 205-5630.
Your paper application must be submitted in accordance with the mail or hand delivery instructions described in this notice.
b.
If you qualify for an exception to the electronic submission requirement, you may mail (through the U.S. Postal Service or a commercial carrier) your application to the Department. You must mail the original and two copies of your application, on or before the application deadline date, to the Department at the following address: U.S. Department of Education, Application Control Center, Attention: (CFDA Number 84.336S) LBJ Basement Level 1, 400 Maryland Avenue SW., Washington, DC 20202-4260.
You must show proof of mailing consisting of one of the following:
(1) A legibly dated U.S. Postal Service postmark.
(2) A legible mail receipt with the date of mailing stamped by the U.S. Postal Service.
(3) A dated shipping label, invoice, or receipt from a commercial carrier.
(4) Any other proof of mailing acceptable to the Secretary of the U.S. Department of Education.
If you mail your application through the U.S. Postal Service, we do not accept either of the following as proof of mailing:
(1) A private metered postmark.
(2) A mail receipt that is not dated by the U.S. Postal Service.
The U.S. Postal Service does not uniformly provide a dated postmark. Before relying on this method, you should check with your local post office.
We will not consider applications postmarked after the application deadline date.
c.
If you qualify for an exception to the electronic submission requirement, you (or a courier service) may deliver your paper application to the Department by hand. You must deliver the original and two copies of your application by hand, on or before the application deadline date, to the Department at the following address: U.S. Department of Education, Application Control Center, Attention: (CFDA Number 84.336S), 550 12th Street SW., Room 7039, Potomac Center Plaza, Washington, DC 20202-4260.
The Application Control Center accepts hand deliveries daily between 8:00 a.m. and 4:30:00 p.m., Washington, DC time, except Saturdays, Sundays, and Federal holidays.
(1) You must indicate on the envelope and—if not provided by the Department—in Item 11 of the SF 424 the CFDA number, including suffix letter, if any, of the competition under which you are submitting your application; and
(2) The Application Control Center will mail to you a notification of receipt of your grant application. If you do not receive this notification within 15 business days from the application deadline date, you should call the U.S. Department of Education Application Control Center at (202) 245-6288.
1.
(a)
In determining the significance of the proposed project, the Secretary considers the following factors—
(i) The extent to which the proposed project is likely to build local capacity to provide, improve, or expand services that address the needs of the target population.
(ii) The importance or magnitude of the results or outcomes likely to be attained by the proposed project, especially improvements in teaching and student achievement.
(b)
In determining the quality of the design of the proposed project, the Secretary considers the extent to which the proposed project consists of a comprehensive plan that includes a description of—
(i) The extent to which the proposed project is supported by strong theory (as defined in this notice).
(ii) The extent to which the services to be provided by the proposed project involve the collaboration of appropriate partners for maximizing the effectiveness of project services.
(iii) The extent to which the proposed project represents an exceptional approach to the priority or priorities established for this competition.
(c)
In determining the quality of the management plan for the proposed project, the Secretary considers the following factors—
(i) The adequacy of the management plan to achieve the objectives of the proposed project on time and within budget, including clearly defined responsibilities, timelines, and milestones for accomplishing project tasks.
(ii) The extent to which performance feedback and continuous improvement are integral to the design of the proposed project.
(d)
In determining the quality of the evaluation, the Secretary considers—
(i) The extent to which the methods of evaluation will provide valid and reliable performance data on relevant outcomes.
(ii) The extent to which the methods of evaluation are thorough, feasible, and appropriate to the goals, objectives, and outcomes of the proposed project.
(iii) The extent to which the methods of evaluation will provide performance feedback and permit periodic assessment of progress toward achieving intended outcomes.
2.
In addition, in making a competitive grant award, the Secretary requires various assurances including those applicable to Federal civil rights laws that prohibit discrimination in programs or activities receiving Federal financial assistance from the Department of Education (34 CFR 100.4, 104.5, 106.4, 108.8, and 110.23).
3.
1.
If your application is not evaluated or not selected for funding, we notify you.
2.
We reference the regulations outlining the terms and conditions of an award in the
3.
(b) At the end of your project period, you must submit a final performance report, including financial information, as directed by the Secretary. If you receive a multiyear award, you must submit an annual performance report that provides the most current performance and financial expenditure information as directed by the Secretary under 34 CFR 75.118. The Secretary may also require more frequent performance reports under 34 CFR 75.720(c). For specific requirements on reporting, please go to
(c) Under 34 CFR 75.250(b), the Secretary may provide a grantee with additional funding for data collection analysis and reporting. In this case the Secretary establishes a data collection period.
4.
(a)
(b)
(c)
(d)
(e)
Applicants must also address the evaluation requirements in section 204(a) of the HEA. This section asks applicants to develop objectives and measures for increasing:
(1) Achievement for all prospective and new teachers, as measured by the eligible partnership;
(2) Teacher retention in the first three years of a teacher's career;
(3) Improvement in the pass rates and scaled scores for initial State certification or licensure of teachers; and
(4) The percentage of teachers who meet the applicable State certification and licensure requirements, including any requirements for certification obtained through alternative routes to certification, or, with regard to special education teachers, the qualifications described in section 612(a)(14)(C) of the IDEA (20 U.S.C. 1412(a)(14)(C)), hired by the high-need LEA participating in the eligible partnership;
(5) The percentage of teachers who meet the applicable State certification and licensure requirements, including any requirements for certification obtained through alternative routes to certification, or, with regard to special education teachers, the qualifications described in section 612(a)(14)(C) of the IDEA (20 U.S.C. 1412(a)(14)(C)), hired by the high-need LEA who are members of underrepresented groups;
(6) The percentage of teachers who meet the applicable State certification and licensure requirements, including any requirements for certification obtained through alternative routes to certification, or, with regard to special education teachers, the qualifications described in section 612(a)(14)(C) of the IDEA (20 U.S.C. 1412(a)(14)(C)), hired by the high-need LEA who teach high-need academic subject areas (such as reading, mathematics, science, and foreign language, including less commonly taught languages and critical foreign languages);
(7) The percentage of teachers who meet the applicable State certification and licensure requirements, including any requirements for certification obtained through alternative routes to certification, or, with regard to special education teachers, the qualifications described in section 612(a)(14)(C) of the IDEA (20 U.S.C. 1412(a)(14)(C)), hired by the high-need LEA who teach in high-need areas (including special education, language instruction educational programs for limited English proficient students, and early childhood education);
(8) The percentage of teachers who meet the applicable State certification and licensure requirements, including any requirements for certification obtained through alternative routes to certification, or, with regard to special education teachers, the qualifications described in section 612(a)(14)(C) of the IDEA (20 U.S.C. 1412(a)(14)(C)), hired by the high-need LEA who teach in high-need schools, disaggregated by the elementary school and secondary school levels;
(9) As applicable, the percentage of early childhood education program classes in the geographic area served by the eligible partnership taught by early childhood educators who are highly competent; and
(10) As applicable, the percentage of teachers trained—
(i) To integrate technology effectively into curricula and instruction, including technology consistent with the principles of universal design for learning; and
(ii) To use technology effectively to collect, manage, and analyze data to improve teaching and learning for the purpose of improving student academic achievement.
If funded, grantees will be asked to collect and report data on these measures in their project's annual performance reports (34 CFR 75.590). Applicants are also advised to consider these measures in conceptualizing the design, implementation, and evaluation of their proposed projects because of their importance in the application review process. Collection of data on these measures should be a part of the evaluation plan, along with measures of progress on goals and objectives that are specific to your project.
All grantees will be expected to submit an annual performance report documenting their success in addressing these performance measures.
5.
In making a continuation award, the Secretary also considers whether the grantee is operating in compliance with the assurances in its approved application, including those applicable to Federal civil rights laws that prohibit discrimination in programs or activities receiving Federal financial assistance from the Department (34 CFR 100.4, 104.5, 106.4, 108.8, and 110.23).
Mia Howerton, U.S. Department of Education, 400 Maryland Avenue SW., Room 4W205, Washington, DC 20202-5960. Telephone: (202) 205-0147 or by email:
If you use a TDD or a TTY, call the FRS, toll-free, at 1-800-877-8339.
You may also access documents of the Department published in the
U.S. Election Assistance Commission.
Notice of public meeting agenda.
Wednesday, May 25, 2016, (9:00 a.m.-1:00 p.m.—EDT)
1335 East West Highway (First Floor Conference Room), Silver Spring, MD 20910.
Commissioners will meet to release a 2016 Election Worker Guidebook, State Compendium of Election Worker Requirements, and Election Worker Webisode. Commissioners will hear from state and local election officials, and research experts to: (1) Discuss ways to recruit and train election workers; and (2) discuss the allocation of resources at the polls on Election Day.
This meeting will be open to the public.
Bryan Whitener, Telephone: (301) 563-3961.
Signed:
Office of Science, Department of Energy.
Notice of open teleconference.
This notice sets forth the schedule and summary agenda for a conference call of the President's Council of Advisors on Science and Technology (PCAST), and describes the functions of the Council. The Federal Advisory Committee Act requires that public notice of these meetings be announced in the
June 6, 2016, 4:00 p.m. to 4:30 p.m.
To receive the call-in information, attendees should register for the conference call on the PCAST Web site,
Information regarding the meeting agenda, time, location, and how to register for the meeting is available on the PCAST Web site at:
The President's Council of Advisors on Science and Technology (PCAST) is an advisory group of the nation's leading scientists and engineers, appointed by the President to augment the science and technology advice available to him from inside the White House, cabinet departments, and other Federal agencies. See the Executive Order at
The public comment period for this meeting will take place on June 6, 2016 at a time specified in the meeting agenda posted on the PCAST Web site at
Please note that because PCAST operates under the provisions of FACA, all public comments and/or presentations will be treated as public documents and will be made available for public inspection, including being posted on the PCAST Web site.
Take notice that on May 13, 2016, pursuant to Rule 206 of the Rules of Practice and Procedure of the Federal Energy Regulatory Commission (Commission), 18 CFR 385.206, section 343.2 of the Commission's Rules Applicable to Oil Pipeline Proceedings, 18 CFR 343.2, American Airlines, Inc. (American or Complainant) filed a formal complaint against Plantation Pipe Line Company (Plantation or Respondent), alleging that Plantation unlawfully proposed to suspend jet fuel transportation service in violation of sections 1, 3, 6, 13, and 15 of the Interstate Commerce Act, 49 U.S.C. app. 1, 3, 6, 13, and 15 (1988) and that its transmix policy is unduly discriminatory and unduly preferential, all as more fully explained in the complaint.
American certifies that copies of the complaint were served on the contacts for Plantation as listed on the Commission's list of Corporate Officials.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. The Respondent's answer and all interventions, or protests must be filed on or before the comment date. The Respondent's answer, motions to intervene, and protests must be served on the Complainants.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
On April 1, 2016, Swanton Hydro, LLC (Swanton Hydro) filed an application for a preliminary permit, pursuant to section 4(f) of the Federal Power Act (FPA), proposing to study the feasibility of the Lower Swanton Dam Hydroelectric Project (project) to be located on the Missisquoi River in the Village of Swanton, Franklin County, Vermont. The sole purpose of a preliminary permit, if issued, is to grant the permit holder priority to file a license application during the permit term. A preliminary permit does not authorize the permit holder to perform any land-disturbing activities or otherwise enter upon lands or waters owned by others without the owners' express permission.
The proposed project would consist of: (1) An existing 335-foot-long, 12-foot-high concrete gravity dam (Swanton dam) with a 331-foot-long spillway with 2-foot-high wooden flashboards; (2) an existing 170-acre impoundment with a normal water surface elevation of 112 feet above mean sea level; (3) a new 35-foot-long, 55-foot-wide intake structure with trashracks; (4) a new 100-foot-long, 55-foot-wide, 25-foot-high powerhouse containing two turbine-generator units with a total installed capacity of 850 kilowatts; (5) a new 45-foot-long, 45-foot-wide, 18-foot-deep tailrace and 50-foot-long training wall; (6) a new 210-foot-long, 12.47-kilovolt transmission line and transformer; and (7) appurtenant facilities. The project would produce an estimated average annual generation of 3,580 megawatt-hours. There are no federal lands associated with the project.
Deadline for filing comments, motions to intervene, competing applications (without notices of intent), or notices of intent to file competing applications: 60 days from the issuance of this notice. Competing applications and notices of intent must meet the requirements of 18 CFR 4.36.
The Commission strongly encourages electronic filing. Please file comments, motions to intervene, notices of intent, and competing applications using the Commission's eFiling system at
More information about this project, including a copy of the application, can be viewed or printed on the “eLibrary” link of the Commission's Web site at
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
The Federal Energy Regulatory Commission hereby gives notice that members of the Commission's staff will attend the following meeting related to the Midcontinent Independent System Operator, Inc. (MISO)—PJM Interconnection, L.L.C. (PJM) Joint and Common Market Initiative (Docket No. AD14-3-000): MISO/PJM Joint Stakeholder Meeting—May 24, 2016.
The above-referenced meeting will be held at: MISO Stakeholder Center, 720 City Center Drive, Carmel, IN 46032.
The above-referenced meeting is open to the public.
Further information may be found at
The discussions at the meeting described above may address matters at issue in the following proceedings:
For more information, contact Bahaa Seireg, Office of Energy Policy and Innovation, Federal Energy Regulatory Commission at (202) 502-8739 or
The staff of the Federal Energy Regulatory Commission (FERC or Commission) will prepare an environmental assessment (EA) that will discuss the environmental impacts of the Access South, Adair Southwest, and Lebanon Extension Projects (Projects) in Docket Nos. CP16-3-000 and CP16-3-001. The Projects involve construction, abandonment, and operation of facilities by Texas Eastern Transmission, LP (Texas Eastern) that would enable an additional 622,000 dekatherms per day of natural gas transportation on Texas Eastern's existing mainline facilities to serve markets in the Midwest and Southeast. The Commission will use this EA in its decision-making process to determine whether the project is in the public convenience and necessity.
This notice announces the opening of a second scoping period that the Commission will use to gather input from the public on the Projects. The Commission is opening a second scoping period for affected landowners who were not included in the mailing list for the original Notice of Intent (NOI) issued for the Projects on August 1, 2015 during the pre-filing review process under Docket Number PF15-17-000. This includes landowners near twelve existing compressor stations where Texas Eastern proposes to replace pipeline or modify facilities to allow for reverse flow capabilities, including one compressor station where it proposes to install additional compression facilities. Texas Eastern's proposal is more fully described on page 3 of this notice.
You can make a difference by providing us with your specific comments or concerns about the Projects. Your comments should focus on the potential environmental effects, reasonable alternatives, and measures to avoid or lessen environmental impacts. Your input will help the Commission staff determine what issues they need to evaluate in the EA. To ensure that your comments are timely and properly recorded, please send your comments so that the Commission receives them in Washington, DC on or before June 16, 2016.
Landowners receiving this notice are primarily abutters to Texas Eastern's existing compressor stations where modifications are proposed or are within 0.5 mile of the Tompkinsville Compressor Station in Monroe County, Kentucky, where additional compression is proposed. One landowner receiving this notice is directly affected by the proposed replacement pipeline at Kosciusko Compressor Station in Attala County, Mississippi, and Texas Eastern has stated it has contacted this landowner. The company will seek to negotiate a mutually acceptable agreement regarding acquisition of any easements needed to construct, operate, and maintain the replacement pipeline. However, if the Commission approves the Projects, that approval conveys with it the right of eminent domain. Therefore, if easement negotiations fail to produce an agreement, the pipeline company could initiate condemnation proceedings where compensation would be determined in accordance with state law.
A fact sheet prepared by the FERC entitled “An Interstate Natural Gas Facility On My Land? What Do I Need To Know?” is available for viewing on the FERC Web site (
For your convenience, there are three methods you can use to submit your comments to the Commission. The Commission encourages electronic filing of comments and has expert staff available to assist you at (202) 502-8258 or
(1) You can file your comments electronically using the
(2) You can file your comments electronically by using the
(3) You can file a paper copy of your comments by mailing them to the following address. Be sure to reference the project docket numbers (CP16-3-000 and CP16-3-001) with your submission: Kimberly D. Bose, Secretary, Federal Energy Regulatory Commission, 888 First Street NE., Room 1A, Washington, DC 20426.
The proposed pipeline facilities for the Projects include 15.8 miles of 36-inch-diameter pipeline loop
The proposed modifications at twelve existing compressor station sites would include piping modifications to accommodate bi-directional flow capability along Texas Eastern's existing mainline. These modifications are proposed at the following compressor stations:
• Holbrook Compressor Station in Greene County, Pennsylvania;
• Lebanon Compressor Station in Warren County, Ohio;
• Somerset Compressor Station in Perry County, Ohio;
• Berne Compressor Station in Monroe County, Ohio;
• Athens Compressor Station in Athens County, Ohio;
• Owingsville Compressor Station in Bath County, Kentucky;
• Danville Compressor Station in Lincoln County, Kentucky;
• Tompkinsville Compressor Station in Monroe County, Kentucky;
• Gladeville Compressor Station in Wilson County, Tennessee;
• Barton Compressor Station in Colbert County, Alabama;
• Egypt Compressor Station in Monroe County, Mississippi; and
• Kosciusko Compressor Station in Attala County, Mississippi.
The general location of the Projects facilities is shown in appendix 1.
Construction of the proposed facilities would disturb about 283.7 acres of land for the pipeline loops and replacement, including extra workspace and access roads, and 341.0 acres of previously disturbed land at compressor station facilities. Following construction, Texas Eastern would maintain an additional 96.8 acres for permanent operation of the Projects' facilities; the remaining acreage would be restored and revert to former uses. The proposed loops would be located mostly adjacent to Texas Eastern's existing pipeline rights-of-way and construction at the compressor stations would occur at existing facilities where no permanent expansion of the facilities would occur.
The National Environmental Policy Act (NEPA) requires the Commission to take into account the environmental impacts that could result from an action whenever it considers the issuance of a Certificate of Public Convenience and Necessity. NEPA also requires us
In the EA we will discuss impacts that could occur as a result of the construction and operation of the proposed Projects under these general headings:
• Geology and soils;
• Land use;
• water resources, fisheries, and wetlands;
• cultural resources;
• vegetation and wildlife;
• air quality and noise;
• endangered and threatened species;
• public safety; and
• cumulative impacts.
We will also evaluate possible alternatives to the proposed Projects or portions of the Projects, and make recommendations on how to lessen or avoid impacts on the various resource areas.
The EA will present our independent analysis of the issues. The EA will be available in the public record through eLibrary. Depending on the comments received during the scoping process, we may also publish and distribute the EA to the public for an allotted comment period. We will consider all comments on the EA before we make our recommendations to the Commission. To ensure we have the opportunity to consider and address your comments, please carefully follow the instructions in the Public Participation section, beginning on page 2.
In accordance with the Advisory Council on Historic Preservation's implementing regulations for section 106 of the National Historic Preservation Act, we have initiated consultation with the applicable State Historic Preservation Offices, and to solicit their views and those of other government agencies, interested Indian tribes, and the public on the Projects' potential effects on historic properties.
The environmental mailing list for the Projects includes federal, state, and local government representatives and agencies; elected officials; environmental and public interest groups; Native American Tribes; and local libraries and newspapers. This list also includes all affected landowners (as defined in the Commission's regulations) who are potential right-of-way grantors, whose property may be used temporarily for project purposes, or who own homes within certain distances of aboveground facilities, and anyone who submits comments on the Projects. The mailing list for this supplemental NOI just includes landowners who were not previously notified by the original NOI and are abutters to Texas Eastern's compressor stations or within 0.5 mile of the Tompkinsville Compressor Station in Monroe County, Kentucky where additional compression is proposed. We will update the environmental mailing list as the analysis proceeds to ensure that we send the information related to this environmental review to all individuals, organizations, and government entities interested in and/or potentially affected by the proposed Projects.
If we publish and distribute the EA, copies of the EA will be sent to the environmental mailing list for public review and comment. If you would prefer to receive a paper copy of the document instead of the CD version or would like to remove your name from the mailing list, please return the attached Information Request (appendix 2).
In addition to involvement in the EA scoping process, you may want to become an “intervenor” which is an official party to the Commission's proceeding. Intervenors play a more formal role in the process and are able to file briefs, appear at hearings, and be heard by the courts if they choose to appeal the Commission's final ruling. An intervenor formally participates in the proceeding by filing a request to intervene. Motions to intervene are more fully described at
Additional information about the project is available from the Commission's Office of External Affairs, at (866) 208-FERC, or on the FERC Web site (
In addition, the Commission offers a free service called eSubscription which allows you to keep track of all formal issuances and submittals in specific dockets. This can reduce the amount of time you spend researching proceedings by automatically providing you with notification of these filings, document summaries, and direct links to the documents. Go to
Finally, public meetings or site visits will be posted on the Commission's calendar located at
On November 20, 2015, NEXUS Gas Transmission, LLC (NEXUS) and Texas Eastern Transmission, LP (Texas Eastern) filed applications in Docket Nos. CP16-22-000 and CP16-23-000 requesting a Certificate of Public Convenience and Necessity pursuant to Section 7(c) of the Natural Gas Act to construct, operate, and maintain certain natural gas pipeline facilities. The proposed projects are known as the NEXUS Gas Transmission (NGT) Project and Texas Eastern Appalachian Lease (TEAL) Project (jointly referred to as “Projects”) and would provide transportation of 1.5 million dekatherms per day of Appalachian Basin shale gas to consuming markets in Northern Ohio, Southeastern Michigan, and Midwestern markets, as well as the Dawn Hub in Ontario, Canada.
On December 7, 2015, the Federal Energy Regulatory Commission (FERC or Commission) issued its Notice of Application for the Projects. Among other things, that notice alerted other agencies issuing federal authorizations of the requirement to complete all necessary reviews and to reach a final decision on the request for a federal authorization within 90 days of the date of issuance of the Commission staff's final Environmental Impact Statement (EIS) for the Projects. This instant notice identifies the FERC staff's planned schedule for completion of the final EIS for the Projects, which is based on an issuance of the draft EIS in July 2016.
If a schedule change becomes necessary for the final EIS, an additional notice will be provided so that the relevant agencies are kept informed of the Projects' progress.
The NGT Project would include about 255 miles of new 36-inch-diameter mainline pipeline, including about 208 miles in Columbiana, Stark, Summit, Wayne, Medina, Lorain, Huron, Erie, Sandusky, Wood, Lucas, Henry, and Fulton Counties, Ohio and about 47 miles in Lenawee, Monroe, Washtenaw, and Wayne Counties, Michigan. The NGT Project also would include about one mile of new 36-inch-diameter interconnecting pipeline in Columbiana County, Ohio. In addition, NEXUS proposes to construct and operate four new compressor stations and other aboveground facilities.
The TEAL Project would include about 4.4 miles of new 36-inch-diameter loop pipeline in Monroe County, Ohio; and about 0.3 mile of new 30-inch-diameter interconnecting pipeline between in Columbiana County, Ohio. The TEAL Project also would include construction of one new compressor station, modification of one existing compressor station, and construction and modification of other aboveground facilities.
On January 9, 2015 and January 26, 2015, the Commission staff granted NEXUS and Texas Eastern's requests to use the FERC's Pre-filing environmental review process and assigned the NGT Project and TEAL Project Docket Nos. PF15-10-000 and PF15-11-000, respectively. On April 8, 2015, the Commission issued a
The NOI was issued during the pre-filing review of the Projects and was sent to federal, state, and local government agencies; elected officials; affected landowners; environmental and public interest groups; Native American tribes and regional organizations; commentors and other interested parties; and local libraries and newspapers. Major issues raised during scoping include underground mines, karst geology, topsoil, drain tiles, drinking water, waterbodies, wetlands, vegetation, wildlife, threatened and endangered species, Oak Openings ecosystem, residential development, socioeconomic resources, cultural resources, public safety, air quality, as well as potential cumulative resource impacts and recommended project alternatives.
The U.S. Fish and Wildlife Service and U.S. Environmental Protection Agency are cooperating agencies in the preparation of the EIS.
In order to receive notification of the issuance of the EIS and to keep track of all formal issuances and submittals in specific dockets, the Commission offers a free service called eSubscription (
Take notice that the Commission received the following exempt wholesale generator filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
This constitutes notice, in accordance with 18 CFR 385.2201(b), of the receipt of prohibited and exempt off-the-record communications.
Order No. 607 (64 FR 51222, September 22, 1999) requires Commission decisional employees, who make or receive a prohibited or exempt off-the-record communication relevant to the merits of a contested proceeding, to deliver to the Secretary of the Commission, a copy of the communication, if written, or a summary of the substance of any oral communication.
Prohibited communications are included in a public, non-decisional file associated with, but not a part of, the decisional record of the proceeding. Unless the Commission determines that the prohibited communication and any responses thereto should become a part of the decisional record, the prohibited off-the-record communication will not be considered by the Commission in reaching its decision. Parties to a proceeding may seek the opportunity to respond to any facts or contentions made in a prohibited off-the-record communication, and may request that the Commission place the prohibited communication and responses thereto in the decisional record. The Commission will grant such a request only when it determines that fairness so requires. Any person identified below as having made a prohibited off-the-record communication shall serve the document on all parties listed on the official service list for the applicable proceeding in accordance with Rule 2010, 18 CFR 385.2010.
Exempt off-the-record communications are included in the decisional record of the proceeding, unless the communication was with a cooperating agency as described by 40 CFR 1501.6, made under 18 CFR 385.2201(e)(1)(v).
The following is a list of off-the-record communications recently received by the Secretary of the Commission. The communications listed are grouped by docket numbers in ascending order. These filings are available for electronic review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency (EPA) is planning to submit an information collection request (ICR) “Registration of Fuels and Fuel Additives—Requirements for Manufacturers” (EPA ICR No. 0309.15, OMB Control No. 2060-0150) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act (PRA) (44 U.S.C. 3501
Comments must be submitted on or before July 22, 2016.
Submit your comments, referencing Docket ID No. EPA-HQ-OAR-2006-0894, online using
James W. Caldwell, Compliance Division, Office of Transportation and Air Quality, Mail Code 6405A, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460; telephone number: (202) 343-9303; fax number: (202) 343-2800; email address:
Supporting documents which explain in detail the information that EPA will be collecting are available in the public docket for this ICR. The docket can be viewed online at
Pursuant to section 3506(c)(2)(A) of the PRA, EPA is soliciting comments and information to enable it to: (i) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility; (ii) evaluate 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; (iii) enhance the quality, utility, and
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency is planning to submit an information collection request, EPA Application Materials for the Water Infrastructure Finance and Innovation Act (EPA ICR no. 2549.01, OMB Control No. 2040-NEW) to the Office of Management and Budget for review and approval in accordance with the Paperwork Reduction Act. Before doing so, EPA is soliciting public comments on specific aspects of the proposed information collection as described below. This is a request for approval of a new collection. 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.
Comments must be submitted on or before July 22, 2016.
Submit your comments, referencing Docket ID No. EPA-HQ-OW-2016-0178, online using
EPA's policy is that all comments received will be included in the public docket without change, including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute.
Karen Fligger, Municipal Support Division, Office of Wastewater Management, 4201-T, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460; telephone number: (202) 564-2992; fax number: (202) 501-2346; email address:
Supporting documents which explain in detail the information the EPA will be collecting are available in the public docket for this ICR. The docket can be viewed online at
Pursuant to section 3506(c)(2)(A) of the Paperwork Reduction Act (44 U.S.C. 3501
WIFIA requires that an eligible entity submit to the Administrator an application at such time, in such manner, and containing such information, as the Secretary or the Administrator
This is to provide notice of filing and to invite comments on or before May 27, 2016, with regard to a requested extension of time for an exemption previously granted as described below.
On January 15, 2016, COSCO Container Lines Company Limited (“COSCON”) (Petitioner), petitioned the Commission pursuant to 46 CFR 502.76 of the Commission's Rules of Practice and Procedure, for an exemption from the Commission's rules requiring individual service contract amendments, 46 CFR 530.10. Petitioner explained that “[o]n or about March 1, 2016, COSCON will acquire by time charter the containerships and certain other assets of China Shipping Container Lines Co. (“China Shipping”)” and, as such, requested that the Commission permit the submission of a “universal notice to the Commission and to the service contract parties” instead of filing an amendment for each of the seven hundred (700) service contracts that will be assigned to COSCON. In addition COSCON proposed to send electronic notice to each shipper counter party. Because China Shipping tariffs would be taken over by COSCON and renumbered and republished, COSCON also sought a waiver to avoid amending each contract with the new tariff number, by publishing a notice of the change in the existing China Shipping and COSCON tariffs. Notice of the Petition appeared in the
The Commission granted the Petition by Order on February 29, 2016 and ordered that the new COSCON tariff remain in effect only until June 1, 2016 noting that “most of the relevant service contracts will expire on or before April 30, 2016, rendering the new tariffs unnecessary after that date.” On May 13, 2016, COSCON filed a Petition for extension of the exemption stating that “there remains a very limited number of shippers (around 30), as to which the discussions have taken longer than COSCON anticipated,” and so requests a continuation of the exemption to July 31, 2016.
The Petition and related documents are posted on the Commission's Web site at
In order for the Commission to make a thorough evaluation of the Petition requesting extension of the exemption, interested persons are requested to submit views or arguments in reply to the Petition for Extension of Exemption no later than May 27, 2016. Commenters must send an original and 5 copies to the Secretary, Federal Maritime Commission, 800 North Capitol Street NW., Washington, DC 20573-0001, and be served on Petitioner's counsel, Robert B. Yoshitomi, or Eric C. Jeffrey, Nixon Peabody LLP, 799 9th Street NW., Washington, DC 20001. A PDF copy of the reply must also be sent as an attachment to
Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Notice of request for public comments regarding an extension to an existing OMB clearance.
Under the provisions of the Paperwork Reduction Act, Regulatory Secretariat Division will be submitting to the Office of Management and Budget (OMB) a request to review and approve an extension of a previously approved information collection requirement concerning quality assurance requirements.
Submit comments on or before June 22, 2016.
Submit comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden to: Office of Information and Regulatory Affairs of OMB, Attention: Desk Officer for GSA, Room 10236, NEOB, Washington, DC 20503.
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Mr. Curtis E. Glover, Sr., Procurement Analyst, Contract Policy Division, at 202-501-1448 or email
Supplies and services acquired under Government contracts must conform to the contract's quality and quantity requirements. FAR Part 46 prescribes inspection, acceptance, warranty, and other measures associated with quality requirements. Standard clauses related to inspection require the contractor to provide and maintain an inspection system that is acceptable to the Government; gives the Government the right to make inspections and test while work is in process; and requires the contractor to keep complete, and make available to the Government, records of its inspection work. A notice was published in the
Public comments are particularly invited on: Whether this collection of information is necessary for the proper performance of functions of the FAR, and whether it will have practical utility; whether our estimate of the public burden of this collection of information is accurate, and based on valid assumptions and methodology; ways to enhance the quality, utility, and clarity of the information to be collected; and ways in which we can minimize the burden of the collection of information on those who are to respond, through the use of appropriate technological collection techniques or other forms of information technology.
The Centers for Disease Control and Prevention (CDC) has submitted the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. The notice for the proposed information collection is published to obtain comments from the public and affected agencies.
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address any of the following: (a) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) Evaluate the accuracy of the agencies estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (c) Enhance the quality, utility, and clarity of the information to be collected; (d) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
To request additional information on the proposed project or to obtain a copy of the information collection plan and instruments, call (404) 639-7570 or send an email to
Monitoring and Reporting System (MRS) for Rape Prevention and Education (RPE) Program Awardees—New—National Center for Injury Prevention and Control NCIPC), Centers for Disease Control and Prevention (CDC).
Sexual violence (SV) is a major public health problem, but it is preventable. According to CDC's National Intimate Partner and Sexual Violence Survey (NISVS), nearly 1 in 5 women and 1 in 71 men in the U.S. have been raped during their lifetime, and nearly 1 in 2 women and 1 in 5 men have experienced severe SV victimization other than rape at some point in their lives. The majority of victimization starts early in life with approximately 80% of female victims experiencing their first rape before the age of 25, and almost half experiencing their first rape before the age of 18.
CDC's RPE Program is a national initiative that addresses SV through cooperative agreement funding and technical assistance to health
The CDC seeks a three-year OMB approval to collect information from 55 RPE awardees (health departments in all 50 states, District of Columbia, and four U.S. territories,
Information to be collected will provide crucial data for program performance monitoring, will allow CDC analyze and synthesize information across multiple RPE programs, help ensure consistency in documenting progress and TA, enhance accountability of the use of federal funds, and provide timely reports as frequently requested by HHS, the White House, and Congress. It provides CDC with the capacity to respond in a timely manner to requests for information about the program, improve real-time communications between CDC and RPE awardees, and strengthen CDC's ability to monitor and evaluate awardees' progress and performance.
The estimated annual burden hours are 654. There is no cost to respondents other than their time.
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice with comment period.
The Centers for Disease Control and Prevention (CDC), as part of its continuing efforts to reduce public burden and maximize the utility of government information, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. This notice invites comment on the proposed National Health and Nutrition Examination Survey (NHANES) Longitudinal Study—Feasibility Component. This project will provide a logistical test of proposed survey procedures along with contact, interview, and examination rates for a sample of previously examined NHANES participants. The information obtained will be used to determine the feasibility of conducting future follow-up surveys.
Written comments must be received on or before July 22, 2016.
You may submit comments, identified by Docket No. CDC-2016-0043 by any of the following methods:
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Leroy A. Richardson, the Information Collection Review Office, Centers for Disease Control and Prevention, 1600 Clifton Road NE., MS-D74, Atlanta, Georgia 30329; phone: 404-639-7570; Email:
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. In addition, the PRA also
The NHANES Longitudinal Study—Feasibility Component—New—National Center for Health Statistics (NCHS), Centers for Disease Control and Prevention (CDC).
Section 306 of the Public Health Service (PHS) Act (42 U.S.C. 242k), as amended, authorizes that the Secretary of Health and Human Services (DHHS), acting through NCHS, shall collect statistics on the extent and nature of illness and disability; environmental, social and other health hazards; and determinants of health of the population of the United States. Under this authorization, the National Health and Nutrition Examination Surveys (NHANES) have been conducted periodically between 1970 and 1994, and continuously since 1999 by NCHS, CDC to produce descriptive statistics on the health and nutrition status of the general population based on direct physical measurements.
The increasing prevalence of obesity and chronic diseases, including diabetes, cardiovascular and kidney diseases, is an important public health issue. If feasible, re-contacting past NHANES participants could provide information about changes in their health condition, exposure to risk factors, and utilization of healthcare since the time of their original NHANES exam, thereby making it possible to estimate the incidence of various chronic conditions. The survey's extensive baseline data on health conditions, nutritional status, risk behaviors, and environmental exposures could further allow the identification and monitoring of the impact of these factors on the participant's current health status. Planning activities for a future longitudinal study of all NHANES examined adults from 2007-2014 have been initiated. This study—the NHANES Longitudinal Study, targeted to start data collection in 2019 or 2020, will provide data to estimate the incidence of selected health outcomes in the U.S. population and relative risk related to other baseline data. The data collection effort proposed in this announcement is only for the Feasibility Component of the NHANES Longitudinal Study. The interview and examination content proposed in the Feasibility Component represents the core module of the future NHANES Longitudinal Study.
Not since the NHANES I Epidemiologic Follow-up Study (NHEFS), which was also conducted by NCHS, has there been a follow-up of a nationally representative cohort to assess the relations between baseline clinical, nutritional, and behavioral factors to subsequent morbidity and mortality. While NCHS has prior experience conducting the follow-up of the NHANES I cohort in 1982-1984, more than 30 years has passed. Since then, response rates in major federal surveys have declined and obtaining cooperation from the household population has become more difficult. Therefore, before attempting to launch a full scale data collection effort among all examined adults from NHANES 2007-2014, we propose conducting a feasibility study (the NHANES Longitudinal Study—Feasibility Component) to determine whether previously examined participants can be successfully traced, interviewed, and examined. The proposed Feasibility Component is comprised of two elements: (1) A field feasibility test for the core module of the NHANES Longitudinal Study; and (2) a series of targeted methodological tests of additional components and procedures.
An annual sample of 400 respondents (total of 800 participants over the 2-year period) will be selected from the 2007-2014 NHANES examinees (20 years and older) to participate in the field feasibility test. Of these, we expect approximately 11% to be deceased prior to the re-contact, resulting in a target annual sample of 356 living examinees and 44 deceased proxy interview respondents.
As part of the preparation efforts for a longitudinal study of all examined adults from NHANES 2007-2014, up to 375 additional persons per year (750 participants over the 2-year period) may be asked to participate in targeted tests of proposed methods and procedures such as bio-specimen collections, cognitive testing for questions, or protocol tests for additional exam components. These targeted tests will only occur if resources permit and if tracing and participation in the field feasibility test is successful. These targeted methodological studies will be conducted with paid volunteers or past NHANES participants who are not part of the potential NHANES longitudinal study sample (for example, past NHANES participants from the 1999-2006 cycle).
Participation in the field feasibility test and the targeted methodological studies is completely voluntary and confidential. The estimated average burden for the field feasibility test is 42 minutes per respondent (1.5 hours per respondent for 356 living participants and 40 minutes per respondent for 44 proxy of deceased participants, annually). The average burden for the targeted methodological study respondents is 1 hour. A two-year approval is requested.
Demographic information such as name, address, phone numbers, and social security number collected in the baseline NHANES will be used to locate the sampled 800 field feasibility test participants (annual sample of 400). Prior to the re-contact, a review of NHANES-linked mortality files will be conducted to assist in determining the vital status of sampled participants.
Trained interviewers will visit the sampled participants at home to conduct an in-person interview and a health examination. Information that will be collected through the interview
Following the interview, a health examination will be conducted as part of the home visit. The respondent's weight, waist circumference, and sitting blood pressure will be measured, and a monofilament assessment may be conducted for neuropathy. In addition, blood and urine will be collected. Examples of laboratory tests planned include hemoglobin A1c from the blood specimen, and albumin and creatinine from the urine collection. This proposed project will assess the feasibility of conducting these tests and procedures in the home examination setting.
A proxy interview will be conducted via telephone for sampled participants who died prior to the re-contact. Information on medical conditions and overnight hospital stays since baseline will be collected.
Although permission will be sought from all field feasibility test participants, hospitalization records will be obtained only for 120 participants annually (240 participants over the 2-year period) to evaluate the record retrieval protocol for the study cohort among different medical facilities. An average of 3 hospital stays per person is anticipated among this cohort, therefore, an estimated 360 requests (120 persons × 3 stays) will be made annually. The estimated burden for hospital record provider is 20 minutes per record.
There is no cost to respondents other than their time.
The Centers for Disease Control and Prevention (CDC) has submitted the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. The notice for the proposed information collection is published to obtain comments from the public and affected agencies.
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address any of the following: (a) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) Evaluate the accuracy of the agencies estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (c) Enhance the quality, utility, and clarity of the information to be collected; (d) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
To request additional information on the proposed project or to obtain a copy of the information collection plan and instruments, call (404) 639-7570 or send an email to
Qualitative Information Collection on Emerging Diseases among the Foreign-born in the U.S. (OMB Control No. 0920-0987, Expires 09/30/2016)—Extension—Division of Global Migration and Quarantine, National Center for Emerging Zoonotic and Infectious Diseases, Centers for Disease Control and Prevention (CDC).
The Centers for Disease Control and Prevention (CDC), National Center for Emerging and Zoonotic Infectious Diseases (NCEZID), Division of Global Migration and Quarantine (DGMQ), requests approval for an extension of the current generic information collection Qualitative Information Collection on Emerging Diseases among the Foreign-born in the U.S. (OMB Control Number 0920-0987, expiration date 9/30/2016).
This qualitative data collection is needed by DGMQ because foreign-born individuals are considered hard-to-reach populations and are often missed by routine information collection systems in the United States. As a consequence, limited information is available about the health status, knowledge, attitudes, health beliefs and practices related to communicable diseases and other emerging health issues (
The purpose of the extension is to continue efforts to improve the agency's understanding of the health status, risk factors for disease, and other health outcomes among foreign-born individuals in the United States. Numerous types of data will be collected under the auspices of this generic information collection. These include, but are not limited to, knowledge, attitudes, beliefs, behavioral intentions, practices, behaviors, skills, self-efficacy, and health information needs and sources.
For example, CDC recently used this generic to collect feedback on Mexican-born audience's preferences for messaging and communication about mosquito-borne diseases to develop effective prevention campaigns as these diseases—especially Zika—pose an increasing threat to global health security.
Under the terms of this generic, CDC will employ focus groups and key informant interviews to collect information. Depending on the specific purpose, the information collection may be conducted either in-person, by telephone, on paper, or online. For each generic information collection, CDC will submit to OMB the project summary and information collection tools.
This requests entails a total of 1,025 respondents and 825 burden hours annually. The respondents to these information collections are foreign born individuals in the United States. There is no cost to respondents other than the time required to provide the information requested.
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice with comment period.
The Centers for Disease Control and Prevention (CDC), as part of its continuing efforts to reduce public burden and maximize the utility of government information, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. This notice invites comment on the proposed revision of the National Health and Nutrition Examination Survey (NHANES). NHANES programs produce descriptive statistics which measure the health and nutrition status of the general population.
Written comments must be received on or before July 22, 2016.
You may submit comments, identified by Docket No. CDC-2015-0044 by any of the following methods:
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To request more information on the proposed project or to obtain a copy of the information collection plan and instruments, contact the Information Collection Review Office, Centers for Disease Control and Prevention, 1600 Clifton Road NE., MS-D74, Atlanta, Georgia 30329; phone: 404-639-7570; Email:
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. In addition, the PRA also requires Federal agencies to provide a 60-day notice in the
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; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; to develop, acquire, install and utilize technology and systems for the purpose of collecting, validating and verifying information, processing and maintaining information, and disclosing and providing information; to train personnel and to be able to respond to a collection of information, to search data sources, to complete and review the collection of information; and to transmit or otherwise disclose the information.
The National Health and Nutrition Examination Survey (NHANES), (OMB No. 0920-0950, expires 12/31/2017)—Revision—National Center for Health Statistics (NCHS), Centers for Disease Control and Prevention (CDC).
Section 306 of the Public Health Service (PHS) Act (42 U.S.C. 242k), as amended, authorizes that the Secretary of Health and Human Services (DHHS), acting through NCHS, shall collect statistics on the extent and nature of illness and disability; environmental, social and other health hazards; and determinants of health of the population of the United States. The National Health and Nutrition Examination Surveys (NHANES) have been conducted periodically between 1970 and 1994, and continuously since 1999 by the National Center for Health Statistics, CDC. Annually, approximately 14,410 respondents participate in some aspect of the full survey. Up to 3,500 additional persons might participate in tests of procedures, special studies, or methodological studies (Table 1). Participation in NHANES is completely voluntary and confidential. A three-year approval is requested.
NHANES programs produce descriptive statistics which measure the health and nutrition status of the general population. Through the use of physical examinations, laboratory tests, and interviews NHANES studies the relationship between diet, nutrition and health in a representative sample of the United States. NHANES monitors the prevalence of chronic conditions and risk factors. NHANES data are used to produce national reference data on height, weight, and nutrient levels in the blood. Results from more recent NHANES can be compared to findings reported from previous surveys to monitor changes in the health of the U.S. population over time. NCHS collects personal identification information. Participant level data items will include basic demographic information, name, address, social security number, Medicare number and participant health information to allow for linkages to other data sources such as the National Death Index and data from the Centers for Medicare and Medicaid Services (CMS).
A variety of agencies sponsor data collection components on NHANES. To keep burden down, NCHS cycles in and out various components. The 2017-2018 NHANES physical examination includes the following components: Anthropometry (all ages), 24-hour dietary recall (all ages), physician's examination (all ages, blood pressure is collected here), oral health examination (ages 1 and older), and hearing (ages 6-19 and 70+).
While at the examination center additional interview questions are asked (6 and older), a second 24-hour dietary recall (all ages) is scheduled to be conducted by phone 3-10 days later. In 2017 we plan to add a liver elastography (ultrasound) exam with a set of alcohol questions to complement this exam, an Oral Human Papilloma Virus (HPV) follow-up, and cycle back in bone density for hip and spine into the Dual X-ray Absorptiometry (DXA) exam for (ages 50+). The osteoporosis questionnaire will also cycle back into NHANES to complement the changes to the DXA exam. These questions will be asked of those 40+ In addition, the age range for the existing DXA total body scan will be changed from 6-59 years to 8-69 years.
NHANES plans to conduct a blood pressure methodology study. The study population will be NHANES participants aged 6 and older who agree to come to the Mobile Examination Center (MEC). The survey would also like to conduct an Ambulatory Blood Pressure Pilot Study among NHANES participants ages 18 and older.
The bio-specimens collected for laboratory tests include urine, blood, vaginal and penile swabs, oral rinses and household water collection. Serum, plasma and urine specimens are stored for future testing, including genetic research, if the participant consents. NHANES 2017-18 plans to add three Phthalates in urine (ages 3+), nine Urinary flame retardants in urine (ages 3+), one Insect repellant in urine (ages 3+), one Volatile organic compound (VOC) metabolite in urine (ages 3+), eighteen Tobacco biomarkers in urine (ages 3+), two Metals in urine (ages 3+), Vitamin C in serum (ages 6+), Vitamins A, E, and carotenoids in serum (ages 6+), Unsaturated Iron Binding Capacity (UIBC)/Total Iron Binding Capacity (TIBC) in serum (ages 12+), and Congenital cytomegalovirus (CMV) in sera (ages 1-5). Consent to store DNA is cycling back into NHANES.
In addition metals in whole blood are changing from a one-half sample to a full sample (ages 1+). Polycyclic Aromatic Hydrocarbons (PAHs) are being discontinued in the smoker oversample subgroup, however testing will continue in a
The 2017-18 survey will also bring back the Flexible Consumer Behavior Survey Phone follow-Up questionnaire for participant ages 1+. This takes place in the home after the second dietary recall is completed.
The following major examination or laboratory items, that had been included in the 2015-2016 NHANES, were cycled out for NHANES 2017-2018: Pubertal maturation, oral glucose tolerance test (OGTT), dual X-ray absorptiometry scans for vertebral fractures and aortic calcification, three metals in serum and three hormones and binding proteins.
Most sections of the NHANES interviews provide self-reported information to be used either in concert with specific examination or laboratory content, as independent prevalence estimates, or as covariates in statistical analysis (
In 2017-2018, we also plan to conduct a Dietary Supplement Imaging pilot study, as well as implement multi-mode screening and electronic consent procedures in NHANES. The consent for birth certificate linkage that had been included in previous NHANES will be dropped from NHANES 2017-2018.
There is no cost to respondents other than their time.
Office of the Assistant Secretary for Health, Office of the Secretary, Department of Health and Human Services.
Notice.
The Presidential Advisory Council on Combating Antibiotic-Resistant Bacteria (Advisory Council) requests information from the general public and stakeholders related to efforts and strategies to combat antibiotic-resistance. In the process of developing their report,
Comments must be received by 11:59 p.m. on June 22, 2016 to be considered.
Individuals are encouraged to submit their responses through one of the following methods. Utilization of the online form available on
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Under Executive Order 13676, dated September 18, 2014, authority was given to the Secretary of Health and Human Services (HHS) to establish the Advisory Council, in consultation with the Secretaries of Defense and Agriculture. Activities of the Advisory Council are governed by the provisions of Public Law 92-463, as amended (5 U.S.C. App.), which sets forth standards for the formation and use of federal advisory committees.
The Advisory Council will provide advice, information, and recommendations to the Secretary of HHS regarding programs and policies intended to support and evaluate the implementation of Executive Order 13676, including the National Strategy for Combating Antibiotic-Resistant
In carrying out its mission, the Advisory Council will provide advice, information, and recommendations to the Secretary regarding programs and policies intended to preserve the effectiveness of antibiotics by optimizing their use; advance research to develop improved methods for combating antibiotic resistance and conducting antibiotic stewardship; strengthen surveillance of antibiotic-resistant bacterial infections; prevent the transmission of antibiotic-resistant bacterial infections; advance the development of rapid point-of-care and agricultural diagnostics; further research on new treatments for bacterial infections; develop alternatives to antibiotics for agricultural purposes; maximize the dissemination of up-to-date information on the appropriate and proper use of antibiotics to the general public and human and animal healthcare providers; and improve international coordination of efforts to combat antibiotic resistance. In response to their mission, the Advisory Council recently released their first report,
1. Describe how organizations are influencing curricula regarding primary prevention (antibiotic stewardship, infection prevention, and control). Please include information about certification examinations, requirements, and continuing education, if relevant.
2. Describe how healthcare organizations can best: (a) Educate and provide feedback to providers in clinics/facilities about infectious diseases diagnostic testing, optimal antibiotic prescribing, and infection prevention; where relevant, please include information about what incentives and disincentives these organizations have in place with the goal of improving antibiotic prescribing (
3. Please provide examples of successful behavior change models that can be applied to preventive strategies, such as infection control and antibiotic stewardship.
4. Please provide information on the best ways to collect data on antibiotic use [and resistance] in animal agriculture through public-private collaborations. Your response can include information on the types of data to be collected, including the method of collection, and the metrics for reporting the data. If helpful, please cite sample models as examples to depict your answer.
5. Please provide information on the different resources that exist to promote the understanding of how antibiotics are being used in humans and animals in different parts of the world. Your response can include information on the types of support to connect with such resources, as appropriate (examples include public-private partnerships, strategic resourcing, or other means).
More information can be found at
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
U.S. Customs and Border Protection, Department of Homeland Security.
General notice.
This document announces that the Automated Commercial Environment (ACE) will be the sole electronic data interchange (EDI) system authorized by the Commissioner of U.S. Customs and Border Protection (CBP) for processing electronic entry and entry summary filings associated with most entry types. This document also announces that the Automated Commercial System (ACS) will no longer be a CBP-authorized EDI system for purposes of processing the electronic filings specified in this notice.
Questions related to this notice may be emailed to
Section 484 of the Tariff Act of 1930, as amended (19 U.S.C. 1484), establishes the requirement for importers of record to make entry for merchandise to be imported into the customs territory of the United States. Customs entry information is used by U.S. Customs and Border Protection (CBP) and Partner Government Agencies (PGAs) to determine whether merchandise may be released from CBP custody. Importers of record are also obligated to complete the entry by filing an entry summary declaring the value, classification, rate of duty applicable to the merchandise and such other information as is necessary for CBP to properly assess duties, collect accurate statistics and determine whether any other applicable requirement of law is met.
The customs entry requirements were amended by Title VI of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057, December 8, 1993), commonly known as the Customs Modernization Act, or Mod Act. In particular, section 637 of the Mod Act amended section 484(a)(1)(A) of the Tariff Act of 1930 (19 U.S.C. 1484(a)(1)(A)) by revising the requirement to make and complete customs entry by submitting documentation to CBP to allow, in the alternative, the electronic transmission of such entry information pursuant to a CBP-authorized electronic data interchange (EDI) system. CBP created the Automated Commercial System (ACS) to track, control, and process all commercial goods imported into the United States. CBP established the specific requirements and procedures for the electronic filing of entry and entry summary data for imported merchandise through the Automated Broker Interface (ABI) to ACS.
In an effort to modernize the business processes essential to securing U.S. borders, facilitating the flow of legitimate shipments, and targeting illicit goods pursuant to the Mod Act and the Security and Accountability for Every (SAFE) Port Act of 2006 (Pub. L. 109-347, 120 Stat. 1884), CBP developed the Automated Commercial Environment (ACE) to eventually replace ACS as the CBP-authorized EDI system. Over the last several years, CBP has tested ACE and provided significant public outreach to ensure that the trade community is fully aware of the transition from ACS to ACE.
On February 19, 2014, President Obama issued Executive Order (EO) 13659,
On October 13, 2015, CBP published an Interim Final Rule in the
CBP has developed a staggered transition strategy for decommissioning ACS. The first two phases of the transition were announced in a
This notice announces that, effective July 23, 2016, ACE will be the sole CBP-authorized EDI system for the electronic entry and entry summary filings listed below, for all filers. These electronic filings must be formatted for submission in ACE, and will no longer be accepted in ACS.
Electronic entry and entry summary filings for the following entry types must continue to be filed only in ACS. CBP will publish a subsequent
National Protection and Programs Directorate, DHS.
Notice of public workshop.
The Department of Homeland Security (DHS) announces a public workshop on Thursday, June 9, 2016 to discuss information sharing as related to Title I of the Cybersecurity Act of 2015, the Cybersecurity Information Sharing Act.
The workshop will be held on Thursday, June 9, 2016, from 9:00 a.m. to 4:00 p.m. EDT. The meeting may conclude before the allotted time if all matters for discussion have been addressed.
The meeting location is the Navy League of the United States, 2300 Wilson Boulevard, #200, Arlington, VA 22201.
Information about the Cybersecurity Information Sharing Act of 2015 and Automated Indicator Sharing can be found at:
If you have questions concerning the meeting, please contact
On December 18, 2015, the President signed into law the Cybersecurity Act of 2015 as a part of the FY16 omnibus spending bill. Both Congress and the White House were active on the issue of cybersecurity during 2015, with multiple bills passed in each chamber. The resulting law included in the omnibus spending legislation reflects a reconciliation of the cybersecurity bills passed in the House and Senate in 2015.
Title I, the Cybersecurity Information Sharing Act (CISA), authorizes companies to voluntarily share cyber threat indicators and defensive measures with the Federal Government, State, Local, Tribal, and Territorial (SLTT) entities, and other private sector entities through a capability and process established by DHS. The law also:
• Provides liability protection to private sector entities for information shared in accordance with the law;
• Directs DHS to share private sector cyber threat indicators and defensive measures in an automated and real-time manner with Federal departments and agencies for cybersecurity purposes;
• Establishes measures to ensure that cybersecurity information received, retained, or shared by the DHS mechanism will not violate the privacy or civil liberties of individuals, under procedures jointly drafted by the Department of Justice and DHS;
• Protects shared information from public disclosure; and
• Sunsets the provisions for these information sharing measures in 10 years.
The CISA establishes an additional statutory basis for the Department's information sharing efforts with the Automated Indicator Sharing (AIS) initiative, which enables real-time sharing of cyber threat indicators between DHS and stakeholders in the public and private sectors. The DHS real-time sharing process (and the web form and email processes) for cyber threat indicator and defensive measure sharing do not replace pre-existing
The purpose of the public workshop is to engage and educate stakeholders and the general public on CISA implementation and related issues such as:
• What is CISA?
• What is the Automated Indicator Sharing (AIS) initiative?
• What are the privacy concerns around CISA and how are privacy protections built into information sharing?
• What is the benefit of participating in an Information Sharing and Analysis Organization (ISAO) as it pertains to CISA?
• How does an organization (Federal or non-federal) connect and participate in AIS?
The event will consist of a combination of keynote addresses, presentations, and panel discussions, each of which will provide the opportunity for audience members to ask questions.
For information on facilities or services for individuals with disabilities or to request special assistance at the public meeting, contact
Members of the public may attend this workshop by RSVP only up to the seating capacity of the room. A valid government-issued photo identification (for example, a driver's license) will be required for entrance to the meeting space. Those who plan to attend should RSVP by emailing
We encourage you to participate in this meeting by submitting comments to the CISA Implementation mailbox (
You may also submit written comments to the docket using any one of the following methods:
(1)
(2)
(4)
To avoid duplication, please use only one of these three methods. All comments must either be submitted to the online docket on or before June 2, 2016, or reach the Docket Management Facility by that date.
Secs. 103 and 105, Pub. L. 114-113, Div. N, Title I.
U.S. Citizenship and Immigration Services, Department of Homeland Security.
60-Day notice.
The Department of Homeland Security (DHS), U.S. Citizenship and Immigration Services (USCIS) invites the general public and other Federal agencies to comment upon this proposed revision of a currently approved collection of information or new collection of information. In accordance with the Paperwork Reduction Act (PRA) of 1995, the information collection notice is published in the
Comments are encouraged and will be accepted for 60 days until July 22, 2016.
All submissions received must include the OMB Control Number 1615-0043 in the subject box, the agency name and Docket ID USCIS-2007-0013. To avoid duplicate submissions, please use only
(1)
(2)
(3)
USCIS, Office of Policy and Strategy, Regulatory Coordination Division, Samantha Deshommes, Acting Chief, 20 Massachusetts Avenue NW., Washington, DC 20529-2140, Telephone number (202) 272-8377 (This is not a toll-free number. Comments are not accepted via telephone message). Please note contact information provided here is solely for questions regarding this notice. It is not for individual case status inquiries. Applicants seeking information about the status of their individual cases can check Case Status Online, available at the USCIS Web site at
You may access the information collection instrument with instructions, or additional information by visiting the Federal eRulemaking Portal site at:
Written comments and suggestions from the public and affected agencies should address one or more of the following four points:
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate 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;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Fish and Wildlife Service, Interior.
Notice; request for information.
We, the U.S. Fish and Wildlife Service (Service), announce our intention to conduct a 5-year status review under the Endangered Species Act of 1973, as amended (ESA), for the Eskimo curlew. A 5-year status review is based on the best scientific and commercial data available at the time of the review; therefore, we are requesting submission of information that has become available since the last review of the species in 2011.
To ensure consideration of your comments in our preparation of this 5-year status review, we must receive your comments and information by July 22, 2016. However, we will accept information about any species at any time.
Please submit your information on the current status of the Eskimo curlew by one of the following methods: Email:
Ted Swem, Fairbanks Fish and Wildlife Field Office, by telephone at 907-456-0441. Individuals who are hearing impaired or speech impaired may call the Federal Relay Service at 800-877-8339 for TTY assistance.
We are initiating a 5-year status review under the ESA for the Eskimo curlew (
Under the ESA (16 U.S.C. 1531
A 5-year review considers all new information available at the time of the review. In conducting these reviews, we consider the best scientific and commercial data that have become available since the listing determination or most recent status review, such as:
(1) The biology of the species, including, but not limited to, population trends, distribution, abundance, demographics, and genetics;
(2) Habitat conditions, including, but not limited to, amount, distribution, and suitability;
(3) Conservation measures that have been implemented that benefit the species;
(4) Threat status and trends in relation to the five listing factors (as defined in section 4(a)(1) of the Act); and
(5) Other new information, data, or corrections, including, but not limited to, taxonomic or nomenclatural changes, identification of erroneous information contained in the List, and improved analytical methods.
Any new information will be considered during the 5-year review and will also be useful in evaluating the ongoing recovery programs for the species.
In the case of the Eskimo curlew, we concluded in our 2011 5-year review that the probability that the species remained extant was extremely low based on the scarcity of recent sightings and the length of time that has passed since the last sighting that was confirmed with physical evidence. We
To ensure that a 5-year review is complete and based on the best available scientific and commercial information, we request new information from all sources. See What Information Do We Consider in Our Review? for specific criteria. If you submit information, please support it with documentation such as maps, bibliographic references, methods used to gather and analyze the data, and/or copies of any pertinent publications, reports, or letters by knowledgeable sources. If you submit purported sightings of the species, please also provide supporting documentation in any form to the extent that it is available.
Before including your address, phone number, email address, or other personal identifying information in your comments, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
A list of all completed and currently active 5-year reviews addressing species for which the Alaskan Region of the Service has lead responsibility is available at
This document is published under the authority of the Endangered Species Act of 1973, as amended (16 U.S.C. 1531
National Park Service, Interior.
Notification of boundary revision.
The boundary of Fredericksburg and Spotsylvania County Battlefields Memorial National Military Park is modified to include four tracts containing 25.55 acres of land, more or less, located in Orange County and Spotsylvania County, Virginia, immediately adjoining the boundary of Fredericksburg and Spotsylvania County Battlefields Memorial National Military Park. Subsequent to the proposed boundary revision, the National Park Service will acquire one tract by donation from the Civil War Trust and two tracts by purchase from the Central Virginia Battlefields Trust. The fourth tract, already owned by the United States and acquired as an uneconomic remnant, will be brought into the boundary so that it can be administered as part of the park.
The effective date of this boundary revision is May 23, 2016.
The map depicting this boundary revision is available for inspection at the following locations: National Park Service, Land Resources Program Center, Northeast Region, New England Office, 115 John Street, 5th Floor, Lowell, MA 01852, and National Park Service, Department of the Interior, 1849 C Street NW., Washington, DC 20240.
Deputy Realty Officer Rachel McManus, National Park Service, Land Resources Program Center, Northeast Region, New England Office, 115 John Street, 5th Floor, Lowell, MA 01852, telephone (978) 970-5260.
Notice is hereby given that, pursuant to 54 U.S.C. 100506(c), the boundary of Fredericksburg and Spotsylvania County Battlefields Memorial National Military Park is modified to include four adjoining tracts totaling 25.55 acres of land. The boundary revision is depicted on Map No. 326/129075, dated July 8, 2015.
54 U.S.C. 100506(c) provides that, after notifying the Committee on Natural Resources of the House of Representatives and the Committee on Energy and Natural Resources of the Senate, the Secretary of the Interior is authorized to make this boundary revision upon publication of notice in the
U.S. International Trade Commission.
Notice.
Notice is hereby given that a complaint was filed with the U.S. International Trade Commission on April 15, 2016, under section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. 1337, on behalf of Paice LLC of Baltimore, Maryland and Abell Foundation, Inc. of Baltimore, Maryland. An amended complaint was filed on April 29, 2016. The amended complaint alleges violations of section 337 based upon the importation into the United States, the sale for importation, and the sale within the United States after importation of certain hybrid electric vehicles and components thereof by reason of infringement of certain claims of U.S. Patent No. 7,104,347 (“the '347 patent”); U.S. Patent No. 7,237,634 (“the '634 patent”); and U.S. Patent No. 8,214,097 (“the '097 patent”). The amended complaint further alleges that an industry in the United States exists as required by subsection (a)(2) of section 337.
The complainants request that the Commission institute an investigation and, after the investigation, issue a limited exclusion order and cease and desist orders.
The amended complaint, except for any confidential information contained therein, is available for inspection during official business hours (8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW., Room 112, Washington, DC 20436, telephone (202) 205-2000. Hearing impaired individuals are advised that information on this matter can be obtained by contacting the Commission's TDD terminal on (202) 205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at (202) 205-2000. General information concerning the Commission may also be obtained by accessing its Internet server at
The Office of Unfair Import Investigations, U.S. International Trade Commission, telephone (202) 205-2560.
The authority for institution of this investigation is contained in section 337 of the Tariff Act of 1930, as amended, and in section 210.10 of the Commission's Rules of Practice and Procedure, 19 CFR 210.10 (2015).
(1) Pursuant to subsection (b) of section 337 of the Tariff Act of 1930, as amended, an investigation be instituted to determine whether there is a violation of subsection (a)(1)(B) of section 337 in the importation into the United States, the sale for importation, or the sale within the United States after importation of certain hybrid electric vehicles and components thereof by reason of infringement of one or more of claims 24, 25, 27, 28, 30, 32, and 41 of the '347 patent; claims 33-44, 46, 50, 52-55, 91, 92, 94, 95, 97, 110, 112, 226, 227, 229-231, 239-241, 252, 253, 255-259, 265-267, 278, 279, 281-283, 285, 289-291 of the '634 patent; and claims 21, 27, 30, 33, and 37 of the '097 patent, and whether an industry in the United States exists as required by subsection (a)(2) of section 337;
(2) For the purpose of the investigation so instituted, the following are hereby named as parties upon which this notice of investigation shall be served:
(a) The complainants are:
(b) The respondents are the following entities alleged to be in violation of section 337, and are the parties upon which the complaint is to be served:
(3) For the investigation so instituted, the Chief Administrative Law Judge, U.S. International Trade Commission, shall designate the presiding Administrative Law Judge.
The Office of Unfair Import Investigations will not participate as a party in this investigation.
Responses to the amended complaint and the notice of investigation must be submitted by the named respondents in accordance with section 210.13 of the Commission's Rules of Practice and Procedure, 19 CFR 210.13. Pursuant to 19 CFR 201.16(e) and 210.13(a), such responses will be considered by the Commission if received not later than 20 days after the date of service by the Commission of the amended complaint and the notice of investigation. Extensions of time for submitting responses to the amended complaint and the notice of investigation will not be granted unless good cause therefor is shown.
Failure of a respondent to file a timely response to each allegation in the amended complaint and in this notice may be deemed to constitute a waiver of the right to appear and contest the allegations of the amended complaint and this notice, and to authorize the administrative law judge and the Commission, without further notice to the respondent, to find the facts to be as alleged in the amended complaint and this notice and to enter an initial determination and a final determination containing such findings, and may result in the issuance of an exclusion order or a cease and desist order or both directed against the respondent.
By order of the Commission.
U.S. International Trade Commission.
Notice.
Notice is hereby given that a complaint was filed with the U.S. International Trade Commission on April 20, 2016, under section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. 1337, on behalf of Select Comfort Corporation of Minneapolis, Minnesota and Select Comfort SC Corporation of Greenville, South Carolina. The complaint alleges violations of section 337 based upon the importation into the United States and the sale within the United States after importation of certain air mattress bed systems and components thereof by reason of infringement of certain claims of U.S. Patent No. 6,804,848 (“the '848 patent”) and U.S. Patent No. 7,389,554 (“the '554 patent”). The complaint further alleges that an industry in the United States exists as required by subsection (a)(2) of section 337.
The complainants request that the Commission institute an investigation and, after the investigation, issue a limited exclusion order and cease and desist orders.
The complaint, except for any confidential information contained therein, is available for inspection during official business hours (8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW., Room 112, Washington, DC 20436, telephone (202) 205-2000. Hearing impaired individuals are advised that information on this matter can be obtained by contacting the Commission's TDD terminal on (202) 205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at (202) 205-2000. General information concerning the Commission may also be obtained by accessing its Internet server at
The Office of Docket Services, U.S. International Trade Commission, telephone (202) 205-1802.
The authority for institution of this investigation is contained in section 337 of the Tariff Act of 1930, as amended, and in section 210.10 of the Commission's Rules of Practice and Procedure, 19 CFR 210.10 (2015).
(1) Pursuant to subsection (b) of section 337 of the Tariff Act of 1930, as amended, an investigation be instituted to determine whether there is a violation of subsection (a)(1)(B) of section 337 in the importation into the United States or the sale within the United States after importation of certain air mattress bed systems and components thereof by reason of infringement of one or more of claims 1, 5, 6, 16, 19, 20, 22, 24, and 26 of the '554 patent and claims 1, 3-6, 10, 14, and 24 of the '848 patent, and whether an industry in the United States exists as required by subsection (a)(2) of section 337;
(2) For the purpose of the investigation so instituted, the following are hereby named as parties upon which this notice of investigation shall be served:
(b) The respondents are the following entities alleged to be in violation of section 337, and are the parties upon which the complaint is to be served:
(3) For the investigation so instituted, the Chief Administrative Law Judge, U.S. International Trade Commission, shall designate the presiding Administrative Law Judge.
The Office of Unfair Import Investigations will not participate as a party in this investigation.
Responses to the complaint and the notice of investigation must be submitted by the named respondents in accordance with section 210.13 of the Commission's Rules of Practice and Procedure, 19 CFR 210.13. Pursuant to 19 CFR 201.16(e) and 210.13(a), such responses will be considered by the Commission if received not later than 20 days after the date of service by the Commission of the complaint and the notice of investigation. Extensions of time for submitting responses to the complaint and the notice of investigation will not be granted unless good cause therefor is shown.
Failure of a respondent to file a timely response to each allegation in the complaint and in this notice may be deemed to constitute a waiver of the right to appear and contest the allegations of the complaint and this notice, and to authorize the administrative law judge and the Commission, without further notice to the respondent, to find the facts to be as alleged in the complaint and this notice and to enter an initial determination and a final determination containing such findings, and may result in the issuance of an exclusion order or a cease and desist order or both directed against the respondent.
By order of the Commission.
United States International Trade Commission.
Notice.
The Commission hereby gives notice of the scheduling of an expedited review pursuant to the Tariff Act of 1930 (“the Act”) to determine whether revocation of the antidumping duty order on porcelain-on-steel cooking ware from China would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.
Effective May 6, 2016.
Keysha Martinez (202-205-2136), Office of Investigations, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its Internet server (
For further information concerning the conduct of this review and rules of general application, consult the Commission's Rules of Practice and Procedure, part 201, subparts A and B (19 CFR part 201), and part 207, subparts A, D, E, and F (19 CFR part 207).
In accordance with sections 201.16(c) and 207.3 of the rules, each document filed by a party to the review must be served on all other parties to the review (as identified by either the public or BPI service list), and a certificate of service must be timely filed. The Secretary will not accept a document for filing without a certificate of service.
This review is being conducted under authority of title VII of the Tariff Act of 1930; this notice is published pursuant to section 207.62 of the Commission's rules.
By order of the Commission.
United States International Trade Commission.
Notice.
The Commission hereby gives notice of the scheduling of an expedited review pursuant to the Tariff Act of 1930 (“the Act”) to determine whether revocation of the antidumping duty order on alloy magnesium from China would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.
Edward Petronzio ((202) 205-3176), Office of Investigations, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
For further information concerning the conduct of this review and rules of general application, consult the Commission's Rules of Practice and Procedure, part 201, subparts A and B (19 CFR part 201), and part 207, subparts A, D, E, and F (19 CFR part 207).
In accordance with sections 201.16(c) and 207.3 of the rules, each document filed by a party to the review must be served on all other parties to the review (as identified by either the public or BPI service list), and a certificate of service must be timely filed. The Secretary will not accept a document for filing without a certificate of service.
This review is being conducted under authority of title VII of the Tariff Act of 1930; this notice is published pursuant to section 207.62 of the Commission's rules.
By order of the Commission.
Notice.
The Department of Labor (DOL) is submitting the Occupational Safety and Health Administration (OSHA) sponsored information collection request (ICR) titled, “Personal Protective Equipment for Shipyard Employment,” to the Office of Management and Budget (OMB) for review and approval for continued use, without change, in accordance with the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501
The OMB will consider all written comments that agency receives on or before June 22, 2016.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden, may be obtained free of charge from the
Submit comments about this request by mail or courier to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-OSHA, Office of Management and Budget, Room 10235, 725 17th Street NW., Washington, DC 20503; by Fax: 202-395-5806 (this is not a toll-free number); or by email:
Michel Smyth by telephone at 202-693-4129, TTY 202-693-8064, (these are not toll-free numbers) or by email at
This ICR seeks to extend PRA authority for the Personal Protective Equipment (PPE) for Shipyard Employment information collection requirements codified in regulations 29 CFR part 1915, subpart I that requires an Occupational Safety Health Act (OSH Act) covered employer subject to the PPE for Shipyard Employment Standard to provide and to ensure that each affected employee uses the appropriate PPE for the eyes, face, head, extremities, torso, and respiratory system whenever the worker is exposed to hazards that require the use of PPE. Such equipment includes protective clothing, protective shields, protective barriers, life-saving equipment, personal fall arrest systems, and positioning device systems that meet the applicable provisions of the subpart. This ICR covers hazard assessment and verification records and record disclosure during inspections. OSH Act sections 2(b)(9), 6, and 8(c) authorize this information collection.
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by the OMB under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number.
OMB authorization for an ICR cannot be for more than three (3) years without renewal, and the current approval for this collection is scheduled to expire on May 31, 2016. The DOL seeks to extend PRA authorization for this information collection for three (3) more years, without any change to existing requirements. The DOL notes that existing information collection requirements submitted to the OMB receive a month-to-month extension while they undergo review. For additional substantive information about this ICR, see the related notice published in the
Interested parties are encouraged to send comments to the OMB, Office of Information and Regulatory Affairs at the address shown in the
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate 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;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
44 U.S.C. 3507(a)(1)(D).
Notice.
The Department of Labor (DOL) is submitting the Bureau of Labor Statistics (BLS) sponsored information collection request (ICR) titled, “Multiple Worksite Report and Report of Federal Employment and Wages,” to the Office of Management and Budget (OMB) for review and approval for continued use,
The OMB will consider all written comments that agency receives on or before June 22, 2016.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the RegInfo.gov Web site at
Submit comments about this request by mail or courier to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-BLS, Office of Management and Budget, Room 10235, 725 17th Street NW., Washington, DC 20503; by Fax: 202-395-5806 (this is not a toll-free number); or by email:
Michel Smyth by telephone at 202-693-4129, TTY 202-693-8064, (these are not toll-free numbers) or by email at
This ICR seeks to extend PRA authority for the Multiple Worksite Report and Report of Federal Employment and Wages information collection. States use the Multiple Worksite Report to collect employment and wages data from non-Federal businesses engaged in multiple operations within a State and subject to State Unemployment Insurance laws. The Report of Federal Employment and Wages is designed for Federal establishments covered under the Unemployment Compensation for Federal Employees program. These data are used for sampling, benchmarking, and economic analysis. BLS Authorizing Statute sections 1 and 2 and Social Security Act section 303 authorize this information collection.
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by the OMB under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number.
OMB authorization for an ICR cannot be for more than three (3) years without renewal, and the current approval for this collection is scheduled to expire on May 31, 2016. The DOL seeks to extend PRA authorization for this information collection for three (3) more years, without any change to existing requirements. The DOL notes that existing information collection requirements submitted to the OMB receive a month-to-month extension while they undergo review. For additional substantive information about this ICR, see the related notice published in the
Interested parties are encouraged to send comments to the OMB, Office of Information and Regulatory Affairs at the address shown in the
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate 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;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
44 U.S.C. 3507(a)(1)(D).
National Aeronautics and Space Administration.
Notice.
In accordance with Section 743 of Division C of the Consolidated Appropriations Act of 2010 (Pub. L. 111-117), the National Aeronautics and Space Administration (NASA) is publishing this notice to advise the public of the availability of its Service Contract Inventory for Fiscal Year (FY) 2015. This inventory provides information on service contract actions over $25,000 that were awarded in FY 2015. The inventory has been developed in accordance with guidance issued by the Office of Management and Budget's Office of Federal Procurement Policy. NASA has posted documents associated with the Service Contract inventory, on the NASA Office of Procurement homepage at the following link:
Jamiel L. Charlton at (202) 358-0302 or
National Science Foundation.
Notice of intent to prepare an Environmental Impact Statement and initiate Section 106 consultation for proposed changes to Arecibo Observatory operations, Arecibo, Puerto Rico and notice of public scoping meetings and comment period.
In compliance with the National Environmental Policy Act of 1969, as amended, the National Science Foundation (NSF) intends to prepare an Environmental Impact Statement (EIS) to evaluate potential environmental effects of proposed changes to operations at Arecibo Observatory, in Arecibo, Puerto Rico. (See supplementary information below for more detail.) By this notice, NSF is announcing the beginning of the scoping process to solicit public comments and identify issues to be analyzed in the EIS. NSF also intends to initiate consultation under Section 106 of the National Historic Preservation Act to evaluate potential effects to the Arecibo Observatory, which is a historic property listed in the National Register of Historic Places.
This notice initiates the public scoping process for the EIS and the initiation of public involvement under Section 106 per 36 CFR 800.2(d). Comments on issues may be submitted verbally during scoping meetings scheduled for June 7, 2016 (see details below) or in writing until June 23, 2016. To be eligible for inclusion in the Draft EIS, all comments must be received prior to the close of the scoping period. NSF will provide additional opportunities for public participation upon publication of the Draft EIS.
You may submit comments related to this proposal by either of the following methods:
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Comments will be transcribed by a court reporter. Spanish language translation will be provided for simultaneous translation of presentations. Please contact NSF at least one week in advance of the meeting if you would like to request special accommodations (
For further information regarding the EIS process or Section 106 consultation, please contact: Ms. Elizabeth Pentecost, National Science Foundation, Division of Astronomical Sciences, Suite 1045, 4201 Wilson Blvd., Arlington, VA 22230; telephone: (703) 292-4907; email:
The Arecibo Observatory is an NSF-owned scientific research and education facility located in Puerto Rico. In 2011, NSF awarded a five-year Cooperative Agreement to SRI International (SRI), which together with Universities Space Research Association (USRA) and Universidad Metropolitana (UMET) have formed the Arecibo Management Team to operate and maintain the Arecibo Observatory for the benefit of research communities. Arecibo Observatory enables research in three scientific disciplines: Space and atmospheric sciences, radio astronomy, and solar system radar studies; the last of these is largely funded through a research award to USRA from the National Aeronautics and Space Administration. An education and public outreach program complements the Arecibo Observatory scientific program. A key component of the Arecibo Observatory research facility is a 305-meter diameter, fixed, spherical reflector. Arecibo Observatory infrastructure includes instrumentation for radio and radar astronomy, ionospheric physics, office and laboratory buildings, a heavily utilized visitor and education facility, and lodging facilities for visiting scientists.
Through a series of academic community-based reviews, NSF has identified the need to divest several facilities from its portfolio in order to retain the balance of capabilities needed to deliver the best performance on the key science of the present decade and beyond. In 2012, NSF's Division of Astronomical Sciences' (AST's) portfolio review committee recommended that “continued AST involvement in Arecibo . . . be re-evaluated later in the decade in light of the science opportunities and budget forecasts at that time.” In 2016, NSF's Division of Atmospheric and Geospace Sciences' (AGS') portfolio review committee recommended significantly decreasing funding for the Space and Atmospheric Sciences portion of the Arecibo mission. In response to these evolving recommendations, in 2016, NSF completed a feasibility study to inform and define options for the observatory's future disposition that would involve significantly decreasing or eliminating NSF funding of Arecibo. Concurrently, NSF sought viable concepts of operations from the scientific community via a Dear Colleague Letter NSF 16-005 (see
The purpose of the public scoping process is to determine relevant issues that will influence the scope of the environmental analysis, including identification of viable alternatives, and guide the process for developing the EIS. At present, NSF has identified the following preliminary resource areas for analysis of potential impacts: Air quality, biological resources, cultural resources, geological resources, solid waste generation, health and safety, socioeconomics, traffic, and groundwater resources. NSF will consult under Section 106 of the National Historic Preservation Act and Section 7 of the Endangered Species Act in coordination with this EIS process, as appropriate. Federal, state, and local agencies, along with other stakeholders that may be interested or affected by NSF's decision on this proposal are invited to participate in the scoping
Nuclear Regulatory Commission.
Direct and indirect transfer of license; order.
The U.S. Nuclear Regulatory Commission (NRC) is issuing an order approving the direct transfer of ownership and indirect transfer of control of Facility Operating License (FOL) Nos. NPF-87 and NPF-89 and the general license for the independent spent fuel storage installation facility from the current holder, Luminant Generation Company LLC, to as-yet unnamed companies, herein identified as Comanche Peak LLC, as owner, and Operating Company LLC, as operator. The NRC will issue conforming amendments to the FOLs for administrative purposes to reflect the proposed license transfer. No physical changes to the facility or operational changes were proposed in the application. The Order is effective upon issuance.
The Order was issued on May 6, 2016, and is effective for 1 year.
Please refer to Docket ID NRC-2016-0020 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document using any of the following methods:
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Margaret Watford, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-1233, email:
The text of the Order is attached.
For the Nuclear Regulatory Commission.
In the Matter of Luminant Generation Company LLC; Comanche Peak Nuclear Power Plant, Unit Nos. 1 and 2
Luminant Generation Company LLC (Luminant Power, the licensee) is the holder of the Facility Operating License (FOL) Nos. NPF-87 and NPF-89 of the Comanche Peak Nuclear Power Plant, Unit Nos. 1 and 2 (CPNPP), and the holder of the general license for the independent spent fuel storage installation (ISFSI) facility. CPNPP is located in Somervell County, Texas.
Pursuant to Section 184 of the Atomic Energy Act of 1954, as amended (the Act), and Title 10 of the
Luminant Power is acting on behalf of itself and the future to-be-formed companies. These future to-be-formed companies include the ultimate parent of CP LLC and OpCo LLC, Reorganized Texas Competitive Electric Holdings Corporation (Reorganized TCEH), and the intermediate parents, Intermediate Holding Company LLC, Asset Company LLC, and Preferred Stock Company Corporation (together with Luminant Power these entities are referred to as the “Applicants”). Entity names in the licensee's application and supplements are placeholders.
On April 29, 2014, Luminant Power notified the NRC of its filing of a bankruptcy (ADAMS Accession No. ML14120A212). Luminant Power is owned by Energy Future Competitive Holdings Company LLC (EFCH), through its wholly owned subsidiaries. The EFCH is a direct wholly owned subsidiary of Energy Future Holdings Corporation (EFH). The current and intended ownership structure of the facility is depicted in the simplified organizational charts provided in Exhibits A and B of Enclosure 1 in the submittal dated November 12, 2015. As a result of the proposed transactions and consistent with Exhibit B, EFH and EFCH will no longer ultimately own CPNPP. The licenses will be transferred from Luminant Power to CP LLC, responsible for ownership of the facility, and OpCo LLC, responsible for the operation and maintenance of CPNPP. At the emergence from bankruptcy, Reorganized TCEH, the ultimate parent company of CP LLC, will be owned by a numerous and diverse set of independent and unaffiliated stockholders. No single entity is expected to own a majority of, or exercise control over Reorganized TCEH or its Board of Directors. Current Luminant Power nuclear management and technical personnel will be employed by OpCo LLC. Accordingly, there will be no change in management or technical qualification, and OpCo LLC will continue to be technically qualified to operate the facility. No physical changes to the CPNPP and ISFSI facility or operational changes are proposed in the application.
The transfer of the licenses includes elements of both a direct and indirect transfer. The transfer of ownership is a direct transfer because ownership is changing from one entity to another new and different entity. Ownership is being transferred from Luminant Power to a new company, CP LLC. The transfer of operations is an indirect transfer because the operator is not changing; it is being absorbed into another entity (OpCo LLC), and the operator's parent companies are changing. Luminant Power's parent companies are currently Luminant Holding Company LLC and its parent, Texas Competitive Electric Holdings Company LLC. These companies will cease to exist and in their place, new companies—Intermediate Holding Company LLC and its parent, Reorganized TCEH—will be created. The operator will change to the extent that its name will change from Luminant Power to OpCo LLC; however, the management and technical personnel of the facility will not change. The change of the parent company of a licensed entity is considered an indirect transfer of control of the operating licenses.
Approval of the transfer of the facility operating licenses and conforming license amendments was requested by the Applicants pursuant to 10 CFR 50.80 and 10 CFR 50.90, “Application for amendment of license, construction permit, or early site permit.” A notice entitled, “Comanche Peak Nuclear Power Plant, Units 1 and 2, and Independent Spent Fuel Storage Installation; Consideration of Approval of Transfer of Licenses and Conforming Amendments,” was published in the
Under 10 CFR 50.80, no license, or any right thereunder, shall be transferred, directly or indirectly, through transfer of control of the license, unless the NRC shall give its consent in writing. Upon review of the information in the licensee's application, and other information before the Commission, the NRC staff has determined that the Applicants are qualified to hold the licenses to the extent proposed to permit the transfer of Luminant Power as possessor, owner, and operator. It also concludes that the transfer of the licenses are otherwise consistent with the applicable provisions of law, regulations, and orders issued by the NRC, pursuant thereto, subject to the conditions set forth below. The NRC staff has further found that the application for the proposed license amendments complies with the standards and requirements of the Atomic Energy Act of 1954, as amended, and the Commission's rules and regulations set forth in 10 CFR Chapter I; the facilities will operate in conformity with the application, the provisions of the Act and the rules and regulations of the Commission; there is reasonable assurance that the activities authorized by the proposed license amendments can be conducted without endangering the health and safety of the public and that such activities will be conducted in compliance with the Commission's regulations; the issuance of the proposed license amendments will not be inimical to the common defense and security or to the health and safety of the public; and the issuance of the proposed amendments will be in accordance with 10 CFR part 51 of the Commission's regulations and all applicable requirements have been satisfied. The findings set forth above are supported by a safety evaluation dated May 6, 2016 (ADAMS Accession No. ML16096A266).
Accordingly, pursuant to Sections 161b, 161i, 161o, and 184 of the Atomic Energy Act of 1954, as amended, 42 U.S.C. 2201(b), 2201(i), 2201(o), and 2234; and 10 CFR 50.80, IT IS HEREBY ORDERED that the application regarding the direct transfer of ownership and the indirect transfer of control of the licenses is approved, subject to the following conditions:
1. The licensees must notify the NRC of the names of the directors and principal officers of Reorganized TCEH and any other changes to these positions that occur before emergence from bankruptcy as soon as they have been identified, but no later than 7 days before implementation of the transfer. Additional changes to these positions may occur post-emergence. The Applicants will notify the NRC no later than 120 days after the transfer of any changes in these personnel made during the first 90 days following emergence from bankruptcy.
2. Following the subject transfer of control of the licenses, all of the directors of CP LLC and OpCo LLC who can vote on activities governed by the CPNPP licenses and all of the officers of CP LLC and OpCo LLC with direct responsibility for activities governed by the CPNPP licenses shall (1) be U.S. citizens and not appointed by a foreign entity and (2) have exclusive authority to ensure and shall ensure that the business and activities of OpCo LLC and CP LLC with respect to the CPNPP licenses is at all times conducted in a manner consistent with the public health and safety and common defense and security of the United States.
3. The Reorganized TCEH Board of Directors shall adopt resolutions that any non-U.S. citizens or foreign-appointed U.S. citizens serving as either directors or executive officers of Reorganized TCEH, the ultimate parent, and intermediate parents of CP LLC and OpCo LLC shall not seek access to any classified information or to special nuclear material in the custody of the CPNPP licensees and shall not participate in or seek to influence operational decisions by the licensees regarding nuclear safety or security matters.
4. CP LLC and OpCo LLC shall provide satisfactory documentary evidence to the Director of the Office of Nuclear Reactor Regulation that, as of the date of the license transfer, the licensees reflected in the amended licenses have obtained the appropriate amount of insurance required of a licensee under 10 CFR part 140 and 10C FR 50.54(w).
IT IS FURTHER ORDERED that after receipt of all required regulatory approvals of the proposed transfer action, Luminant Power shall inform the Director of the Office of Nuclear Reactor Regulation in writing of such receipt within 5 business days, and of the date of the closing of the direct transfer no later than 7 business days before the date of the closing. Should the proposed transfer not be completed within 1 year from the date of this order, this order shall become null and void, provided, however, upon written application and good cause shown, such date may be extended by order. The conditions of this order may be amended upon application by the licensee and approval by the Director of the Office of Nuclear Reactor Regulation.
IT IS FURTHER ORDERED that, consistent with 10 CFR 2.1315(b), license amendments that make changes, as indicated in Enclosure 2 to the cover letter forwarding this order, to conform the licenses to reflect the subject transfer are approved. The amendments will be revised only to reflect the final company names (yet to be decided), and shall be issued and made effective at the time the proposed license transfer is completed.
This order is effective upon issuance.
For further details with respect to this order, see the initial application dated November 12, 2015, as supplemented by letters dated December 9, 2015, and March 14, March 29, April 7, and April 20, 2016, and the safety evaluation dated the same date as this order, which are available for public inspection at the Commission's Public Document Room (PDR), located at One White Flint North, Public File Area 01 F21, 11555 Rockville Pike (first floor), Rockville, Maryland. Publicly available documents created or received at the NRC are accessible electronically through ADAMS in the NRC Library at
Dated at Rockville, Maryland this 6th day of May 2016.
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
License amendment application; opportunity to comment, request a hearing, and petition for leave to intervene.
The U.S. Nuclear Regulatory Commission (NRC) is considering issuance of amendments to Facility Operating License Nos. DPR-70 and 75, issued to PSEG Nuclear LLC (PSEG or the licensee) for operation of the Salem
Submit comments by June 22, 2016. Requests for a hearing or petition for leave to intervene must be filed by July 22, 2016.
You may submit comments by any of the following methods (unless this document describes a different method for submitting comments on a specific subject):
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For additional direction on obtaining information and submitting comments, see “Obtaining Information and Submitting Comments” in the
Thomas J. Wengert, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-4037, email:
Please refer to Docket ID NRC-2016-0102 when contacting the NRC about the availability of information for this action. You may obtain publicly-available information related to this action by any of the following methods:
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Please include Docket ID NRC-2016-0102 in your comment submission.
The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC posts all comment submissions at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment submissions into ADAMS.
The NRC is considering issuance of amendments to Facility Operating License Nos. DPR-70 and 75, issued to PSEG Nuclear LLC for operation of Salem, Unit Nos. 1 and 2, located in Salem County, New Jersey.
The proposed amendments would extend the implementation period for Salem, Unit No. 1, License Amendment No. 311, and Salem, Unit No. 2, License Amendment No. 292, from July 5, 2016 (120 days from March 7, 2016, date of issuance of the amendments), to prior to Mode 6 entry for the Salem, Unit No. 1, fall 2017 (1R25) outage and prior to Mode 6 entry for the Salem, Unit No. 2, spring 2017 (2R22) outage to align with the outages for the replacement of the source range and intermediate range detectors.
Before any issuance of the proposed license amendments, the NRC will need to make the findings required by the Atomic Energy Act of 1954, as amended (the Act), and the NRC's regulations.
The NRC has made a proposed determination that the license amendment request involves no significant hazards consideration. Under the NRC's regulations in § 50.92 of title 10 of the
1. Do the proposed changes involve a significant increase in the probability or consequences of an accident previously evaluated?
Response: No.
The proposed amendment implementation schedule extension is administrative in nature and does not require any modifications to or change in operation of plant systems or components. The extension of the amendment implementation period does not increase the probability or consequences of an accident previously evaluated in the Updated Final Safety Analysis (UFSAR). Current Technical Specification (TS) 3.9.2 requirements will continue to ensure the plant is operated consistent with the UFSAR accident analysis for a boron dilution event.
Therefore, the proposed change does not involve a significant increase in the probability or consequences of an accident previously evaluated.
2. Do the proposed changes create the possibility of a new or different kind of accident from any accident previously evaluated?
Response: No.
The proposed amendment implementation schedule extension is administrative in nature. The extension of the amendment implementation does not require any physical plant modifications, does not alter any plant systems or components, and does not change the operation of the plant. Current TS 3.9.2 requirements will continue to ensure the plant is operated consistent with the UFSAR accident analysis for a boron dilution event.
Therefore, the proposed change does not create the possibility of a new or different kind of accident from any previously evaluated.
3. Do the proposed changes involve a significant reduction in a margin of safety?
Response: No.
Margin of safety is related to the confidence in the ability of the fission product barriers to perform their intended functions. These barriers include the fuel cladding, the reactor coolant system pressure boundary, and the containment. The proposed TS change is administrative in nature and does not affect any of these barriers. Current TS 3.9.2 requirements will continue to ensure the plant is operated consistent with the UFSAR accident analysis for a boron dilution event.
Therefore, the proposed change does not involve a significant reduction in the margin of safety.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the license amendment request involves a no significant hazards consideration.
The NRC is seeking public comments on this proposed determination that the license amendment request involves no significant hazards consideration. Any comments received within 30 days after the date of publication of this notice will be considered in making any final determination.
Normally, the Commission will not issue the amendments until the expiration of 60 days after the date of publication of this notice. The Commission may issue the license amendments before expiration of the 60-day notice period if the Commission concludes the amendments involve no significant hazards consideration. In addition, the Commission may issue the amendments prior to the expiration of the 30-day comment period if circumstances change during the 30-day comment period such that failure to act in a timely way would result, for example, in derating or shutdown of the facility. If the Commission takes action prior to the expiration of either the comment period or the notice period, it will publish in the
Within 60 days after the date of publication of this notice, any person(s) whose interest may be affected by this action may file a request for a hearing and a petition to intervene with respect to issuance of the amendments to the subject facility operating licenses or combined license. Requests for a hearing and a petition for leave to intervene shall be filed in accordance with the Commission's “Agency Rules of Practice and Procedure” in 10 CFR part 2. Interested person(s) should consult a current copy of 10 CFR 2.309, which is available at the NRC's PDR, located at One White Flint North, Room O1-F21, 11555 Rockville Pike (first floor), Rockville, Maryland 20852. The NRC's regulations are accessible electronically from the NRC Library on the NRC's Web site at
As required by 10 CFR 2.309, a petition for leave to intervene shall set forth with particularity the interest of the petitioner in the proceeding, and how that interest may be affected by the results of the proceeding. The petition should specifically explain the reasons why intervention should be permitted with particular reference to the following general requirements: (1) The name, address, and telephone number of the requestor or petitioner; (2) the nature of the requestor's/petitioner's right under the Act to be made a party to the proceeding; (3) the nature and extent of the requestor's/petitioner's property, financial, or other interest in the proceeding; and (4) the possible effect of any decision or order which may be entered in the proceeding on the requestor's/petitioner's interest. The petition must also set forth the specific contentions which the requestor/petitioner seeks to have litigated at the proceeding.
Each contention must consist of a specific statement of the issue of law or fact to be raised or controverted. In addition, the requestor/petitioner shall provide a brief explanation of the bases for the contention and a concise statement of the alleged facts or expert opinion which support the contention and on which the requestor/petitioner intends to rely in proving the contention at the hearing. The requestor/petitioner must also provide references to those specific sources and documents of which the petitioner is aware and on which the requestor/petitioner intends to rely to establish those facts or expert opinion. The petition must include sufficient information to show that a genuine dispute exists with the applicant on a material issue of law or fact. Contentions shall be limited to matters within the scope of the amendments under consideration. The contention must be one which, if proven, would entitle the requestor/petitioner to relief. A requestor/petitioner who fails to satisfy these requirements with respect to at least one contention will not be permitted to participate as a party.
Those permitted to intervene become parties to the proceeding, subject to any limitations in the order granting leave to intervene, and have the opportunity to participate fully in the conduct of the hearing with respect to resolution of that person's admitted contentions, including the opportunity to present evidence and to submit a cross-examination plan for cross-examination of witnesses, consistent with NRC regulations, policies and procedures.
Petitions for leave to intervene must be filed no later than 60 days from the date of publication of this notice. Requests for hearing, petitions for leave to intervene, and motions for leave to file new or amended contentions that are filed after the 60-day deadline will not be entertained absent a determination by the presiding officer that the filing demonstrates good cause by satisfying the three factors in 10 CFR 2.309(c)(1)(i)-(iii).
If a hearing is requested, and the Commission has not made a final determination on the issue of no significant hazards consideration, the Commission will make a final determination on the issue of no significant hazards consideration. The final determination will serve to decide when the hearing is held. If the final determination is that the amendment request involves no significant hazards consideration, the Commission may issue the amendments and make them immediately effective, notwithstanding the request for a hearing. Any hearing held would take place after issuance of the amendments. If the final determination is that the amendment request involves a significant hazards consideration, then any hearing held would take place before the issuance of any amendments unless the Commission finds an imminent danger to the health or safety of the public, in which case it will issue an appropriate order or rule under 10 CFR part 2.
A State, local governmental body, Federally-recognized Indian Tribe, or agency thereof, may submit a petition to the Commission to participate as a party
If a hearing is granted, any person who does not wish, or is not qualified, to become a party to the proceeding may, in the discretion of the presiding officer, be permitted to make a limited appearance pursuant to the provisions of 10 CFR 2.315(a). A person making a limited appearance may make an oral or written statement of position on the issues, but may not otherwise participate in the proceeding. A limited appearance may be made at any session of the hearing or at any prehearing conference, subject to the limits and conditions as may be imposed by the presiding officer. Persons desiring to make a limited appearance are requested to inform the Secretary of the Commission by July 22, 2016.
All documents filed in NRC adjudicatory proceedings, including a request for hearing, a petition for leave to intervene, any motion or other document filed in the proceeding prior to the submission of a request for hearing or petition to intervene, and documents filed by interested governmental entities participating under 10 CFR 2.315(c), must be filed in accordance with the NRC's E-Filing rule (72 FR 49139; August 28, 2007). The E-Filing process requires participants to submit and serve all adjudicatory documents over the Internet, or in some cases to mail copies on electronic storage media. Participants may not submit paper copies of their filings unless they seek an exemption in accordance with the procedures described below.
To comply with the procedural requirements of E-Filing, at least 10 days prior to the filing deadline, the participant should contact the Office of the Secretary by email at
Information about applying for a digital ID certificate is available on the NRC's public Web site at
If a participant is electronically submitting a document to the NRC in accordance with the E-Filing rule, the participant must file the document using the NRC's online, Web-based submission form. In order to serve documents through the Electronic Information Exchange System, users will be required to install a Web browser plug-in from the NRC's Web site. Further information on the Web-based submission form, including the installation of the Web browser plug-in, is available on the NRC's public Web site at
Once a participant has obtained a digital ID certificate and a docket has been created, the participant can then submit a request for hearing or petition for leave to intervene. Submissions should be in Portable Document Format (PDF) in accordance with NRC guidance available on the NRC's public Web site at
A person filing electronically using the NRC's adjudicatory E-Filing system may seek assistance by contacting the NRC Meta System Help Desk through the “Contact Us” link located on the NRC's public Web site at
Participants who believe that they have a good cause for not submitting documents electronically must file an exemption request, in accordance with 10 CFR 2.302(g), with their initial paper filing requesting authorization to continue to submit documents in paper format. Such filings must be submitted by: (1) First class mail addressed to the Office of the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Rulemaking and Adjudications Staff; or (2) courier, express mail, or expedited delivery service to the Office of the Secretary, Sixteenth Floor, One White Flint North, 11555 Rockville Pike, Rockville, Maryland, 20852, Attention: Rulemaking and Adjudications Staff. Participants filing a document in this manner are responsible for serving the document on all other participants. Filing is considered complete by first-class mail as of the time of deposit in the mail, or by courier, express mail, or expedited delivery service upon depositing the document with the provider of the service. A presiding officer, having granted an exemption request from using E-Filing, may require a participant or party to use E-Filing if the presiding officer subsequently determines that the reason for granting
Documents submitted in adjudicatory proceedings will appear in the NRC's electronic hearing docket which is available to the public at
For further details with respect to this action, see the application for license amendment dated May 10, 2016 (ADAMS Accession No. ML16131A555).
For the Nuclear Regulatory Commission.
The ACRS Subcommittee on Planning and Procedures will hold a meeting on June 8, 2016, Room T-2B3, 11545 Rockville Pike, Rockville, Maryland.
The meeting will be open to public attendance with the exception of a portion that may be closed pursuant to 5 U.S.C. 552b(c)(2) and (6) to discuss organizational and personnel matters that relate solely to the internal personnel rules and practices of the ACRS, and information the release of which would constitute a clearly unwarranted invasion of personal privacy.
The agenda for the subject meeting shall be as follows:
The Subcommittee will discuss proposed ACRS activities and related matters. The Subcommittee will gather information, analyze relevant issues and facts, and formulate proposed positions and actions, as appropriate, for deliberation by the Full Committee.
Members of the public desiring to provide oral statements and/or written comments should notify the Designated Federal Official (DFO), Quynh Nguyen (Telephone 301-415-5844 or Email:
Information regarding changes to the agenda, whether the meeting has been canceled or rescheduled, and the time allotted to present oral statements can be obtained by contacting the identified DFO. Moreover, in view of the possibility that the schedule for ACRS meetings may be adjusted by the Chairman as necessary to facilitate the conduct of the meeting, persons planning to attend should check with the DFO if such rescheduling would result in a major inconvenience.
If attending this meeting, please enter through the One White Flint North building, 11555 Rockville Pike, Rockville, MD. After registering with security, please contact Mr. Theron Brown (240-888-9835) to be escorted to the meeting room.
Nuclear Regulatory Commission.
Regulatory issue summary; issuance.
The U.S. Nuclear Regulatory Commission (NRC) is issuing Regulatory Issue Summary (RIS) 2016-07, “Containment Shell or Liner Moisture Barrier Inspection.” This RIS reiterates the NRC staff's position regarding American Society of Mechanical Engineers (ASME) code inservice inspection requirements for moisture barriers. The NRC's regulations require, in part, that licensees implement the inservice inspection program for pressure retaining components and their integral attachments of metal containments and metallic liners of concrete containments in accordance with the ASME Code. If a material prevents moisture from contacting inaccessible areas of the containment shell or liner, especially if the material is being relied upon in lieu of augmented examinations of a susceptible location, the material must be inspected as a moisture barrier. The applicable ASME Code sections require licensees to inspect 100 percent of accessible moisture barriers during each inspection period.
The RIS is available as of May 23, 2016.
Please refer to Docket ID NRC-2015-0285 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document using any of the following methods:
•
•
•
• This RIS is also available on the NRC's public Web site at
Bryce Lehman, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-1626; email:
The NRC published a notice of opportunity for public comment on this RIS in the
For the Nuclear Regulatory Commission.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange filed a proposal to amend the fee schedule applicable to Members
The text of the proposed rule change is available at the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend its Fee Schedule to adopt a new Tape B Quoting Tier in order to strengthen market quality in LMP Securities
In addition to the changes proposed above, the Exchange proposes to relocate the term “Qualified LMM” within the list of Definitions to its proper alphabetical placement.
The Exchange proposes to implement these amendments to its fee schedule effective June 1, 2016.
The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6 of the Act.
The Exchange believes that the proposed new tier is reasonable in that it will enhance market quality on the Exchange in two ways: (i) By incentivizing Members to meet certain quoting standards in LMP Securities designed to narrow spreads, increase size at the inside, and increase liquidity depth on the Exchange in such LMP Securities; and (ii) providing an additional rebate for all of a qualifying Member's orders that add liquidity in Tape B securities will incentivize Members to increase their participation on the Exchange in Tape B securities. The Exchange believes that the proposed quoting standards are reasonable because the NBBO Time and NBBO Size Time will either act to add additional liquidity at the NBBO in the LMP Securities or ensure that there is already significant size-setting quote activity on the Exchange in the LMP Securities and the Displayed Size Time will act to increase the depth of the market within 2% of the NBB and NBO for the vast majority of the trading day. The Exchange believes that such incentives will promote price discovery and market quality in such securities and, further, that the tightened spreads and increased liquidity from the proposal will benefit all investors by deepening the Exchange's liquidity pool, offering additional flexibility for all investors to enjoy cost savings, supporting the quality of price discovery, enhancing quoting competition across exchanges, promoting market transparency, and improving investor protection. The Exchange also believes that including all Bats-listed ETPs as LMP Securities is equitable and not unfairly discriminatory because it will help to strengthen the Exchange's market quality for Bats-listed securities by enhancing the quality of quoting in such securities, which will further assist the Exchange in competing as a listing venue for issuers seeking to list ETPs. The Exchange also believes that including only certain non-Bats-listed ETPs as LMP Securities is equitable and not unfairly discriminatory because the Exchange has identified such non-Bats-listed ETPs as securities for which it would like to inject additional quoting competition, which it believes will generally act to narrow spreads, increase size at the inside, and increase liquidity depth in such securities. Accordingly, the Exchange believes that the proposal is reasonable, equitably allocated, and not unfairly discriminatory because it is consistent with the overall goals of enhancing market quality.
The Exchange notes that the proposed pricing structure is not dissimilar from volume-based rebates and fees (“Volume Tiers”) that have been widely adopted by exchanges, including the Exchange, and are equitable and not unfairly discriminatory because they are open to all members on an equal basis and provide higher rebates and lower fees that are reasonably related to the value to an exchange's market quality. Much like Volume Tiers are generally designed to incentivize higher levels of liquidity provision and/or growth patterns on the Exchange, the proposal is designed to incentivize enhanced market quality on the Exchange through tighter spreads, greater size at the inside, and greater quoting depth in LMP Securities by offering an enhanced rebate in Tape B securities. Such enhanced rebate will simultaneously incentivize higher levels of liquidity provision in all Tape B securities. Where the NBBO Size Time is at least 25%, there is no minimum NBBO Time standard applicable to the Member, however, the Exchange believes that this is reasonable because where the NBBO Size Time is already at least 25%, a Member meeting the NBBO Time standard will not significantly enhance market quality at the NBBO for the product on the Exchange. The Exchange also notes that the Member must still have a Displayed Size Time of at least 90% to receive the enhanced rebate. As such, the Exchange believes that the proposed enhanced rebate will strengthen the Exchange's market quality for LMP Securities by enhancing the quality of quoting in such securities, as well as enhancing market quality in Tape B securities generally. Accordingly, the Exchange believes that the proposal will act to enhance liquidity and competition across exchanges in LMP Securities and enhance liquidity provision in Tape B securities on the Exchange by providing a rebate reasonably related to such enhanced market quality to the benefit of all investors, thereby promoting the
The Exchange also believes that the clarifying change to alphabetize the Definitions section of the fee schedule is reasonable, fair and equitable and non-discriminatory because it is non-substantive and is designed to make sure that the fee schedule is as clear and easily understandable as possible.
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. The Exchange does not believe that the changes burden competition, but instead, enhance competition, as these changes are intended to increase the competitiveness of the Exchange as it is designed to draw additional volume to the Exchange. The Exchange notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if the deem fee structures to be unreasonable or excessive. The proposed changes are generally intended to enhance the rebates in Tape B securities, which is intended to enhance market quality in LMP Securities and Tape B securities. As such, the proposal is a competitive proposal that is intended to add additional liquidity to the Exchange, which will, in turn, benefit the Exchange and all Exchange participants.
The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act
A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative before 30 days from the date of the filing. However, pursuant to Rule 19b-4(f)(6)(iii),
The Exchange has asked the Commission to waive the 30-day operative delay. The Exchange states that waiver of the 30-day operative delay will allow the Exchange to implement the proposal without delay on June 1, 2016, allowing market participants to potentially realize the benefits of the proposal. The Exchange further states that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest because it believes that the proposed rule change would promote enhanced market quality and serve as an additional safeguard against extreme price dislocation. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. The Commission hereby waives the 30-day operative delay and designates the proposed rule change to be operative upon filing with the Commission.
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act” or “Act”)
FINRA is proposing to amend Rule 12904 (Awards) of the Code of Arbitration Procedure for Customer Disputes (“Customer Code”) and Rule 13904 (Awards) of the Code of Arbitration Procedure for Industry Disputes (“Industry Code”) (together, “Codes”) to provide that absent specification to the contrary in an award, when arbitrators order opposing parties to pay each other damages, the monetary awards shall offset, and the party that owes the larger amount shall pay the net difference.
The text of the proposed rule change is available on FINRA's Web site at
In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
FINRA Rules 12904 and 13904 address awards issued by arbitrators at the FINRA Office of Dispute Resolution forum. They provide, among other matters, that awards must be in writing and signed by a majority of the arbitrators or as required by applicable law. The rules itemize required elements of awards, including a statement of the damages awarded, and provide that all monetary awards shall be paid within 30 days of receipt unless a motion to vacate has been filed in a court of competent jurisdiction.
Sometimes arbitrators order opposing parties in a case to pay each other monetary damages. When arbitrators make such awards, but do not specify whether the party that owes the higher amount must pay the net difference, the lack of clarity has resulted in parties asking arbitrators to revise an award after a case has closed or in post-award litigation. For example, arbitrators may award damages to a firm because an associated person failed to pay money owed on a promissory note and award a lesser amount to the associated person on a counterclaim. The firm is willing to accept the net payment due. However, if the arbitrators do not specify that awards should be offset, the firm may be required to pay the counterclaim even if the associated person refuses or is unable to pay the larger amount. The offset issue could also arise in customer cases, such as those involving margin account disputes. Currently, Rules 12904 and 13904 are silent on award offsets. Therefore, under the current Codes, FINRA does not require arbitrators to specify whether parties should offset amounts awarded.
For example, in
FINRA is proposing to amend Rules 12904(j) and 13904(j) to provide that, absent specification to the contrary in an award, when arbitrators order opposing parties to pay each other damages, the monetary awards shall offset, and the party that owes the larger amount shall pay the net difference. FINRA is also proposing to replace the bullets in Rules 12904 and 13904 with numbers because forum users have indicated that for ease of citation, they would prefer that FINRA use numbers and letters instead of bullets.
As noted in Item 2 of this filing, if the Commission approves the proposed rule change, FINRA will announce the effective date of the proposed rule change in a
FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,
FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. FINRA believes that the proposed rule change will mitigate the risk of failure to pay by an opposing party that may arise when multiple parties in a dispute are found to owe non-equivalent awards simultaneously. Creating a presumption that opposing award amounts will be offset will increase the likelihood that the arbitrators' purpose in issuing opposing awards would be carried out. In addition, the proposed rule would reduce instances where the party owed the greater net damages is required to make payment even if the opposing party fails to pay its damages. In addition, this proposed rule change would likely reduce legal expenses to the party owed greater damages by eliminating the need to apply for the reopening of the case or going to court to seek award offsets, or seek other redress.
The scope of cases affected by offsets is small in comparison to the number of cases handled at the forum, but forum users have asked FINRA to address the issue. During 2013 and 2014, a total of 8,375 cases were closed at the forum (predominantly by settlement or award). The majority of cases are settled before a hearing takes place. The offset issue had the potential to arise in 299 cases (just over 3.5% of cases) where there was a claim by both a claimant and a respondent, and the case was resolved by arbitrators at a hearing on the merits. In 17 cases (0.2% of cases), the arbitrators awarded monetary damages to both a claimant and a respondent, offering the opportunity for an offset.
Of these 17 cases, one involved a customer dispute in which a member initiated a claim for breach of contract. The arbitrators made a monetary award to both the customer and firm and provided for an offset. In the remaining 16 intra-industry cases, most of which involved promissory notes, the arbitrators made an award to both the firm and the associated person. In 8 of the 16 cases, the arbitrators ordered award offsets. In the remaining eight cases, the awards were silent as to offset.
Written comments were neither solicited nor received.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On April 7, 2016, the New York Stock Exchange LLC (“NYSE” or the “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item III below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to adopt initial and continued listing standards for the listing of Equity Investment Tracking Stocks. The Exchange also proposes to adopt listing fees specific to Equity Investment Tracking Stocks that are the sole listed common equity security of the issuer.
For purposes of proposed new Section 102.07 of the Manual, an Equity Investment Tracking Stock is defined as a class of common equity securities that tracks on an unleveraged basis the performance of an investment by the issuer in the common equity securities of a single other company listed on the Exchange. An Equity Investment Tracking Stock may track multiple classes of common equity securities of a single issuer, so long as all of those classes have identical economic rights and at least one of those classes is listed on the Exchange.
In order to qualify for initial listing under proposed Section 102.07, an Equity Investment Tracking Stock will be required to meet the distribution and public float requirements currently applicable for initial public offerings set forth in Sections 102.01A and 102.01B of the Manual, respectively, and the Global Market Capitalization set forth in Section 102.01C. As such, as required under Section 102.01A, an Equity Investment Tracking Stock, at the time of initial listing, will be required to have at least 400 holders of 100 shares or more and 1,100,000 public [sic] held shares available for trading. Further, as required under Section 102.01B, an Equity Investment Tracking Stock must have an aggregated [sic] market value of publicly-held shares of $40,000,000 and a per share price of $4 at the time of initial listing. Under Section 102.01C, the issuer of an Equity Investment Tracking Stock will be required to meet the Global Market Capitalization Test, under which the issuer must have $200 million in global market capitalization at the time of initial listing. The issuer of the Equity Investment Tracking Stock must also own (directly or indirectly
The Exchange will not list an Equity Investment Tracking Stock if, at the time of the proposed listing, the issuer of the equity tracked by the Equity Investment Tracking Stock has been deemed below compliance with listing standards by the Exchange.
The Exchange proposes to subject the issuer of an Equity Investment Tracking Stock to the same continued listing standards under Sections 802.01A and 802.01B as are applicable to other companies listing common stocks on the Exchange. As such, these companies will be considered to be below compliance with Section 802.01A if (i) their number of total stockholders is less than 400 or (ii) their number of total stockholders is less than 1,200 and their average monthly trading volume is less than 100,000 shares (for the most recent 12 months) or (iii) their number of publicly-held shares is less than 600,000. Such companies will be deemed to be below compliance with Section 802.01B if their average global market capitalization over a consecutive 30 trading-day period is less than $50,000,000 and, at the same time stockholders' equity is less than $50,000,000 and (will be subject to immediate delisting if they are determined to have average global market capitalization over a consecutive 30 trading-day period of less than $15,000,000).
In the case of an Equity Investment Tracking Stock, the Exchange will review the continued listing status of that security if:
• The underlying listed equity security or securities whose value is tracked by the Equity Investment Tracking Stock ceases or cease to be listed on the Exchange.
• The issuer of the Equity Investment Tracking Stock owns (directly or indirectly) less than 50% of either the economic interest or the voting power of all of the outstanding classes of common equity of the issuer whose equity is tracked by the Equity Investment Tracking Stock.
• The Equity Investment Tracking Stock ceases to track the performance of the listed equity security or securities that was tracked at the time of initial listing.
In the event that any of the foregoing conditions exist [sic], the Exchange will determine whether the Equity Investment Tracking Stock meets any other applicable initial listing standard in place at that time. If the Equity Investment Tracking Stock does not qualify for initial listing at that time under another applicable listing standard the issuer will not be eligible to follow the procedures set forth in Sections 802.02 and 802.03 and the Exchange will immediately suspend the Equity Investment Tracking Stock and commence delisting proceedings. Furthermore, whenever trading in the equity security whose value is tracked by an Equity Investment Tracking Stock is suspended or delisting proceedings are commenced with respect to such security, such Equity Investment Tracking Stock will be suspended and/or delisting proceedings commenced with respect to such Equity Investment Tracking Stock at the same time.
The Exchange proposes to amend Section 202.06(B) of the Manual to provide that, in the event that the issuer of the common equity security tracked by an Equity Investment Tracking Stock
The Exchange represents that it will monitor activity in Equity Investment Tracking Stocks to identify and deter any potential improper trading activity in such securities. The Exchange will adopt enhanced surveillance procedures to enable it to monitor Equity Investment Tracking Stocks alongside the securities whose value they track. Additionally, the Exchange represents that its surveillance procedures are generally adequate to properly monitor the trading of Equity Investment Tracking Stocks. Specifically, the Exchange will rely on its existing trading surveillances, administered by the Exchange, or the Financial Industry Regulatory Authority (“FINRA”) on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.
The surveillances referred to above generally focus on detecting securities trading outside their normal patterns, which could be indicative of manipulative or other violative activity. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations.
Given the novel investment characteristics of Equity Investment Tracking Stocks, the Exchange will conduct a review of the trading and compliance with continued listing standards of Equity Investment Tracking Stocks and their issuers over the initial two year period for which the proposed listing standard is in operation. The Exchange will furnish two reports to the SEC based on this review, one to be provided one year after the initial listing date of the first security listed under the proposed standard and the second to be provided on the second anniversary of such initial listing. At a minimum, the reports will address the relationship between the trading prices of listed Equity Investment Tracking Stocks and those of the securities whose values they track, the liquidity of the market for the two securities, and any manipulation concerns arising in connection with the trading of securities listed under the standard and the securities whose values are being tracked. The reports will also discuss any recommendations the Exchange may have for enhancements to the listing standard based on its review.
The proposed rule will provide that, prior to the commencement of trading of any Equity Investment Tracking Stock, the Exchange will distribute an Information Memorandum to its Members and Member Organizations that includes (a) any special characteristics and risks of trading the Equity Investment Tracking Stock, and (b) the Exchange Rules that will apply to the Equity Investment Tracking Stock including Exchange Rules that require Member Organizations:
• To use reasonable diligence in regard to the opening and maintenance of every account, to know (and retain) the essential facts concerning every customer and concerning the authority of each person acting on behalf of such customer.
• In recommending transactions in the Equity Investment Tracking Stock to have a reasonable basis to believe that (1) the recommendation is suitable for a customer given reasonable inquiry concerning the customer's investment objectives, financial situation, needs, and any other information known by such Member Organization, and (2) the customer can evaluate the special characteristics, and is able to bear the financial risks, of an investment in the Equity Investment Tracking Stock.
The Exchange proposes to amend Sections 902.02 and 902.03 of the Manual to provide that, where an Equity Investment Tracking Stock is the only common equity security of the issuer listed on the Exchange, listing and annual fees for such security will be subject to a single fee cap at the time of original listing and on an annual basis. The Exchange further proposes to amend Section 907.00 of the Manual to limit the products and services provided to the issuer of an Equity Investment Tracking Stock for so long as it is the only common equity security of the issuer listed on the Exchange.
Pursuant to Sections 902.02 and 902.03 of the Manual, listed companies are charged an annual fee for each class or series of security listed on the Exchange. The annual fee is calculated based on the number of shares issued and outstanding and is currently set at a rate of $0.001025 for the primary listed class of equity, subject to an annual minimum of $52,500. In its first year of listing, a company's annual fee is prorated from the date of initial listing through the year end. Listed companies also pay other fees to the Exchange, including fees associated with initial and supplemental listing applications. In any given calendar year, however, Section 902.02 of the Manual specifies that the total fees that the Exchange may bill a listed company are capped at $500,000 (the “Total Maximum Fee”). For an Equity Investment Tracking Stock that is the issuer's only common equity security listed on the Exchange, the Exchange proposes to adopt a Total Maximum Fee of $200,000.
Section 902.03 of the Manual currently provides, in part, for listing fees the first time an issuer lists a class of common shares, charged on a per share basis based on tiers set forth in the rule. The first time that an issuer lists a class of common shares, the issuer is also subject to a one-time special charge of $50,000. Once listed, if an issuer lists additional shares of a class of previously listed securities, the issuer is subject to listing fees for such additional shares. The minimum and maximum listing fees applicable the first time an issuer lists a class of common shares are $125,000 and $250,000, respectively, which amounts include the special charge of $50,000. In lieu of the foregoing, the Exchange proposes to establish for an Equity Investment Tracking Stock that is its issuer's only common equity security listed on the Exchange a fixed initial listing fee (inclusive of the one-time charge) of $100,000. Subject to the Total Maximum Fee of $200,000 per year described above, the Exchange proposes to charge the same per share annual fee for Equity Investment Tracking Stocks as for the primary class of equity of a listed operating company (
Finally, Section 907.00 of the Manual sets forth certain complimentary products and services that are offered to certain currently and newly listed issuers. These products and services are developed or delivered by NYSE or by a third party for use by NYSE-listed companies. Some of these products are commercially available from such third-party vendors. All listed issuers receive some complimentary products and services through the NYSE Market Access Center. The Exchange proposes to exclude issuers of an Equity Investment Tracking Stock that is the issuer's only common equity security listed on the Exchange from receiving
The Exchange proposes to limit the fees that would be payable for the listing on an Equity Investment Tracking Stock as an incentive for the issuer to list such security on the Exchange. As described below, the Exchange proposes to make the aforementioned fee changes to better reflect the Exchange's costs related to listing Equity Investment Tracking Stocks and the corresponding value of such listing to issuers.
The Exchange proposes to make three other minor changes in this filing: (i) To remove from Section 902.03 references to the annual fee schedule applicable to years prior to 2016; (ii) to update the web link included in Section 907.00 and (iii) to delete the word “four” from Section 802.01B, as there are no longer four continued listing standards referred to in that rule.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that the proposed initial and continued listing standards for Equity Investment Tracking Stocks further the objectives of Section 6(b)(5) of the Act,
In particular, the proposed listing standards are designed to protect investors and the public interest by ensuring that Equity Investment Tracking Stocks listed on the Exchange meet stringent quantitative and qualitative listing standards to qualify for initial and continued listing. The Exchange notes that an Equity Investment Tracking Stock will be subject to delisting if they [sic] do [sic] not meet another applicable initial listing standard and (i) the underlying equity security whose value is tracked by the Equity Investment Tracking Stock ceases to be listed on the Exchange; (ii) the issuer of the Equity Investment Tracking Stock owns (directly or indirectly) less than 50% of either the economic interest or the voting power of all of the outstanding classes of common equity of the issuer whose equity is tracked by the Equity Investment Tracking Stock; or (iii) the Equity Investment Tracking Stock ceases to track the performance of the listed equity security that was tracked at the time of initial listing. The Issuer of Equity Investment Tracking Stock must also fully comply with the Exchange's corporate governance requirements set forth in Section 303A of the Manual, subject to applicable exemptions such as those applicable to controlled companies.
The Exchange notes that it is proposing to amend Section 202.06(B) to provide that, in the event that the issuer of the common equity security tracked by an Equity Investment Tracking Stock intends to issue a material news release during the trading day and the staff of NYSE Regulation determines that a regulatory trading halt pursuant to Section 202.06 should be implemented pending dissemination of the news or if the staff of NYSE Regulation determine [sic] that any other required regulatory trading halt should be implemented, the Exchange will also halt trading in the Equity Investment Tracking Stock simultaneously with the halt in the underlying security and will also recommence trading at the same time. The Exchange believes that this proposed amendment will protect investors and the public interest by preventing market participants from gaining an advantage in trading in an Equity Investment Tracking Stock based on their possession of material nonpublic information with respect to the company whose value is being tracked by the Equity Investment Tracking Stock.
The proposed rule requires the issuer of an Equity Investment Tracking Stock to meet the Global Market Capitalization Test in Section 102.01C of the Manual at the time of initial listing and does not allow applicants the alternative of meeting the Earnings Test, as would normally be available to an operating company applicant. The Exchange does not believe this is unfairly discriminatory, as many applicants will likely not have prepared standalone financial statements applicable to the equity investment being tracked and would therefore be unable to demonstrate compliance with the Earnings Test.
The proposed fee provisions further the objectives of Sections 6(b)(4) in that they are designed to provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities. The Exchange believes that the proposed fee provisions are consistent with Section 6(b)(5) of the Act in that they do not unfairly discriminate among listed companies because there is a reasonable justification for charging the issuer of an Equity Investment Tracking Stock different fees from those charged to other issuers as there are cost and regulatory efficiencies for the Exchange when the issuer of an Equity Investment Tracking Stock and the issuer of the underlying equity security are both listed on the Exchange. Under the Exchange's proposal, the issuer of an Equity Investment Tracking Stock that is the issuer's only common equity security listed on the Exchange would pay a fixed initial listing fee of $100,000, which is less than the minimum fee charged in connection with the listing of the primary class of equity of an operating company. In addition, Equity Investment Tracking Stocks would be billed annual fees at the same rate per share as the primary class of equity of an operating company, but, so long as the Equity Investment Tracking Stock is the issuer's only common equity security listed on the exchange, they [sic] will be subject to a lower annual fee cap that may cause an issuer of an Equity Investment Tracking Stock to be subject to a lower effective fee rate per share than if it were a regular operating company. Given the unique nature of an Equity Investment Tracking Stock, including especially the fact that its trading price will likely be primarily derivative of the trading price of the security of another company, most of the services provided by the
The Exchange does not expect many issuers will seek to list an Equity Investment Tracking Stock. Accordingly, the Exchange does not anticipate that it will experience any meaningful diminution in revenue as a result of the proposed lower fees and therefore does not believe that the proposed fees would in any way negatively affect its ability to continue to adequately fund its regulatory program or the services the Exchange provides to issuers
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is designed to provide listing standards for Equity Investment Tracking Stocks that are appropriately protective of investors and is not designed to limit the ability of the issuers of those securities to list them on any other national securities exchange. The proposed rule change is designed to ensure that the fees charged by the Exchange accurately reflect the services provided and benefits realized by listed companies. The market for listing services is extremely competitive. Each listing exchange has a different fee schedule that applies to issuers seeking to list securities on its exchange. Issuers have the option to list their securities on these alternative venues based on the fees charged and the value provided by each listing. Because issuers have a choice to list their securities on a different national securities exchange, the Exchange does not believe that the proposed listing standards and fee changes impose a burden on competition.
No written comments were solicited or received with respect to the proposed rule change.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as modified by Amendment No. 5 is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”)
The Exchange proposes to list and trade the shares of the following under NYSE Arca Equities Rule 8.600 (“Managed Fund Shares”): AdvisorShares KIM Korea Equity ETF. The proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to list and trade shares (“Shares”) of the following under NYSE Arca Equities Rule 8.600, which governs the listing and trading of Managed Fund Shares:
Commentary .06 to Rule 8.600 provides that, if the investment adviser to the investment company issuing Managed Fund Shares is affiliated with a broker-dealer, such investment adviser shall erect a “fire wall” between the investment adviser and the broker-dealer with respect to access to information concerning the composition and/or changes to such investment company portfolio. In addition, Commentary .06 further requires that personnel who make decisions on the open-end fund's portfolio composition must be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding the open-end fund's portfolio.
According to the Registration Statement, the Fund will seek to provide long-term capital appreciation above the capital appreciation of its primary benchmark, the MSCI Korea Index, and other Korea-focused indexes. The Fund will seek to achieve its investment objective by investing primarily in growth-oriented stocks of any capitalization range listed on the Korea Exchange. Under normal circumstances,
In addition to individual stock selection, the Sub-Adviser will engage in sector allocation based on analysis of the macro economy and its effect on corporate competitiveness and industry cycles. This is often called “top down” analysis. The Sub-Adviser will strive to invest with large economic cycles as compared to short-term market trends and short-term supply and demand.
While the Fund, under normal circumstances, will invest at least 80% of its assets in the securities described above, the Fund may invest its remaining assets in the securities and financial instruments described below.
In addition to the common stocks of Korean companies referenced in the Principal Investments section above, the Fund may invest in the following equity securities traded on a U.S. or foreign exchange or over-the-counter (“OTC”), including equity securities of foreign issuers in emerging countries: Common stocks, preferred stocks, warrants, rights, securities convertible into common stock, and investments in master limited partnerships (“MLPs”).
The Fund will invest in issuers located outside the United States directly and may invest in exchange-traded funds (“ETFs”),
The Fund may invest in the securities of non-exchange-traded investment company securities to the extent that such an investment would be consistent with the requirements of Section 12(d)(1) of the 1940 Act, or any rule, regulation or order of the Commission or interpretation thereof. Consistent with such restrictions discussed above, the Fund may invest in U.S. and non-U.S. exchange-listed closed-end funds and business development companies (“BDCs”). Except with respect to ETFs, as described above,
The Fund may invest in U.S. government securities. Securities issued or guaranteed by the U.S. government or its agencies or instrumentalities include the following: U.S. Treasury securities, which are backed by the full faith and credit of the U.S. Treasury and which differ only in their interest rates, maturities, and times of issuance; U.S. Treasury bills, which have initial maturities of one year or less; U.S. Treasury notes, which have initial maturities of one to ten years; U.S. Treasury bonds, which generally have initial maturities of greater than ten years; and U.S. Treasury zero-coupon bonds. The Fund may invest in certain U.S. government securities that are issued or guaranteed by agencies or instrumentalities of the U.S. government including, but not limited to, obligations of U.S. government agencies or instrumentalities such as the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”), and the Government National Mortgage Association (“Ginnie Mae”).
The Fund may invest in non-exchange-traded convertible securities that are bonds, debentures, notes, or other securities that may be converted or exchanged (by the holder or by the issuer) into shares of the underlying common stock (or cash or securities of equivalent value) at a stated exchange ratio.
The Fund may invest in shares of U.S. or non-U.S. exchange-traded real estate investment trusts (“REITs”).
The Fund may invest in repurchase agreements and reverse repurchase agreements.
The Fund may purchase securities on a when-issued, delayed-delivery or forward commitment basis (
To respond to adverse market, economic, political or other conditions, the Fund may invest up to 100% of its total assets in high-quality, short-term debt securities and money market instruments either directly or through ETFs. The Fund may be invested in this manner for extended periods, depending on the Sub-Advisor's assessment of market conditions. Debt securities and money market instruments are the following: Shares of other mutual funds, commercial paper, certificates of deposit, bankers' acceptances, U.S. government securities, repurchase agreements, and bonds that are rated BBB or higher.
According to the Registration Statement, the Fund will be classified as
The Fund intends to qualify as a “regulated investment company” for purposes of the Internal Revenue Code of 1986.
The Fund may hold up to an aggregate amount of 15% of its net assets in assets deemed illiquid by the Adviser.
The Fund may not:
(a) With respect to 75% of its total assets, (i) purchase securities of any issuer (except securities issued or guaranteed by the U.S. government, its agencies or instrumentalities or shares of investment companies) if, as a result, more than 5% of its total assets would be invested in the securities of such issuer, or (ii) acquire more than 10% of the outstanding voting securities of any one issuer.
(b) Invest 25% or more of its total assets in the securities of one or more issuers conducting their principal business activities in the same industry or group of industries. This limitation does not apply to investments in securities issued or guaranteed by the U.S. government, its agencies or instrumentalities, or shares of investment companies. The Fund will not invest 25% or more of its total assets in any investment company that so concentrates.
The Fund will not invest in options, futures, swaps or forward contracts.
The Fund's investments will be consistent with its investment objective and will not be used to provide multiple returns of a benchmark or to produce leveraged returns. The Fund's investments will not be used to seek performance that is the multiple or inverse multiple (
According to the Registration Statement, the Trust will issue and sell Shares of the Fund only in “Creation Units” of at least 25,000 Shares on a continuous basis through the Distributor, at their net asset value (“NAV”) next determined after receipt, on any business day, of an order received in proper form.
Creation Units of the Fund will be sold only for cash (“Cash Purchase Amount”). Creation Units will be sold at the NAV next computed, plus a transaction fee. The Trust reserves the right to offer an in-kind option for creations of Creation Units for the Fund.
To be eligible to place orders with the Distributor to create a Creation Unit of the Fund, an entity must be (i) a “Participating Party,”
All orders to create Creation Units must be received by the Distributor no later than the close of the regular trading session on the Exchange (ordinarily 4:00 p.m., Eastern Time), in each case on the date such order is placed in order for the creation of Creation Units to be effected based on the NAV of Shares of the Fund as next determined on such date after receipt of the order in proper form.
All purchases of the Fund will be effected through a transfer of cash directly through DTC.
Shares may be redeemed only in Creation Units at their NAV next determined after receipt of a redemption request in proper form by the Fund through the Administrator and only on a business day.
The redemption proceeds for a Creation Unit of the Fund will consist solely of cash in an amount equal to the NAV of the Shares being redeemed, as next determined after receipt of a request in proper form, less a redemption transaction fee (the “Cash Redemption Amount”). The Trust reserves the right to offer an in-kind option for redemptions of Creation Units for the Fund.
The right of redemption may be suspended or the date of payment postponed with respect to the Fund (1) for any period during which the NYSE is closed (other than customary weekend and holiday closings); (2) for any period during which trading on the NYSE is suspended or restricted; (3) for any period during which an emergency exists as a result of which disposal of the Shares of the Fund or determination of the Shares' NAV is not reasonably practicable; or (4) in such other circumstance as is permitted by the Commission.
According to the Registration Statement, the Fund will calculate NAV by (i) taking the current market value of its total assets, (ii) subtracting any liabilities, and (iii) dividing that amount by the total number of Shares owned by shareholders.
The Fund will calculate NAV once each business day as of the regularly scheduled close of normal trading on the New York Stock Exchange (the “NYSE”) (normally 4:00 p.m. Eastern Time).
In calculating NAV, the Fund generally will value its portfolio
The NAV per Share of the Fund will be computed by dividing the value of the net assets of the Fund (
In computing the Fund's NAV, the Fund's securities holdings will be valued based on their last readily available market price. Price information on listed securities, including ETFs, ETNs and ETPs in which the Fund invests, will be taken from the exchange where the security is primarily traded. Other portfolio securities and assets for which market quotations are not readily available or determined to not represent the current fair value will be valued based on fair value as determined in good faith by the Fund's Sub-Adviser in accordance with procedures adopted by the Fund's Board of Trustees (“Board”).
Exchange-traded equity securities, including common stocks, ETFs, ETNs, ETPs, preferred stocks, rights, warrants, convertible securities, closed-end funds, certain Depositary Receipts, MLPs, REITs, and BDCs will be valued at market value, which will generally be determined using the last reported official closing or last trading price on the exchange or market on which the security is primarily traded at the time of valuation or, if no sale has occurred, at the last quoted bid price on the primary market or exchange on which they are traded. If market prices are unavailable or the Fund believes that they are unreliable, or when the value of a security has been materially affected by events occurring after the relevant market closes, the Fund will price those securities at fair value as determined in good faith using methods approved by the Fund's Board.
OTC-traded common stocks, OTC ADRs, preferred stocks, rights, warrants, convertible securities, and MLPs will be valued at the last reported sale price from the OTC Bulletin Board or OTC Link LLC on the valuation date. If such OTC-traded security does not trade on a particular day, then the mean between the last quoted closing bid and asked price will be used.
Non-exchange-traded convertible securities, U.S. government securities, short-term debt securities, repurchase agreements and reverse repurchase agreements will be valued at prices supplied by approved pricing services.
Investment company securities (other than exchange-traded investment company securities) will be valued at NAV.
The Fund's Web site (
On a daily basis, the Adviser, on behalf of the Fund, will disclose on the Fund's Web site the following information regarding each portfolio holding, as applicable to the type of holding: Ticker symbol, CUSIP number or other identifier, if any; a description of the holding (including the type of holding); the identity of the security, index, or other asset or instrument underlying the holding, if any; quantity held (as measured by, for example, par value, notional value or number of shares, contracts or units); maturity date, if any; coupon rate, if any; effective date, if any; market value of the holding; and the percentage weighting of the holding in the Fund's portfolio. The Web site information will be publicly available at no charge.
In addition, a basket composition file, which includes the security names and share quantities (as applicable) required to be delivered in exchange for Fund Shares, together with estimates and actual cash components, will be publicly disseminated daily prior to the opening of the NYSE via the NSCC. The basket will represent one Creation Unit of the Fund.
Investors can also obtain the Fund's Statement of Additional Information (“SAI”), the Fund's Shareholder Reports, and its Form N-CSR and Form N-SAR, filed twice a year. The Trust's SAI and Shareholder Reports will be available free upon request from the Trust, and those documents and the Form N-CSR and Form N-SAR may be viewed on-screen or downloaded from the Commission's Web site at
In addition, the Portfolio Indicative Value, as defined in NYSE Arca Equities Rule 8.600 (c)(3), based on current information regarding the value of the securities and other assets in the Disclosed Portfolio, will be widely disseminated at least every 15 seconds during the Core Trading Session by one or more major market data vendors.
With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares of the Fund.
The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. Shares will trade on the NYSE Arca Marketplace from 4 a.m. to 8 p.m. Eastern Time in accordance with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late Trading Sessions). The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. As provided in NYSE Arca Equities Rule 7.6, the minimum price variation (“MPV”) for quoting and entry of orders in equity securities traded on the NYSE Arca Marketplace is $0.01, with the exception of securities that are priced less than $1.00 for which the MPV for order entry is $0.0001.
The Shares will conform to the initial and continued listing criteria under NYSE Arca Equities Rule 8.600. Consistent with NYSE Arca Equities Rule 8.600(d)(2)(B)(ii), the Adviser, as the Reporting Authority, will implement and maintain, or be subject to, procedures designed to prevent the use and dissemination of material non-public information regarding the actual components of the Fund's portfolio. The Exchange represents that, for initial and/or continued listing, the Fund will be in compliance with Rule 10A-3
The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by the Exchange or the Financial Industry Regulatory Authority (“FINRA”) on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.
The surveillances referred to above generally focus on detecting securities trading outside their normal patterns, which could be indicative of manipulative or other violative activity. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations.
The Exchange or FINRA, on behalf of the Exchange, will communicate as needed regarding trading in the Shares and certain underlying exchange-traded equity securities (including common stocks, ETFs, ETNs, ETPs, preferred stock, rights, warrants, exchange-traded convertible securities, closed-end funds, MLPs, REITs, BDCs and certain Depositary Receipts) with other markets and other entities that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, may obtain trading information regarding trading in the Shares and such securities and financial instruments from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares and such securities and financial instruments from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement.
Not more than 10% of the net assets of the Fund in the aggregate invested in equity securities (other than non-exchange-traded investment company securities) shall consist of equity securities whose principal market is not a member of the ISG or is a market with which the Exchange does not have a comprehensive surveillance sharing agreement.
In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees.
All statements and representations made in this filing regarding (a) the description of the portfolio, (b) limitations on portfolio holdings or reference assets, or (c) the applicability
The issuer has represented to the Exchange that it will advise the Exchange of any failure by the Fund to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor for compliance with the continued listing requirements. If the Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under NYSE Arca Equities Rule 5.5(m).
Prior to the commencement of trading, the Exchange will inform its Equity Trading Permit Holders in an Information Bulletin (“Bulletin”) of the special characteristics and risks associated with trading the Shares. Specifically, the Bulletin will discuss the following: (1) The procedures for purchases and redemptions of Shares in Creation Unit aggregations (and that Shares are not individually redeemable); (2) NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence on its Equity Trading Permit Holders to learn the essential facts relating to every customer prior to trading the Shares; (3) the risks involved in trading the Shares during the Opening and Late Trading Sessions when an updated Portfolio Indicative Value will not be calculated or publicly disseminated; (4) how information regarding the Portfolio Indicative Value and the Disclosed Portfolio is disseminated; (5) the requirement that Equity Trading Permit Holders deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (6) trading information.
In addition, the Bulletin will reference that the Fund is subject to various fees and expenses described in the Registration Statement. The Bulletin will discuss any exemptive, no-action, and interpretive relief granted by the Commission from any rules under the Act. The Bulletin will also disclose that the NAV for the Shares will be calculated after 4:00 p.m. Eastern Time each trading day.
The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5)
The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Equities Rule 8.600. The Exchange has in place surveillance procedures that are adequate to properly monitor trading in the Shares in all trading sessions and to deter and detect violations of Exchange rules and applicable federal securities laws. The Exchange or FINRA, on behalf of the Exchange, will communicate as needed regarding trading in the Shares, certain underlying exchange-traded equity securities (including common stocks, ETFs, ETNs, ETPs, preferred stock, rights, warrants, exchange-traded convertible securities, closed-end funds, REITs, MLPs, BDCs and certain Depositary Receipts) with other markets and other entities that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, may obtain trading information regarding trading in the Shares and such securities and financial instruments from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares and such securities and financial instruments from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. Not more than 10% of the net assets of the Fund in the aggregate invested in equity securities (other than non-exchange-traded investment company securities) shall consist of equity securities whose principal market is not a member of the ISG or is a market with which the Exchange does not have a comprehensive surveillance sharing agreement. Neither the Adviser nor the Sub-Adviser is registered as a broker-dealer. The Fund's investments will be consistent with its investment objective and will not be used to provide multiple returns of a benchmark or to produce leveraged returns. The Fund's investments will not be used to seek performance that is the multiple or inverse multiple (
The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that the Exchange will obtain a representation from the issuer of the Shares that the NAV per Share will be calculated daily and that the NAV and the Disclosed Portfolio will be made available to all market participants at the same time. In addition, a large amount of information will be publicly available regarding the Fund and the Shares, thereby promoting market transparency. Quotation and last sale information for the Shares will be available via the CTA high-speed line. In addition, the Portfolio Indicative Value will be widely disseminated at least every 15 seconds during the Core Trading Session by one or more major market data vendors. The Fund's Web site will include a form of the prospectus for the Fund that may be downloaded, as well as additional quantitative information updated on a daily basis. On each business day, before commencement of trading in Shares in the Core Trading Session on the Exchange, the Fund will disclose on its Web site the Disclosed Portfolio that will form the basis for the Fund's calculation of NAV at the end of the business day. On a daily basis, the Adviser, on behalf of the Fund, will disclose on the Fund's Web site the following information regarding each portfolio holding, as applicable to the type of holding: Ticker symbol, CUSIP number or other identifier, if any; a description of the holding (including the type of holding); the identity of the security, index, or other asset or instrument underlying the holding, if any; quantity held (as measured by, for example, par value, notional value or number of shares, contracts or units); maturity date, if any; coupon rate, if any; effective date, if any; market value of the holding; and the percentage weighting of the holding in the Fund's portfolio. The Web site information will be publicly available at no charge.
Moreover, prior to the commencement of trading, the Exchange will inform its Equity Trading Permit Holders in an Information Bulletin of the special characteristics and risks associated with trading the Shares. Trading in Shares of the Fund will be halted if the circuit breaker parameters in NYSE Arca Equities Rule 7.12 have been reached or because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. Trading in the Shares will be subject to NYSE Arca Equities Rule 8.600(d)(2)(D), which sets forth circumstances under which Shares of the Fund may be halted. In addition, as noted above, investors will have ready access to information regarding the Fund's holdings, the Portfolio Indicative
The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of an additional type of actively-managed exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures that are adequate to properly monitor trading in the Shares in all trading sessions and to deter and detect violations of Exchange rules and applicable federal securities laws. In addition, as noted above, investors will have ready access to information regarding the Fund's holdings, the Portfolio Indicative Value, the Disclosed Portfolio, and quotation and last sale information for the Shares.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. The Exchange notes that the proposed rule change will facilitate the listing and trading of an additional type of actively-managed exchange-traded product that primarily holds equity securities and that will enhance competition among market participants, to the benefit of investors and the marketplace.
No written comments were solicited or received with respect to the proposed rule change.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to: (1) Permit the continued listing and trading of shares of the PowerShares Build America Bond Portfolio (the “Fund”) following a change to the index underlying the Fund, and (2) propose changes to the index underlying the Fund and the name of the Fund, as described below. The proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received
The Exchange currently lists and trades shares (“Shares”) of the Fund
Invesco PowerShares Capital Management LLC is the investment adviser (“Adviser”) for the Fund. Invesco Distributors, Inc. is the Fund's distributor (“Distributor”). The Bank of New York Mellon is the administrator, custodian and fund accounting and transfer agent for the Fund.
The Exchange is submitting this proposed rule change (1) to permit the continued listing and trading of Shares of the Fund following a change to the index underlying the Fund, and (2) to propose changes to the index underlying the Fund and the name of the Fund, as described below.
The Fund seeks investment results that generally correspond to the price and yield (before fees and expenses) of The BofA Merrill Lynch Build America Bond Index (the “Build America Bond Index”). The Fund generally invests at least 80% of its total assets in taxable municipal securities eligible to participate in the Build America Bond program created under the American Recovery and Reinvestment Act of 2009 or other legislation providing for the issuance of taxable municipal securities on which the issuer receives federal support of the interest paid (“Build America Bonds”) and that comprise the Build America Bond Index. The Build America Bond Index is designed to track the performance of U.S. dollar-denominated investment grade taxable municipal debt publicly issued under the Build America Bond program by U.S. states and territories, and their political subdivisions, in the U.S. market. Qualifying securities must have a minimum amount outstanding of $1 million, at least 18 months remaining term to final maturity at the time of issuance and at least one year remaining term to final maturity, a fixed coupon schedule and an investment grade rating (based on an average of Moody's Investors Services, Inc. (“Moody's”), Standard & Poor's, a division of The McGraw-Hill Company, Inc. (“S&P”) and Fitch Ratings, Inc. (“Fitch”).
As described below, the Trust has proposed to change the index underlying the Fund to the BofA Merrill Lynch US Taxable Municipal Securities Plus Index (the “New Index”) and to change the name of the Fund to PowerShares Taxable Municipal Bond Portfolio. The New Index does not meet the generic listing criteria of NYSE Arca Equities Rule 5.2(j)(3), as described below. The Exchange is submitting this proposed rule change to permit the continued listing of the Fund. The New Index meets all of the requirements of the generic listing criteria of NYSE Arca Equities Rule 5.2(j)(3), except for those set forth in Commentary .02(a)(2).
As stated in the Registration Statement, the Fund currently has a non-fundamental policy to invest at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in Build America Bonds. Moreover, as stated in the Registration Statement, the Fund complies with that non-fundamental policy because it also is required generally to invest at least 80% of the value of its total assets in the Build America Bonds that comprise the Build America Bond Index, in accordance with the terms of the relief set forth in the Trust's Exemptive Order.
However, in response to a changing market environment that includes a reduction in the number of Build America Bonds, the Adviser has proposed that the Fund's underlying index be changed from one that is focused on Build America Bonds to one that is more broadly focused on taxable municipal debt in general, and which may include Build America Bonds. Changing the Fund's underlying index would require changing the non-fundamental policy set forth above; accordingly, before the Fund can change its underlying index, the Registration Statement states that the Fund's board of trustees (the “Board”) must approve the underlying index change, and the Fund must provide shareholders with sixty days written notice of the change.
Thus, after this proposed rule change is approved, the Trust represents that it intends to seek to obtain Board approval and provide the requisite shareholder notice. Subject to that Board approval and shareholder notice, the Fund intends to change its underlying index to one that is composed of taxable municipal securities, including both Build America Bonds and non-Build America Bonds. Following such change, the proposed underlying index for the Fund will be the New Index.
According to the Trust, the change in Fund's underlying index is designed to
In addition, the Fund will adopt a new non-fundamental investment policy to invest at least 80% of its net assets (plus borrowings for investment purposes) in taxable municipal securities. In addition, the Fund generally will invest at least 80% of its total assets in the securities that will compose the New Index, in accordance with the terms of the Trust's Exemptive Order. However, the Fund may invest up to 20% of its total assets in securities not included in the New Index, in money market instruments, including repurchase agreements or other funds that invest exclusively in money market instruments (subject to applicable limitations under the 1940 Act or exemptions therefrom), convertible securities and structured notes (notes on which the amount of principal repayment and interest payments is based on the movement of one or more specified factors, such as the movement of a particular security or securities index), all to the extent that the Adviser believes investment in such instruments will facilitate the Fund's ability to achieve its new investment objective. In addition, the Fund intends to change its name to PowerShares Taxable Municipal Bond Portfolio.
The New Index tracks the performance of U.S. dollar denominated taxable municipal debt publicly issued by U.S. states and territories, and their political subdivisions, in the U.S. domestic market. Qualifying securities must be subject to U.S. federal taxes and must have at least 18 months to maturity at point of issuance, at least one year remaining term to final maturity, a fixed coupon schedule (including zero coupon bonds) and an investment grade rating (based on an average of Moody's, S&P and Fitch). The call date on which a pre-refunded bond will be redeemed is used for purposes of determining qualification with respect to final maturity requirements. For Build America Bonds the minimum amount outstanding is $1 million, and only “direct pay” (
As of February 4, 2016, approximately 84.39% of the weight of the New Index components was composed of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more for all maturities of the offering. In addition, as of February 4, 2016, the total dollar amount outstanding of issues in the New Index was approximately $281,589,346,769 and the average dollar amount outstanding of issues in the New Index was approximately $27,808,547. Further, the most heavily weighted component represents 2.27% of the weight of the Index and the five most heavily weighted components represent 6.33% of the weight of the New Index.
All components of the New Index have at least an investment grade composite rating of BBB3 or higher (based on an average of S&P, Moody's and Fitch).
The Exchange represents that: (1) With respect to the New Index, except for Commentary .02(a)(2) to NYSE Arca Equities Rule 5.2(j)(3), the Shares of the New Index currently satisfy all of the generic listing standards under NYSE Arca Equities Rule 5.2(j)(3); (2) the continued listing standards under NYSE Arca Equities Rules 5.2(j)(3) and 5.5(g)(2) applicable to Units shall apply to the Shares of the Fund; and (3) the Trust is required to comply with Rule 10A-3
The current value of the New Index is widely disseminated by one or more major market data vendors at least once per day, as required by NYSE Arca Equities Rule 5.2(j)(3), Commentary.02(b)(ii). The IIV for Shares of the Fund is disseminated by one or more major market data vendors, updated at least every 15 seconds during the Exchange's Core Trading Session, as required by NYSE Arca Equities Rule 5.2(j)(3), Commentary .02(c). The components and percentage weightings of the New Index are also available from major market data vendors. In addition, the portfolio of securities held by the Fund is disclosed daily on the Fund's Web site at
The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5)
The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Equities Rule 5.2(j)(3). The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by the Exchange or the Financial Industry Regulatory Authority (“FINRA”) on behalf of the Exchange, which are designed to detect violations of Exchange rules and federal securities laws applicable to trading on the Exchange.
As discussed above, the Exchange believes that the New Index is sufficiently broad-based to deter potential manipulation. As of February 4, 2016, approximately 84.39% of the weight of the New Index components was composed of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more for all maturities of the offering. In addition, as of February 4, 2016, the total dollar amount outstanding of issues in the New Index was approximately $281,589,346,769 and the average dollar amount outstanding of issues in the Index was approximately $27,808,547. Further, the most heavily weighted component represents 2.27% of the weight of the New Index and the five most heavily weighted components represent 6.33% of the weight of the New Index.
The New Index value, calculated and disseminated at least once daily, as well as the components of the Index and their percentage weightings, will be available from major market data vendors. In addition, the portfolio of securities held by the Fund will be disclosed on the Fund's Web site. The IIV for Shares of the Fund will be disseminated by one or more major market data vendors, updated at least every 15 seconds during the Exchange's Core Trading Session.
The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that a large amount of information is publicly available regarding the Fund and the Shares, thereby promoting market transparency. The Fund's portfolio holdings will be disclosed on the Fund's Web site daily after the close of trading on the Exchange and prior to the opening of trading on the Exchange the following day. Moreover, the IIV for Shares of the Fund will be widely disseminated by one or more major market data vendors at least every 15 seconds during the Exchange's Core Trading Session. The current value of the New Index will be disseminated by one or more major market data vendors at least once per day. Information regarding market price and trading volume of the Shares will be continually available on a real-time basis throughout the day on brokers' computer screens and other electronic services, and quotation and last sale information will be available via the CTA high-speed line. The Web site for the Fund will include the prospectus for the Fund and additional data relating to
All statements and representations made in this filing regarding (a) the description of the Fund's portfolio, (b) limitations on portfolio holdings or reference assets, or (c) the applicability of Exchange rules and surveillance procedures shall constitute continued listing requirements for listing the Shares on the Exchange. The Adviser has represented to the Exchange that it will advise the Exchange of any failure by the Fund to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor for compliance with the continued listing requirements. If the Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under NYSE Arca Rule 5.5(m).
The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the continued listing and trading of exchange-traded products that principally hold municipal bonds and that will enhance competition among market participants, to the benefit of investors and the marketplace. The Exchange has in place surveillance procedures relating to trading in the Shares and may obtain information via ISG from other exchanges that are members of ISG or with which the Exchange has entered into a comprehensive surveillance sharing agreement. In addition, investors will have ready access to information regarding the IIV and quotation and last sale information for the Shares.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. The Exchange notes that the proposed rule change will facilitate the continued listing and trading of an exchange-traded product that holds municipal securities and will enhance competition among market participants, to the benefit of investors and the marketplace.
No written comments were solicited or received with respect to the proposed rule change.
Within 45 days of the date of publication of this notice in the
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On January 27, 2016, NYSE Arca, Inc. (“Exchange” or “NYSE Arca”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange proposes to adopt new NYSE Arca Equities Rule 8.900, which would govern the listing and trading of “Managed Portfolio Shares.”
While Investment Companies issuing Managed Portfolio Shares would be actively-managed, and in that respect would be similar to those issuing Managed Fund Shares,
• First, issues of Managed Fund Shares are required to disseminate their “Disclosed Portfolio” at least once daily.
• Second, in connection with the redemption of shares in “Redemption Unit” size (as described below), the delivery of any portfolio securities in kind would only be effected through a “Confidential Account” (as described below) for the benefit of the redeeming authorized participant without disclosing the identity of the securities to the authorized participant.
• Third, for each series of Managed Portfolio Shares, a Verified Intraday Indicative Value (“VIIV”) would be disseminated by one or more major market-data vendors every second during the Exchange's Core Trading Session (normally, 9:30 a.m. to 4:00 p.m., Eastern Time (“E.T.”)).
The Exchange asserts that market makers will be able to make efficient and liquid markets priced near the VIIV even without daily disclosure of a
According to the Exchange, if an authorized participant believes that Shares of a Fund are trading at a price that is higher than the value of the underlying portfolio—for example, if the market price for the Shares is higher than the VIIV—then the authorized participant may sell Shares of the Fund short and instruct its “Trusted Agent”
Similarly, according to the Exchange, an authorized participant could buy Shares and instruct the Trusted Agent to sell the underlying portfolio securities from its Confidential Account in an attempt to profit when a Fund's Shares are trading at a discount to its portfolio. According to the Exchange, the authorized participant's purchase of a Fund's Shares in the secondary market, combined with the sale of the portfolio securities from its Confidential Account, may also create upward pressure on the price of Shares and/or downward pressure on the price of portfolio securities, driving the market price of Shares and the value of a Fund's portfolio securities closer together. The Exchange states that, Precidian Funds LLC (“Adviser”), the investment adviser to the Trust, avers that this process is identical to how many authorized participants currently arbitrage existing traditional ETFs, except for the use of the Confidential Account.
According to the Exchange, a market maker that is not an authorized participant would also be able to establish a Confidential Account and could engage in arbitrage activity without using the creation or redemption processes described above. If such a market maker believes that a Fund is overvalued relative to its underlying assets, the Exchange states, that market maker could sell Shares short and instruct its Trusted Agent to buy portfolio securities in its Confidential Account and then wait for the trading prices to move toward parity and close out the positions in both the Shares and the portfolio securities to realize a profit from the relative movement of their trading prices. Similarly, according to the Exchange, this market maker could buy Shares and instruct the Trusted Agent to sell the underlying portfolio securities in an attempt to profit when a Fund's Shares are trading at a discount to a Fund's underlying or reference assets.
The Exchange states that, generally, Shares will be purchased and redeemed on an in-kind basis, so that, except where the purchase or redemption will include cash under the limited circumstances described in the Registration Statement, purchasers will be required to purchase Creation Units by making an in-kind deposit of specified instruments (“Deposit Instruments”), and shareholders redeeming their Shares will receive an in-kind transfer of specified instruments (“Redemption Instruments”). On any given Business Day, the names and quantities of the instruments that constitute the Deposit Instruments and the names and quantities of the instruments that constitute the Redemption Instruments will be identical, and these instruments may be referred to, in the case of either a purchase or a redemption, as the “Creation Basket.”
In the case of a redemption, a Fund's custodian (“Custodian”) will typically deliver securities to the Confidential Account on a pro rata basis with a value approximately equal to the value of the Shares tendered for redemption at the Cut-Off time. The Custodian will make delivery of the securities by appropriate entries on its books and records transferring ownership of the securities to the authorized participant's Confidential Account, subject to delivery of the Shares redeemed. The Trusted Agent of the Confidential Account will in turn liquidate, hedge, or otherwise manage the securities based on instructions from the authorized participant.
If the Trusted Agent is instructed to sell all securities received at the close on the redemption date, the Trusted Agent will pay the liquidation proceeds net of expenses, plus or minus any cash balancing amount, to the authorized participant through DTC.
Each Fund will be required to file with the Commission its complete portfolio schedules for the second and fourth fiscal quarters on Form N-SAR under the 1940 Act, and to file its complete portfolio schedules for the first and third fiscal quarters on Form
In addition, the VIIV, as defined in proposed NYSE Arca Equities Rule 8.900(c)(3), will be widely disseminated by one or more major market-data vendors at least every second during the Exchange's Core Trading Session. The VIIV, which is approximate value of each Fund's investments on a per Share basis, will be disseminated every second during the Exchange's Core Trading Session through the facilities of the CTA. According to the Exchange, the VIIV will include all accrued income and expenses of a Fund and will assure that any extraordinary expenses, booked during the day, that would be taken into account in calculating a Fund's NAV for that day are also taken into account in calculating the VIIV. For purposes of the VIIV, securities held by a Fund will be valued throughout the day based on the mid-point between the disseminated current national best bid and offer. According to the Exchange, by utilizing the mid-point pricing for purposes of VIIV calculation, stale prices are eliminated and more accurate representation of the real-time value of the underlying securities is provided to the market. Specifically, according to the Exchange, quotations based on the mid-point of bid/ask spreads more accurately reflect current market sentiment by providing real time information on where market participants are willing to buy or sell securities at that point in time. Using quotations rather than last-sale information addresses concerns regarding the staleness of pricing information of less actively traded securities. The Exchange represents that, because quotations are updated more frequently than last-sale information especially for inactive securities, the VIIV will be based on more current and accurate information. The Exchange also represents that the use of quotations will also dampen the impact of any momentary spikes in the price of a portfolio security.
Each Fund will utilize two independent pricing sources to provide two independent sources of pricing information. Each Fund will also utilize a “Pricing Verification Agent” and establish a computer-based protocol that will permit the Pricing Verification Agent to continuously compare the two data streams from the independent pricing agents sources on a real time basis.
The Commission has received four comment letters on the proposed rule change.
A.
Generally, the commenter asserts that market makers will face significant impediments to successfully arbitraging the Shares, and he predicts that this will lead to the Shares trading at wider bid-ask spreads and more variable premiums/discounts than actively-managed ETFs available today.
In evaluating the Exchange's statements regarding VIIVs, the commenter asserts that their utility should be compared not to the IIVs of existing ETFs but rather to the independently derived, real-time estimates of underlying fund value that ETF market makers use to identify arbitrage opportunities and manage the risk of holding ETF positions today (“MM IIVs”). The commenter asserts that, because existing actively managed ETFs (and most index ETFs) provide full daily disclosure of their current portfolio, their market makers have access to far better information about the current value of Fund holdings than the proposed VIIVs would provide and, correspondingly, VIIVs will be significantly less precise than MM IIVs. The commenter also asserts that MM IIVs include significant information that would not be reflected in VIIVs, noting:
• In calculating VIIVs, Fund securities would be valued based on the midpoint between the current national best bid and offer quotations. The commenter characterizes the bid-ask midpoint as a “fairly crude valuation metric” that does not capture important trading information incorporated into MM IIVs, such as the current bid-ask spread, the depth of the current order book on the bid and offer side of the market, and the predominance of current trading between bid-side and offer-side transactions.
• VIIVs would be calculated and disseminated every second and, while this interval may seem sufficient, MM IIVs are updated in fractions of a second (milliseconds or microseconds).
• The VIIV verification process would leave significant room for dissemination of erroneous values. For example, a Fund's Pricing Verification Agent would take no action to address observed discrepancies in VIIV input prices until the calculated Fund values differ by at least 25 bps for 60 seconds. The commenter characterizes that disparity as “huge,” asserting that it would be wider than the customary bid-ask spread of most domestic equity ETFs.
• The VIIV process would not address all potential intraday valuation errors. The commenter describes that corporate actions must be accurately reflected in the VIIV, which can be challenging, and
• The process for adjusting VIIVs in the event of trading halts in portfolio securities is cumbersome and likely to result in errors in disseminated VIIVs. Throughout a halt, which may be protracted, the Fund would continue to disseminate VIIVs that do not reflect fair values of the halted security, and therefore may vary significantly from the Fund's true underlying value at that time. The commenter asserts that MM IIVs would almost certainly arrive at a fair estimate of a Fund's current underlying value far faster than the VIIV specified process.
The commenter asserts that reliance on faulty VIIVs may expose market makers to unrecoverable losses, noting that: (1) Neither the Exchange nor its agents nor the Reporting Authority would be liable for disseminating erroneous VIIVs; and (2) the circumstances under which the Independent Pricing Agents and the Pricing Verification Agent are legally liable for such errors are limited.
According to the commenter, market makers' forced reliance on VIIVs to determine intraday Fund valuations is a source of significant incremental risk for them versus making markets in existing ETFs, and he predicts that this will result in the Shares trading at wider bid-ask spreads and more variable premiums and discounts to NAV than similar existing ETFs.
The commenter also criticizes the Confidential Accounts structure. He asserts that, compared to the usual manner in which market makers in existing ETFs engage in arbitrage and buy and sell Creation Basket instruments, the Confidential Accounts arrangement exposes market makers to significant additional costs, risks and lost opportunities, including:
• Less control over trade execution and trade order management when implementing portfolio hedging and Creation Unit transactions, which will result in more cost and risk, and less profit opportunity.
• No ability for market makers to use their market knowledge and market positions to enhance arbitrage profits and minimize costs.
• Reduced incentive for third-party service providers to trade expeditiously and with low market impact.
• Little or no ability for market makers to monitor trading in Confidential Accounts to ensure best execution or to evaluate trading performance.
• Forced
• Given the more-involved routing of trade instructions and trade orders that the Confidential Account structure would necessitate, the commenter states that hedging and Creation Unit instrument transactions through Confident Accounts will almost certainly take longer, on average, for a market maker to execute than similar transactions that the market maker executes internally. According to the commenter, slower executions may translate into less efficient arbitrage.
• Potentially significant explicit costs to establish and maintain Confidential Accounts.
Additionally, the commenter discusses the efficiency of statistical arbitrage. While market makers may be able to gain some useful information about a Fund's current composition by knowing the Fund's investment objective and tracking performance correlations over time versus a known index, the commenter states that the amount of portfolio information that can be gleaned using this approach is limited. As a result, any portfolio hedge constructed using this information would be subject to meaningful basis risk.
The commenter also expresses concern regarding portfolio information security in light of the dissemination of this data across a network of Trusted Agents, affiliated broker-dealers and other Confidential Account service providers, and their use of the provided information to implement trades on behalf of Confidential Account holders.
The commenter also raises concerns with the possibility that market participants could use the VIIV to reverse-engineer the Funds' portfolio holdings, subjecting the Funds to the dilutive effects of front-running. The commenter asserts that “it is far from a settled question that the Funds would not ever be susceptible to reverse engineering.”
B.
C.
In addition, the commenter notes that actively managed ETFs provide benefits to the fund manager and to fund performance. The commenter states that actively managed ETFs allow fund managers to make investment decisions they believe in, without being distorted by tax consequences. In addition, the commenter believes that the proposed Funds have come up with a way to provide retail and professional investors with a level playing field in terms of intra-day price feeds on the value of the underlying portfolio, and through a trusted agent to allow market makers to create and redeem (and hold) the portfolio of the actively managed fund without being able to see the individual share holdings. The commenter finds this proposal to be an “elegant solution” and to be an effective way to both use the well-understood arbitrage mechanism that has made ETFs liquid and reliable products and allow market makers to control execution of their fund portfolios while protecting the confidentiality of the fund manager.
D.
The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Act
Pursuant to Section 19(b)(2)(B) of the Act,
The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the issues identified above, as well as any other concerns they may have with the proposal. In particular, the Commission invites the written views of interested persons concerning whether the proposal is consistent with Section 6(b)(5) or any other provision of the Act, or the rules and regulations thereunder. Although there do not appear to be any issues relevant to approval or disapproval that would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b-4, any request for an opportunity to make an oral presentation.
Interested persons are invited to submit written data, views, and arguments regarding whether the proposal should be approved or disapproved by June 13, 2016. Any person who wishes to file a rebuttal to any other person's submission must file that rebuttal by June 27, 2016. The Commission asks that commenters address the sufficiency of the Exchange's statements in support of the proposal, which are set forth in the Notice
1. Do commenters believe that market makers will be able to engage in effective and efficient arbitrage in the Shares without knowledge of the contents of the Funds' portfolios? Do commenters believe that market makers will be able to engage in effective and efficient arbitrage in the Shares while delegating trading in the portfolio securities to an intermediary, rather than trading in those securities directly? Do commenters believe that the Shares of a Fund will trade at secondary market prices that are closely aligned with the value of the Fund's portfolio?
2. Do commenters believe that the trading characteristics—such as bid/ask spread and premium or discount to NAV—of a Fund will be comparable to the trading characteristics of a fully transparent ETF with similar assets and a similar strategy?
3. What are commenters' views concerning the proposed use of a VIIV as opposed to the IIV commonly used by other ETFs? Do commenters believe that the VIIV will provide sufficient information to market participants to ensure that the Funds are appropriately priced in secondary trading? Do commenters believe that the VIIV will provide sufficient information to market participants in periods of market volatility, including periods in which securities underlying a Fund's portfolio encounter trading halts or pauses? Do commenters believe that the proposed parameters that apply to the accuracy of the VIIV—
4. What are commenters views regarding whether market participants will be able to use the VIIV—by itself or in conjunction with other public data—to reverse engineer a Fund's portfolio holdings? What factors might affect the susceptibility of a Fund to such reverse engineering? If such reverse engineering were possible, what effect would it have on the Fund? What effect would reverse engineering have on shareholders in the Fund?
5. What are commenters views about the selective disclosure of portfolio holdings to the Trusted Agents, as described above?
6. In light of the non-transparency of the basket of securities underlying the proposed Funds, the Commission seeks comment on how a broker-dealer authorized participant engaging in creation and redemption activity might fulfill its obligation to maintain a minimum level of net capital in compliance with Rule 15c3-1 under the Act and how such an authorized participant would comply with the books and records requirements of Rules 17a-3 and 17a-4 under the Act. For example, how would an authorized participant that is a broker-dealer apply an appropriate haircut to positions included in the Creation Basket when the authorized participant is unaware of the securities included in the basket? In addition, how would the authorized participant determine an appropriate price for such securities? Moreover, how would such an authorized participant make and keep current the records required under Rule 17a-3, including the daily blotter and daily stock record required under paragraphs (a)(1) and (a)(5), respectively, of that rule?
Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Department of State.
Notice of request for public comment and submission to OMB of proposed collection of information; correction.
The Department of State published a
Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed collection instrument and supporting documents, to Jennifer Stein, U.S. Department of State, DRL/MLGA Suite L-430, 2400 Virginia Avenue NW., Washington, DC 20037, who may be reached on 202-663-3299 or at
In the
•
•
On May 3, 2016, BNSF Railway Company (BNSF) filed with the Surface Transportation Board (Board) a petition under 49 U.S.C. 10502 for exemption from the provisions of 49 U.S.C. 10903 to abandon an approximately 0.89-mile rail line on BNSF's Lumber District Lead beginning just west of Laflin Street at Engineering Station 118+00 and proceeding east along West Cermak Road to the most easterly point at Engineering Station 157+65 and heading north along the Sangamon Street Lead at Engineering Station 163+50, including both legs of the wye, in Chicago, Cook County, Ill. (the Line). The Line traverses United States Postal Zip Code 60608.
BNSF states that the Line does not contain federally granted rights-of-way. Any documentation in BNSF's possession will be made available promptly to those requesting it.
The interest of railroad employees will be protected by the conditions set forth in
By issuing this notice, the Board is instituting an exemption proceeding pursuant to 49 U.S.C. 10502(b). A final decision will be issued by August 19, 2016.
Any offer of financial assistance (OFA) under 49 CFR 1152.27(b)(2) will be due no later than 10 days after service of a decision granting the petition for exemption. Each OFA must be accompanied by a $1,600 filing fee.
All interested persons should be aware that, following abandonment, the Line may be suitable for other public use, including interim trail use. Any request for a public use condition under 49 CFR 1152.28 or for trail use/rail banking under 49 CFR 1152.29 will be due no later than June 10, 2016. Each trail request must be accompanied by a $300 filing fee.
All filings in response to this notice must refer to Docket No. AB 6 (Sub-No. 493X) and must be sent to: (1) Surface Transportation Board, 395 E Street SW., Washington, DC 20423-0001; and (2) Karl Morell, Karl Morell & Associates, Suite 225, 655 Fifteenth Street NW., Washington, DC 20005. Replies to the petition are due on or before June 10, 2016.
Persons seeking further information concerning abandonment procedures may contact the Board's Office of Public Assistance, Governmental Affairs and Compliance at (202) 245-0238 or refer to the full abandonment regulations at 49 CFR part 1152. Questions concerning environmental issues may be directed to the Board's Office of Environmental Analysis (OEA) at (202) 245-0305. Assistance for the hearing impaired is available through the Federal Information Relay Service at 1-800-877-8339.
An environmental assessment (EA) (or environmental impact statement (EIS), if necessary) prepared by OEA will be served upon all parties of record and upon any other agencies or persons who comment during its preparation. Other interested persons may contact OEA to obtain a copy of the EA (or EIS). EAs in abandonment proceedings normally will be made available within 60 days of the
Board decisions and notices are available on our Web site at
By the Board, Rachel D. Campbell, Director, Office of Proceedings.
Federal Aviation Administration (FAA), U.S. Department of Transportation (DOT).
Notice of Ninth RTCA Special Committee 230 Meeting.
The FAA is issuing this notice to advise the public of the Ninth RTCA Special Committee 230 meeting.
The meeting will be held June 28-30, 2016 from 9:00 a.m.-5:00 p.m.
The meeting will be held at Boeing Everett Facility, Building 40-88, 3003 W. Casino Road, Everett, WA 98204.
The RTCA Secretariat, 1150 18th Street NW., Suite 910, Washington, DC 20036, or by telephone at (202) 833-9339, fax at (202) 833-9434, or Web site at
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., App.), notice is hereby given for a meeting of RTCA Special Committee 230. The agenda will include the following:
Attendance is open to the interested public but limited to space availability. If you plan to attend, please email by June 14, 2016. With the approval of the chairman, members of the public may present oral statements at the meeting. Plenary information will be provided upon request. Persons who wish to present statements or obtain information should contact the person listed in the
Federal Aviation Administration (FAA), U.S. Department of Transportation (DOT).
Notice of Twenty-Third RTCA Special Committee 225 Meeting.
The FAA is issuing this notice to advise the public of the Twenty-Third RTCA Special Committee 225 meeting.
The meeting will be held June 23, 2016 from 9:00 a.m.-1:00 p.m.
The meeting will be held virtually at
The RTCA Secretariat, 1150 18th Street NW., Suite 910, Washington, DC 20036, or by telephone at (202) 833-9339, fax at (202) 833-9434, or Web site at
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., App.), notice is hereby given for a meeting of RTCA Special Committee 225. The agenda will include the following:
Attendance is open to the interested public but limited to space availability. With the approval of the chairman, members of the public may present oral statements at the meeting. Plenary information will be provided upon request. Persons who wish to present statements or obtain information should contact the person listed in the
Federal Aviation Administration (FAA), U.S. Department of Transportation (DOT).
Notice of Forty-Fourth RTCA Special Committee 206 meeting.
The FAA is issuing this notice to advise the public of the Forty-Fourth RTCA Special Committee 206 meeting.
The meeting will be held June 13-17, 2016 from 8:30 a.m.-5:00 p.m.
The meeting will be held at NAV CANADA, 1601 Tom Roberts Avenue, Gloucester, ON, Canada K1V1E6.
The RTCA Secretariat, 1150 18th Street NW., Suite 910, Washington, DC 20036, or by telephone at (202) 833-9339, fax at (202) 833-9434, or Web site at
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., App.), notice is hereby given for a meeting of RTCA Special Committee 206. The agenda will include the following:
Attendance is open to the interested public but limited to space availability. If planning to attend in person, please provide the following information as soon as possible: Name, organization, position title, phone number, supervisor name, supervisor contact information, and dates of attendance. With the approval of the chairman, members of the public may present oral statements at the meeting. Plenary information will be provided upon request. Persons who wish to present statements or obtain information should contact the person listed in the
Federal Transit Administration, Department of Transportation.
Passenger Ferry Grant Program announcement of project selections.
The US. Department of Transportation's (DOT) Federal Transit Administration (FTA) announces the selection of projects with Fiscal Year (FY) 2015 and FY 2016 appropriations for the Passenger Ferry Grant Program (Ferry Program), 49 U.S.C. 5307(h), as authorized by the Moving Ahead for Progress in the 21st Century Act (MAP-21) and the Fixing America's Surface Transportation Act (FAST) Act. MAP-21 authorized $30 million for discretionary allocations in FY 2015 and the FAST Act authorized $30 million for discretionary allocations in FY 2016. Both amounts combined provide a total of $60 million for this program. On August 3, 2015, FTA published a Notice of Funding Availability (NOFA) (80 FR 46093) announcing the availability of Federal funding for the Ferry Program. These program funds will provide financial assistance to support existing ferry service, establish new ferry service, and repair and modernize ferry boats, terminals, and related facilities and equipment. Funds may not be used for operating expenses, planning, or preventive maintenance.
Successful applicants should contact the appropriate FTA Regional Office for information regarding applying for the funds or program-specific information. A list of Regional Offices can be found at
In response to the NOFA, FTA received 21 proposals from 10 states and the U.S. Virgin Islands requesting $98.1 million in Federal funds, indicating significant demand to fund ferry capital projects. Project proposals were evaluated based on each applicant's responsiveness to the program evaluation criteria outlined in the NOFA. FTA is funding 18 projects as shown in Table 1 for a total of $58,974,323 million. Grantees selected for competitive discretionary funding should work with their FTA Regional Office to finalize the grant application in FTA's Transit Award Management System (TrAMs) for the projects identified in the attached table to quickly obligate funds. Grant applications must only include eligible activities applied for in the original project application. Funds must be used consistent with the competitive proposal and for the eligible capital purposes established in the NOFA and described in the FTA's Urbanized Area Formula Program Circular 9030.1E. In
Office of Foreign Assets Control, Treasury.
Notice.
The Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing the name of six entities whose property and interests in property are blocked pursuant to Executive Order (E.O.) 13448 of October 18, 2007, “Blocking Property and Prohibiting Certain Transactions Related to Burma” (E.O. 13448) and the Burmese Sanctions Regulations, 31 CFR part 537 (BSR). OFAC is also removing ten entities whose property and interests in property have been unblocked pursuant to Executive Order 13310 of July 28, 2003, “Blocking Property of the Government of Burma and Prohibiting Certain Transactions” (E.O. 13310) or Executive Order 13464 of April 30, 2008, “Blocking Property and Prohibiting Certain Transactions Related to Burma” (E.O. 13464) and the BSR.
The actions described in this notice were effective on May 17, 2016.
The Department of the Treasury's Office of Foreign Assets Control: Assistant Director for Licensing, tel.: 202-622-2480, Assistant Director for Regulatory Affairs, tel.: 202-622-4855, Assistant Director for Sanctions Compliance & Evaluation, tel.: 202-622-2490; or the Department of the Treasury's Office of the Chief Counsel (Foreign Assets Control), Office of the General Counsel, tel.: 202-622-2410.
This document and additional information concerning OFAC are available from OFAC's Web site (
On May 17, 2016, OFAC identified six entities in which Steven Law or Asia World Co. Ltd., persons whose property and interests in property are blocked pursuant to E.O. 13448 and the BSR, own a 50 percent or greater interest, and added their names to OFAC's list of Specially Designated Nationals and Blocked Persons (SDN List):
1. SHWE NAR WAH COMPANY LIMITED, No. 39/40, Bogyoke Aung San Road, Bahosi Housing, Lanmadaw, Rangoon, Burma; Registration ID 1922/2007-2008 (Burma) [BURMA] (Linked to: LAW, Steven).
2. GREEN ASIA SERVICES CO., LTD., No. 61/62, Bahosi Housing, War Tan St., Lanmadaw T/S, Rangoon, Burma; Registration ID 4013/2011-2012 (Burma) [BURMA] (Linked to: ASIA WORLD CO. LTD.)
3. GLOBAL WORLD INSURANCE COMPANY LIMITED, No. 44, Thein Phyu Road, Corner of Bogyoke Aung San Road and Thein Phyu Road, Pazuntaung, Rangoon, Burma; Registration ID 2511/2012-2013 (Burma) [BURMA] (Linked to: ASIA WORLD CO. LTD.)
4. ASIA MEGA LINK CO., LTD., No. 39/40, Bogyoke Aung San Road, Bahosi Housing, Lanmadaw, Rangoon, Burma; Registration ID 1679/2009-2010 (Burma) [BURMA] (Linked to: ASIA WORLD CO. LTD.)
5. ASIA MEGA LINK SERVICES CO., LTD., No. 44/45, Bogyoke Aung San Road, Bahosi Housing Complex, Lanmadaw, Rangoon, Burma; Registration ID 2652/2010-2011 (Burma) [BURMA] (Linked to ASIA WORLD CO. LTD.)
6. PIONEER AERODROME SERVICES CO., LTD., No. 203/204, Thiri Mingalar Housing, Strand Rd, Ahlone, Rangoon, Burma; Registration ID 620/2007-2008 (Burma) [BURMA] (Linked to: ASIA WORLD CO. LTD.)
On May 17, 2016, OFAC, in consultation with the Department of State, determined that circumstances no longer warrant the inclusion of the following entities in the Annex to E.O. 13310, and on OFAC's SDN List, and that these entities are no longer subject to the blocking provisions of Section 1(a) of E.O. 13310:
1. MYANMA FOREIGN TRADE BANK (a.k.a. MYANMAR FOREIGN TRADE BANK), P.O. Box 203, 80-86 Maha Bandoola Garden Street, Kyauktada T/S, Yangon, Burma; SWIFT/BIC FOTMMMM1 [BURMA]
2. MYANMA INVESTMENT AND COMMERCIAL BANK (a.k.a. MICB; a.k.a. MYANMAR INVESTMENT AND COMMERCIAL BANK), 170/176 Bo Aung Kyaw Street, Botataung Township, Yangon, Burma; SWIFT/BIC MYANMMM1; SWIFT/BIC MICB MM MY; SWIFT/BIC MICB MM MY MAN [BURMA]
3. MYANMA ECONOMIC BANK (a.k.a. MYANMAR ECONOMIC BANK), 1-19 Sule Pagoda Road, Pabedan T/S, Yangon, Burma [BURMA]
On May 17, 2016, OFAC, in consultation with the Department of State, determined that circumstances no longer warrant the blocking of the property and interests in property of, or the prohibiting of transactions with, the following entities in the Annex to E.O. 13464, and on OFAC's SDN List, and that these entities are no longer subject to the blocking provisions of Section 1(a) of E.O. 13464:
1. MYANMAR TIMBER ENTERPRISE (a.k.a. MTE; a.k.a. MYANMA TIMBER ENTERPRISE), P.O. Box 206, Mission Road/Ahlone Street, Rangoon, Burma [BURMA]
2. MYANMAR GEM ENTERPRISE (a.k.a. MGE; a.k.a. MYANMA GEM ENTERPRISE), 66 Kaba Aye Pagoda Road, Rangoon, Mayangone Township (MYGN), Burma [BURMA]
3. MYANMAR PEARL ENTERPRISE (a.k.a. MPE; a.k.a. MYANMA PEARL ENTERPRISE), No. 4345, Bu Khwe, Naypyitaw, Burma [BURMA]
On May 17, 2016, OFAC, in consultation with the Department of State, determined that circumstances no longer warrant the inclusion of the
1. CO-OPERATIVE EXPORT-IMPORT ENTERPRISE (a.k.a. CEIE), 259/263 Bogyoke Aung San Street, Yangon, Burma [BURMA]
2. NO. 1 MINING ENTERPRISE, 90 Kanbe Road, Yankin, Rangoon, Burma [BURMA]
3. NO. 2 MINING ENTERPRISE, 90 Kanbe Road, Yankin, Rangoon, Burma [BURMA]
4. NO. 3 MINING ENTERPRISE, 90 Kanbe Road, Yankin, Rangoon, Burma [BURMA]
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning TD 8995, Mid-Contract Change in Taxpayer.
Written comments should be received on or before July 22, 2016 to be assured of consideration.
Direct all written comments to Tuawana Pinkston, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of this regulation should be directed to Martha R. Brinson, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW., Washington, DC 20224, or through the Internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. 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.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning Revenue Procedure 2001-21, Debt Roll-Ups.
Written comments should be received on or before July 22, 2016 to be assured of consideration.
Direct all written comments to Tuawana Pinkston, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the regulations should be directed to Allan Hopkins at Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224, or through the internet at
The following paragraph applies to all the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. 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.
Veterans Benefits Administration, Department of Veterans Affairs.
Notice.
The Veterans Benefits Administration (VBA), Department of Veterans Affairs (VA), is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act (PRA) of 1995, Federal agencies are required to publish notice in the
Written comments and recommendations on the proposed collection of information should be received on or before July 22, 2016.
Submit written comments on the collection of information through Federal Docket Management System (FDMS) at
Nancy J. Kessinger at (202) 632-8924 or FAX (202) 632-8925.
Under the PRA of 1995 (Pub. L. 104-13; 44 U.S.C. 3501-21), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. This request for comment is being made pursuant to section 3506(c)(2)(A) of the PRA.
With respect to the following collection of information, VBA invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of VBA's functions, including whether the information will have practical utility; (2) the accuracy of VBA's estimate of the burden of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or the use of other forms of information technology.
The statute and regulations describe the process by which a claimant can appeal the decisions made by VBA on a claim for benefits.
VA Form 21P-0970 will be used by the claimant to initiate an appeal by indicating disagreement with a decision issued by a VA Regional Office (RO) specifically related to a claim for VA pension benefits, dependency and indemnity compensation (DIC) benefits, burial benefits, and accrued benefits. VA Form 21P-0970 will be the claimant's first step in the appeal process. The respondent may or may not continue with an appeal to the Board of Veterans Appeals (BVA). If the claimant opts to continue to BVA for an appeal, this form will be included in the claim folder as evidence.
VA will provide VA Form 21P-0970 to the claimant with the notification letter of the decision in paper form or via hyperlink to VA's Web site. The use of VA Form 21P-0970 will be mandatory when claimants initiate an appeal of a decision on a pension, DIC, burial, or accrued claims for benefits.
Currently, VBA does not have a mandatory form which would enable the claimant to initiate an appeal of a decision made regarding entitlement to pension, DIC, burial, or accrued benefits. As a result, claimants may provide their notice of disagreement in any format. The variety of submissions hampers efforts to identify, and process timely, the claimant's appeal. With the implementation of this collection, the submissions will be standardized, increasing efficiency.
By direction of the Secretary.
Veterans Benefits Administration, Department of Veterans Affairs.
Notice.
The Veterans Benefits Administration (VBA), Department of Veterans Affairs (VA), is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act (PRA) of 1995, Federal agencies are required to publish notice in the
Written comments and recommendations on the proposed collection of information should be received on or before July 22, 2016.
Submit written comments on the collection of information through Federal Docket Management System (FDMS) at
Nancy J. Kessinger at (202) 632-8924 or FAX (202) 632-8925.
Under the PRA of 1995 (Pub. L. 104-13; 44 U.S.C. 3501-21), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. This request for comment is being made pursuant to section 3506(c)(2)(A) of the PRA.
With respect to the following collection of information, VBA invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of VBA's functions, including whether the information will have practical utility; (2) the accuracy of VBA's estimate of the burden of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or the use of other forms of information technology.
VA Form 21P-8416 is used by claimants and beneficiaries to report unreimbursed medical expenses for the purpose of reducing their countable income associated with needs-based benefit programs such as VA Pension and Parents' Dependency and Indemnity Compensation (DIC). Unreimbursed medical expenses are deducted from otherwise countable income to determine eligibility for income-based benefits and the rate payable.
By direction of the Secretary.
Veterans Benefits Administration, Department of Veterans Affairs.
Notice.
The Veterans Benefits Administration (VBA), Department of Veterans Affairs (VA), is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act (PRA) of 1995, Federal agencies are required to publish notice in the
Written comments and recommendations on the proposed collection of information should be received on or before July 22, 2016.
Submit written comments on the collection of information through Federal Docket Management System (FDMS) at
Nancy J. Kessinger at (202) 632-8924 or FAX (202) 632-8925.
Under the PRA of 1995 (Pub. L. 104-13; 44 U.S.C. 3501-21), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. This request for comment is being made pursuant to section 3506(c)(2)(A) of the PRA.
With respect to the following collection of information, VBA invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of VBA's functions, including whether the information will have practical utility; (2) the accuracy of VBA's estimate of the burden of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the
By direction of the Secretary.
Wage and Hour Division, Department of Labor.
Announcement of policy.
The Department of Labor's (Department or DOL) Final Rule revising the regulations for implementing the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees, published in the Rules section of today's
May 23, 2016.
Director, Division of Regulations, Legislation and Interpretation, U.S. Department of Labor, Wage and Hour Division, Room S-3502, 200 Constitution Avenue NW., Washington, DC 20210; telephone: (202) 693-0406 (this is not a toll-free number). Copies of this docuemnt may be obtained in alternative formats (Large Print, Braille, Audio Tape or Disc), upon request, by calling (202) 693-0675 (this is not a toll-free number). TTY/TDD callers may dial toll-free 1-877-889-5627 to obtain information or request materials in alternative formats.
Today, the Department's Wage and Hour Division issued
The Department and the U.S. Department of Health and Human Services (“HHS”) have engaged in appropriate interagency discussions regarding the interaction between the Overtime Final Rule and HHS' policy and regulatory priorities. During these communications HHS expressed particular concerns about the Final Rule's impact on residential homes and facilities for individuals with intellectual or developmental disabilities with 15 or fewer beds. HHS also voiced concern that the December 1, 2016 effective date could affect the federal government's efforts to encourage the use of such community-based providers, and stated that providing this subset of Medicaid-funded providers additional time to implement these requirements could help mitigate potential budgeting and implementation concerns for these providers.
HHS conveyed that the Final Rule coincides with implementation of certain provisions of its rule affecting states' provision of Medicaid home and community-based services (“HCBS”).
The Department is committed to working with HHS to ensure that implementation of the Overtime Final Rule does not compromise its agency priorities or regulations. Based on these discussions with HHS, the Department has determined that DOL enforcement of the new salary threshold in the Overtime Final Rule in the period immediately following the December 1, 2016 effective date could have an impact on the use of these types of community-based facilities. Providing this subset of providers of Medicaid-funded services additional time to transition and seek technical assistance from the Department without being subject to DOL enforcement of the new salary threshold may mitigate some potential budgeting and implementation concerns.
Providers in this subset of Medicaid-funded residential homes and facilities face a unique combination of challenges in balancing the goal of shifting care of individuals with intellectual or developmental disabilities to small community-based settings and meeting the timeline for implementing the HHS rule impacting HCBS providers, with the fact that these facilities are small, dependent on Medicaid funding in state budgets, and serve vulnerable populations. The non-enforcement policy will allow the Department to devote its time and resources to providing assistance to these providers of services at small community-based facilities, and will allow these employers time, if needed, to work with their state legislatures and HHS on implementation of the Overtime Final Rule.
Accordingly, after carefully considering appropriate interagency discussions with HHS, the Department has decided to enact a time-limited non-enforcement policy for providers of Medicaid-funded services for
This document is non-binding guidance articulating considerations relevant to the Department's exercise of its enforcement authority under the FLSA. It is therefore exempt from the notice-and-comment rulemaking requirements under the Administrative Procedure Act pursuant to 5 U.S.C. 553(b).
Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a). The Department has determined that this guidance does not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring OMB approval under the Paperwork Reduction Act, 44 U.S.C. 3501
29 U.S.C. 216(c); Secretary's Order No. 01-2014.
Wage and Hour Division, Department of Labor.
Final rule.
The Fair Labor Standards Act (FLSA or Act) guarantees a minimum wage for all hours worked during the workweek and overtime premium pay of not less than one and one-half times the employee's regular rate of pay for hours worked over 40 in a workweek. While these protections extend to most workers, the FLSA does provide a number of exemptions. In this Final Rule, the Department of Labor (Department) revises final regulations under the FLSA implementing the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees. These exemptions are frequently referred to as the “EAP” or “white collar” exemptions. To be considered exempt under part 541, employees must meet certain minimum requirements related to their primary job duties and, in most instances, must be paid on a salary basis at not less than the minimum amounts specified in the regulations.
In this Final Rule the Department updates the standard salary level and total annual compensation requirements to more effectively distinguish between overtime-eligible white collar employees and those who may be exempt, thereby making the exemption easier for employers and employees to understand and ensuring that the FLSA's intended overtime protections are fully implemented. The Department sets the standard salary level for exempt EAP employees at the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region. The Department also permits employers to satisfy up to 10 percent of the standard salary requirement with nondiscretionary bonuses, incentive payments, and commissions, provided these forms of compensation are paid at least quarterly. The Department sets the total annual compensation requirement for an exempt Highly Compensated Employee (HCE) equal to the annualized weekly earnings of the 90th percentile of full-time salaried workers nationally. The Department also adds a provision to the regulations that automatically updates the standard salary level and HCE compensation requirements every three years by maintaining the earnings percentiles set in this Final Rule to prevent these thresholds from becoming outdated. Finally, the Department has not made any changes in this Final Rule to the duties tests for the EAP exemption.
This Final Rule is effective on December 1, 2016.
Director, Division of Regulations, Legislation and Interpretation, U.S. Department of Labor, Wage and Hour Division, Room S-3502, 200 Constitution Avenue NW., Washington, DC 20210; telephone: (202) 693-0406 (this is not a toll-free number). Copies of this Final Rule may be obtained in alternative formats (Large Print, Braille, Audio Tape or Disc), upon request, by calling (202) 693-0675 (this is not a toll-free number). TTY/TDD callers may dial toll-free 1-877-889-5627 to obtain information or request materials in alternative formats.
Questions of interpretation and/or enforcement of the agency's regulations may be directed to the nearest Wage and Hour Division (WHD) district office. Locate the nearest office by calling the WHD's toll-free help line at (866) 4US-WAGE ((866) 487-9243) between 8 a.m. and 5 p.m. in your local time zone, or log onto WHD's Web site at
The Fair Labor Standards Act (FLSA or Act) guarantees a minimum wage for all hours worked and limits to 40 hours per week the number of hours an employee can work without additional compensation. Section 13(a)(1) of the FLSA, which was included in the original Act in 1938, exempts from these minimum wage and overtime pay protections “any employee employed in a bona fide executive, administrative, or professional capacity.” The exemption is premised on the belief that these kinds of workers typically earn salaries well above the minimum wage and enjoy other privileges, including above-average fringe benefits, greater job security, and better opportunities for advancement, setting them apart from workers entitled to overtime pay. The statute delegates to the Secretary of Labor the authority to define and delimit the terms of the exemption.
The Department has undertaken this rulemaking in order to revise the regulations so that they effectively distinguish between overtime-eligible white collar employees who Congress intended to be protected by the FLSA's minimum wage and overtime provisions and bona fide EAP employees whom it intended to exempt. When the definition becomes outdated, employees who Congress intended to protect receive neither the higher salaries and above-average benefits expected for EAP employees nor do they receive overtime pay, and employers do not have an efficient means of identifying workers who are, and are not, entitled to the FLSA's protections. With this Final Rule, the Department will ensure that white collar employees who should receive extra pay for overtime hours will do so and that the test for exemption remains up-to-date so future workers will not be denied the protections that Congress intended to afford them.
In 1938, the Department issued the first regulations at 29 CFR part 541 defining the scope of the section 13(a)(1) white collar exemption. Since 1940, the regulations implementing the exemption have generally required each of three tests to be met for the exemption to apply: (1) The employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the “salary basis test”); (2) the amount of salary paid must meet a minimum specified amount (the “salary level test”); and (3) the employee's job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (the “duties test”). While payment of a salary does not make an employee ineligible for overtime compensation, the Department has nonetheless long recognized the salary level test is the best single test of exempt status for white collar employees. The salary level test is an objective measure that helps distinguish white collar employees who are entitled to overtime from those who may be bona fide executive, administrative, or professional (EAP) employees. If left at the same amount over time, however, the effectiveness of the salary level test as a means of determining exempt status diminishes as the wages of employees increase and the real value of the salary threshold falls.
The Department has updated the salary level requirements seven times since 1938, most recently in 2004 when the salary level an employee must be paid to come within the standard test for EAP exemption was set at $455 per week ($23,660 per year for a full-year worker), which nearly tripled the $155 per week minimum salary level required for exemption up to that point. The Department also modified the duties tests in 2004, eliminating the “long” and “short” tests that had been part of the regulations since 1949 and replacing them with the “standard” test. The historic long test paired a lower salary requirement with a stringent duties test including a 20 percent cap on the amount of time most exempt employees could spend on nonexempt duties, while the short test paired a higher salary requirement with a less stringent duties test. In other words, prior to the 2004 Final Rule, to exempt lower-paid employees from receiving overtime the employer would have to meet more rigorous requirements; but for higher-paid employees, the requirements to establish the applicability of the exemption were less rigorous. The standard test established by the Department in the 2004 Final Rule paired a duties test closely based on the less-stringent short duties test with a salary level derived from the lower long test salary level. This had the effect of making it easier for employers to both pay employees a lower salary and not pay them overtime for time worked beyond 40 hours. The 2004 Final Rule also created an exemption for highly compensated employees (HCE), which imposes a very minimal duties test but requires that an employee must earn at least $100,000 in total annual compensation.
On March 13, 2014, President Obama signed a Presidential Memorandum directing the Department to update the regulations defining which white collar workers are protected by the FLSA's minimum wage and overtime standards. 79 FR 18737 (Apr. 3, 2014). The memorandum instructed the Department to look for ways to modernize and simplify the regulations while ensuring that the FLSA's intended overtime protections are fully implemented. The Department published a proposal to update the part 541 regulations on July 6, 2015.
One of the Department's primary goals in this rulemaking is updating the standard salary requirement, both in light of the passage of time since 2004, and because the Department has concluded that the effect of the 2004 Final Rule's pairing of a standard duties test based on the less rigorous short duties test with the kind of low salary level previously associated with the more rigorous long duties test was to exempt from overtime many lower paid workers who performed little EAP work and whose work was otherwise indistinguishable from their overtime-eligible colleagues. This has resulted in the inappropriate classification of employees as EAP exempt—that is overtime exempt—who pass the standard duties test but would have failed the long duties test. As the Department noted in our proposal, the salary level's function in helping to differentiate overtime-eligible employees from employees who may be exempt takes on greater importance when the duties test does not include a specific limit on the amount of nonexempt works that an exempt employee may perform.
In the Notice of Proposed Rulemaking (NPRM), the Department proposed setting the standard salary level at the 40th percentile of weekly earnings of full-time salaried workers nationally and setting the HCE total annual compensation requirement at the annualized value of the 90th percentile of weekly earnings of full-time salaried workers nationally. The Department further proposed to automatically update these levels annually to ensure that they would continue to provide an
After considering the comments, the Department has made several changes from the proposed rule to the Final Rule. In particular, the Department has modified the standard salary level to more fully account for the lower salaries paid in certain regions. In this Final Rule, the Department sets the standard salary level equal to the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region (currently the South). This results in a salary level of $913 per week, or $47,476 annually for a full-year worker, based on data from the fourth quarter of 2015.
In order to prevent the salary and compensation levels from becoming outdated, the Department is including in the regulations a mechanism to automatically update the salary and compensation thresholds by maintaining the fixed percentiles of weekly earnings set in this Final Rule. In response to comments, however, the Final Rule provides for updates every three years rather than for annual updates as proposed. The first update will take effect on January 1, 2020. The Department believes that regularly updating the salary and compensation levels is the best method to ensure that these tests continue to provide an effective means of distinguishing between overtime-eligible white collar employees and those who may be bona fide EAP employees. Based on historical wage growth in the South, at the time of the first update on January 1, 2020, the standard salary level is likely to be approximately $984 per week ($51,168 annually for a full-year worker) and the HCE total annual compensation requirement is likely to be approximately $147,524.
The Department also revises the regulations to permit employers for the first time to count nondiscretionary bonuses, incentives, and commissions toward up to 10 percent of the required salary level for the standard exemption, so long as employers pay those amounts on a quarterly or more frequent basis. Finally, the Department has not made any changes to the duties tests in this Final Rule. The majority of the revisions occur in §§ 541.600, 541.601, 541.602 and new § 541.607; conforming changes were also made in §§ 541.100, 541.200, 541.204, 541.300, 541.400, 541.604, 541.605, and 541.709.
In FY2017,
Additionally, the Department estimates that another 5.7 million white collar workers who are currently overtime eligible because they do not satisfy the EAP duties tests and who currently earn at least $455 per week but less than $913 per week will have their overtime protection strengthened in Year 1 because their status as overtime-eligible will be clear based on the salary test alone without the need to examine their duties. Reducing the number of workers for whom employers must apply the duties test to determine exempt status simplifies the application of the exemption and is consistent with the President's directive.
The Department quantified three direct costs to employers in this Final Rule: (1) Regulatory familiarization costs; (2) adjustment costs; and (3) managerial costs. Assuming a 7 percent discount rate, the Department estimates that average annualized direct employer costs will total $295.1 million per year (Table ES1). In addition to the direct costs, this Final Rule will also transfer income from employers to employees in the form of higher earnings. We estimate average annualized transfers to be $1,189.1 million. The Department also projects average annualized deadweight loss of $9.2 million, and notes that the projected deadweight loss is small in comparison to the amount of estimated costs.
The change to a standard salary level based on the lowest-wage Census Region has decreased the salary amount from the proposal, resulting in a smaller number of affected workers and lower transfers than estimated in the NPRM. Direct costs are higher than predicted in the NPRM, primarily because the Department has increased its estimate of the number of affected workers who work some overtime. Additionally, in response to comments, the Department has increased estimated regulatory familiarization and adjustment costs in the Final Rule.
Finally, the impacts of the Final Rule extend beyond those we have estimated quantitatively. The Department
The FLSA generally requires covered employers to pay their employees at least the federal minimum wage (currently $7.25 an hour) for all hours worked, and overtime premium pay of one and one-half times the employee's regular rate of pay for all hours worked over 40 in a workweek.
The Department has consistently used our rulemaking authority to define and clarify the section 13(a)(1) exemptions. Since 1940, the implementing regulations have generally required each of three tests to be met for the exemptions to apply: (1) The employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the “salary basis test”); (2) the amount of salary paid must meet a minimum specified amount (the “salary level test”); and (3) the employee's job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (the “duties test”).
Employees who meet the requirements of part 541 are exempted from both the Act's minimum wage and overtime pay protections. As a result, an employer may employ such employees for any number of hours in the workweek without paying the minimum hourly wage or an overtime premium. Some state laws have stricter exemption standards than those described above. The FLSA does not preempt any such stricter state standards. If a State establishes a higher standard than the provisions of the FLSA, the higher standard applies in that State.
Section 13(a)(1) was included in the original Act in 1938 and was based on provisions contained in the earlier National Industrial Recovery Act of 1933 (NIRA) and state law precedents. Specific references in the legislative history to the exemptions contained in section 13(a)(1) are scant. Although section 13(a)(1) exempts covered employees from both the FLSA's minimum wage and overtime requirements, its most significant impact is its removal of these employees from the Act's overtime protections.
The requirement that employers pay a premium rate of pay for all hours worked over 40 in a workweek is grounded in two policy objectives. The first is to spread employment (or, in other words, reduce involuntary unemployment) by incentivizing employers to hire more employees rather than requiring existing employees to work longer hours.
In contrast, the exemptions contained in section 13(a)(1) were premised on the belief that the type of work exempt employees performed was difficult to standardize to any time frame and could not be easily spread to other workers after 40 hours in a week, making enforcement of the overtime provisions difficult and generally precluding the potential job expansion intended by the FLSA's time-and-a-half overtime premium.
The universe of employees eligible for the section 13(a)(1) exemptions has fluctuated with amendments to the FLSA. Initially, persons employed in a “local retailing capacity” were exempt, but Congress eliminated that language from section 13(a)(1) in 1961 when the FLSA was expanded to cover retail and service enterprises.
A 1990 enactment expanded the EAP exemptions to include computer systems analysts, computer programmers, software engineers, and similarly skilled professional workers, including those paid on an hourly basis if paid at least 6
The FLSA became law on June 25, 1938, and the Department issued the first version of the part 541 regulations, setting forth criteria for exempt status under section 13(a)(1), that October. 3 FR 2518 (Oct. 20, 1938). Following a series of public hearings, which were discussed in a report issued by WHD,
The Department revised the part 541 regulations twice in 1992. First, the Department created a limited exception from the salary basis test for public employees, permitting public employers to follow public sector pay and leave systems requiring partial-day deductions from pay for absences for personal reasons or due to illness or injury not covered by accrued paid leave, or due to budget-driven furloughs, without defeating the salary basis test required for exemption. 57 FR 37677 (Aug. 19, 1992). The Department also implemented the 1990 law requiring it to promulgate regulations permitting employees in certain computer-related occupations to qualify as exempt under section 13(a)(1) of the FLSA. 57 FR 46744 (Oct. 9, 1992);
On March 31, 2003, the Department published a Notice of Proposed Rulemaking proposing significant changes to the part 541 regulations. 68 FR 15560 (Mar. 31, 2003). On April 23, 2004, the Department issued a Final Rule (2004 Final Rule), which raised the salary level for the first time since 1975, and made other changes, some of which are discussed below. 69 FR 22122 (Apr. 23, 2004). Current regulations retain the three tests for exempt status that have been in effect since 1940: a salary basis test, a salary level test, and a job duties test.
The regulations in part 541 contain specific criteria that define each category of exemption provided by section 13(a)(1) for bona fide executive, administrative, and professional employees (including teachers and academic administrative personnel), and outside sales employees. The regulations also define those computer employees who are exempt under section 13(a)(1) and section 13(a)(17).
The Department last updated the part 541 regulations in the 2004 Final Rule. Prior to 2004, employers could assert the EAP exemption for employees who satisfied either a “long” test—which paired a more restrictive duties test with a lower salary level—or a “short” test—which paired less stringent duties requirements with a higher salary level.
Under the current part 541 regulations, an exempt executive employee must be compensated on a salary basis at a rate of not less than $455 per week and have a primary duty of managing the enterprise or a department or subdivision of the enterprise.
An exempt administrative employee must be compensated on a salary or fee basis at a rate of not less than $455 per week and have a primary duty of the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers.
An exempt professional employee must be compensated on a salary or fee basis at a rate of not less than $455 per week and have a primary duty of (1) work requiring knowledge of an advanced type in a field of science or learning customarily acquired by prolonged, specialized, intellectual instruction and study, or (2) work that is original and creative in a recognized field of artistic endeavor, or (3) teaching in a school system or educational institution, or (4) work as a computer systems analyst, computer programmer, software engineer, or other similarly-skilled worker in the computer field.
An exempt outside salesperson must be customarily and regularly engaged away from the employer's place of business and have a primary duty of making sales, or obtaining orders or contracts for services or for the use of facilities.
The 2004 Final Rule also created a test for exemption of highly compensated executive, administrative, and professional employees. Under the HCE exemption, employees who are paid total annual compensation of at least $100,000 (which must include at least $455 per week paid on a salary or fee basis) are exempt from the FLSA's overtime requirements if they customarily and regularly perform at least one of the exempt duties or responsibilities of an executive, administrative, or professional employee identified in the standard tests for exemption.
On March 13, 2014, President Obama signed a Presidential Memorandum directing the Department to update the regulations defining which “white collar” workers are protected by the FLSA's minimum wage and overtime standards.
Following issuance of the memorandum, the Department embarked on an extensive outreach program, meeting with over 200 organizations in Washington, DC and several other locations, as well as by conference call. A wide range of stakeholders attended the listening sessions: employees, employers, business associations, non-profit organizations, employee advocates, unions, state and local government representatives, tribal representatives, and small businesses. In these sessions the Department asked stakeholders to address, among other issues: (1) What is the appropriate salary level for exemption; (2) what, if any, changes should be made to the duties tests; and (3) how can the regulations be simplified.
The stakeholders shared their concerns with various aspects of the current regulations, suggestions for changes, and general concerns about the scope of the exemption. The Department greatly appreciated the wide range of views that were shared during the outreach sessions. The information shared during those sessions informed the Department's NPRM.
The Department's outreach also made clear, however, that there are some widespread misconceptions about overtime eligibility under the FLSA, some of which were echoed in the comments received on the NPRM. For example, many employers and employees mistakenly believe that payment of a salary automatically disqualifies an employee from entitlement to overtime compensation irrespective of the duties performed. Many employees are also unaware of the duties required to be performed in order for the exemption to apply. Additionally, many employers seem to mistakenly believe that newly overtime-
On July 6, 2015, in accordance with the Presidential Memorandum, the Department published a Notice of Proposed Rulemaking to propose revisions to the part 541 regulations.
More than 270,000 individuals and organizations timely commented on the NPRM during the sixty-day comment period that ended on September 4, 2015. The Department received comments from a broad array of constituencies, including small business owners, Fortune 500 corporations, employer and industry associations, individual workers, worker advocacy groups, unions, non-profit organizations, law firms (representing both employers and employees), educational organizations and representatives, religious organizations, economists, Members of Congress, federal government agencies, state and local governments and representatives, tribal governments and representatives, professional associations, and other interested members of the public. All timely received comments may be viewed on the
Several organizations' submissions included attachments from their individual members generally using substantively identical form comments: For example, AFSCME (24,122 comments), Center for American Progress (6,697 comments from two submissions), CREDO Action (58,927 comments), Democracy for America (34,932 comments), Economic Policy Institute (72,131 comments from five submissions), Faculty Forward and SEIU (515 comments), Jobs with Justice (5,136 comments), Mom's Rising (16,114 comments from three submissions), National Partnership for Women and Families (21,192 comments from two submissions), National Restaurant Association (2,648 comments), National Women's Law Center (6,753 comments from two submissions), Partnership to Protect Workplace Opportunity (1,770 comments from five submissions), Social Security Works (15,575 comments), Society for Human Resource Management (827 comments from two submissions), and others. Other organizations attached membership signatures to their comments. These included Care2 (37,459 signatures), the International Franchise Association (17 signatures), Organizing for Action (76,625 signatures), and 15 different post-doctoral associations (560 signatures).
Many of the comments the Department received were: (1) Very general statements of support or opposition; (2) personal anecdotes that did not address a specific aspect of the proposed changes; or (3) identical or nearly identical “campaign” comments sent in response to comment initiatives sponsored by various groups. A large number of commenters favored some change to the existing regulations, and commenters expressed a wide variety of views on the merits of particular aspects of the Department's proposal. Some commenters requested that the Department withdraw the proposal. Acknowledging that there are strong views on the issues presented in this rulemaking, the Department has carefully considered the timely submitted comments addressing the proposed changes.
Significant issues raised in the timely received comments are discussed below, together with the Department's response to those comments and a topical discussion of the changes that have been made in the Final Rule and its regulatory text. The Department also received a number of submissions after the close of the comment period, including some campaign comments, from a range of commenters representing both employers and employees. Late comments were not considered in the development of this Final Rule, and are not discussed in this Final Rule. In instances where an organization submitted both timely and untimely comments, only the timely comments were considered.
The Department received a number of comments that are beyond the scope of this rulemaking. These include, for example, comments asking the Department to issue a rule requiring employers to provide employees with “clear pay stubs,” and requesting that the Department clarify the definition of “establishment” under the exemption for seasonal amusement or recreational establishments. The Department does not address such issues in this Final Rule.
A number of commenters asked the Department to provide guidance on how the FLSA applies to non-profit organizations.
The Department notes that the FLSA does not provide special rules for non-profit organizations or their employees, nor does this Final Rule. Nevertheless, we agree that it is important for such organizations to understand their obligations under the Act. As a general matter, non-profit charitable organizations are not covered enterprises under the FLSA unless they engage in ordinary commercial activities (for example, operating a gift shop).
The Department also refers interested stakeholders to guidance on the application of the FLSA to non-profit organizations available in WHD Fact Sheet #14A: Non-Profit Organizations and the Fair Labor Standards Act;
Commenters also asked for guidance on the application of the EAP exemption to educational institutions.
Although the EAP exemption expressly applies to an “employee employed in the capacity of academic administrative personnel or teacher” 29 U.S.C. 213(a)(1);
Commenters such as the NEA asked the Department to clarify which workers qualify as bona fide teachers. Teachers are exempt if their primary duty is teaching, tutoring, instructing or lecturing in the activity of imparting knowledge, and if they are employed and engaged in this activity as a teacher in an educational establishment. § 541.303(a). An educational establishment is “an elementary or secondary school system, an institution of higher education or other educational institution.”
The Department also received several comments about postdoctoral scholars.
Finally, the Council on Government Relations commented that “it is our understanding that the Wage and Hour Division does not assert an employee-employer relationship for graduate students who are simultaneously performing research under faculty supervision.” The Department views graduate students in a graduate school engaged in research under the supervision of a member of the faculty and in the course of obtaining advanced degrees as being in an educational relationship and not in an employment relationship with either the school or of any grantor funding the research, even though the student may receive a stipend for performing the research. 1994 WL 1004845 (June 28, 1994). In an effort to assist the educational sector with the issues addressed above, the Department is issuing additional guidance for this sector in connection with the publication of this Final Rule.
Lastly, in an attempt to address concerns that the terms exempt and nonexempt were not sufficiently descriptive or intuitive, in the NPRM the Department used the terms “overtime-protected” and “overtime-eligible” as synonyms for nonexempt, and “not overtime-protected” and “overtime-ineligible” as synonyms for exempt.
The Department received a number of comments concerning the effective date of the Final Rule. Citing the need to reduce the burden of implementation, many commenters representing employers requested a delayed effective date following publication of the Final Rule. Commenters including the Fisher & Phillips law firm, the National Association of Independent Schools and the National Association of Business Officers, requested an effective date at least 120 days after publication as was done in the Department's 2004 rulemaking.
Other commenters requested a longer period. The American Car Rental Association (ACRA), Dollar Tree, and the Retail Industry Leaders Association (RILA) each requested a delayed effective date of at least six months following publication of the Final Rule. The United States Chamber of Commerce (Chamber), the Food Marketing Institute (FMI), H-E-B, Island Hospitality Management, the National Association of Landscape Professionals (NALP), the National Council of Chain Restaurants (NCCR), the National Retail Federation (NRF), and the Securities Industry and Financial Markets Association (SIFMA) each requested a one-year delayed effective date. Finally, Laff and Associates, the National Association for Home Care and Hospice, and American Network of Community Options and Resources (ANCOR), which coordinated with more than three dozen home health care organizations, submitted comments requesting an effective date at least two years following publication of the Final Rule, to afford states sufficient time to allocate and appropriate funding.
More than 55,000 individuals submitted comments coordinated by the Center for American Progress, EPI, and MomsRising, requesting that the salary level be raised without delay. Many labor organizations and social justice and women's advocacy organizations, including the Center for Law and Social Policy, the Center for Popular Democracy, the First Shift Justice Project, the Institute for Women's Policy Research (IWPR), the Leadership Conference on Civil and Human Rights, the National Education Association (NEA), the National Coalition of Classified Education Support Employees Union, the National Urban League, the Public Justice Center, the United Automobile, Aerospace and Agricultural Implement Workers of America (UAW), Women Employed, and others, similarly urged the Department to implement the Final Rule as soon as possible.
The Department has set an effective date of December 1, 2016 for the Final Rule. As several commenters noted, the Department's 2004 Final Rule set an effective date 120 days following publication of the final rule.
Multiple commenters also requested a delayed enforcement period or some form of safe harbor following the effective date of the Final Rule ranging from six months to two years.
The Department appreciates employer concerns regarding compliance and enforcement in light of this rulemaking. As explained above, the Department believes that the December 1, 2016 effective date will provide employers ample time to make any changes that are necessary to comply with the final regulations. The Department will also provide significant outreach and compliance assistance, and will issue a number of guidance documents in connection with the publication of this Final Rule.
One of the Department's primary goals in this rulemaking is updating the section 13(a)(1) exemption's standard
The salary level's function in differentiating exempt from overtime-eligible employees takes on greater importance when there is only one duties test that has no limitation on the amount of nonexempt work that an exempt employee may perform, as has been the case since 2004. Historically, the Department set two different salary tests that were paired with different duties tests. The long test salary level set at the low end of salaries paid to exempt employees imposed a cap on the amount of nonexempt work that an exempt employee could perform. This aspect of the long duties test made it effective in distinguishing lower-paid exempt EAP employees from overtime-eligible employees. In effect, the long duties test ensured that employers could not avoid paying overtime by assigning lower-paid employees a minimal amount of exempt work. The short test salary level, which was historically set at a level between 130 and 180 percent of the long test salary level, did not impose any specific limit on the amount of nonexempt work since that distinction was not considered necessary to aid in classifying higher-paid exempt EAP employees. In eliminating the two salary tests in 2004, the Department instead set the single standard salary level equivalent to the historic levels of the former long test salary, but paired it with a standard duties test based on the short duties test, which did not include a limit on nonexempt work. The effect of this mismatch was to exempt from overtime many lower-wage workers who performed little EAP work and whose work was otherwise indistinguishable from their overtime-eligible colleagues.
The Department has now concluded that the standard salary level we set in 2004 did not account for the absence of the more rigorous long duties test and thus has been less effective in distinguishing between EAP employees who are exempt from overtime and overtime-eligible employees. Additionally, the salary level required for exemption under section 13(a)(1) is currently $455 a week and has not been updated in more than 10 years. The annual value of the salary level ($23,660) is now lower than the poverty threshold for a family of four. As the relationship between the current standard salary level and the poverty threshold shows, the effectiveness of the salary level test as a means of helping determine exempt status diminishes as the wages of employees entitled to overtime pay increase and the real value of the salary threshold falls.
By way of this rulemaking, the Department seeks to update the standard salary level to ensure that it works effectively with the standard duties test to distinguish exempt EAP employees from overtime-protected white collar workers. This will make the exemptions easier for employers and workers to understand and ensure that the FLSA's intended overtime protections are fully implemented. The Department also proposed to update the total annual compensation required for the HCE exemption, because it too has been unchanged since 2004 and must be updated to avoid the unintended exemption of employees in high-wage areas who are clearly not performing EAP duties.
In a further effort to respond to changing conditions in the workplace, the Department's proposal also requested comment on whether to allow nondiscretionary bonuses and incentive payments to satisfy some portion of the standard test salary requirement. Currently, such bonuses are only included in calculating total annual compensation under the HCE test, but some stakeholders have urged broader inclusion, pointing out that in some industries significant portions of salaried EAP employees' earnings may be in the form of such bonuses.
The Department also proposed automatically updating the salary and compensation levels to prevent the levels from becoming outdated. The Department proposed to automatically update the standard salary test, the total annual compensation requirement for highly compensated employees, and the special salary levels for American Samoa and for motion picture industry employees, in order to ensure the continued utility of these tests over time. As the Department explained in 1949, the salary test is only a strong measure of exempt status if it is up to date, and a weakness of the salary test is that increases in wage rates and salary levels over time gradually diminish its effectiveness.
Finally, the Department has always recognized that the salary level test works in tandem with the duties tests to identify bona fide EAP employees. The Department discussed concerns with the duties test for executive employees in the NPRM. The proposal also included questions about the duties tests including requiring exempt employees to spend a specified amount of time performing their primary duty (
The FLSA became law on June 25, 1938, and the first version of part 541, issued later that year, set a minimum salary level of $30 per week for exempt executive and administrative employees.
To make enforcement possible and to provide for equity in competition, a rate should be selected in each of the three definitions which will be reasonable in the light of average conditions for industry as a whole. In some instances the rate selected will inevitably deny exemption to a few employees who might not unreasonably be exempted, but, conversely, in other instances it will undoubtedly permit the exemption of some persons who should properly be entitled to the benefits of the act.
In 1949, the Department again looked at salary data from state and federal agencies, including the Bureau of Labor Statistics (BLS). The data reviewed included wages in small towns and low-wage industries, earnings of federal employees, average weekly earnings for exempt employees, starting salaries for college graduates, and salary ranges for different occupations such as bookkeepers, accountants, chemists, and mining engineers.
Also in 1949, the Department established a second, less-stringent duties test for each exemption, but only for those employees paid at or above a higher “short test” salary level. Those paid above the higher salary level were exempt if they also met a “short” duties test, which lessened the duties requirements for exemption.
In contrast to the Department's extensive discussion of the methodology for setting the long test salary level, the Department's rulemakings have included comparatively little discussion of the methodology for setting the short test levels. While the Department set the long test salary level based on an analysis of the defined sample, we set the short test salary level in relation to the long test salary, and the initial short test salary set in 1949 was 133 percent of the highest long test salary (administrative and professional). In 1958, the Department rejected the suggestion that the short test salary level should be increased by the same dollar amount that the highest long test salary levels were increased and instead increased the short test salary to maintain the “percentage differential in relation to the highest [long test] salary requirement.”
In setting the long test salary level in 1958, the Department considered data collected during 1955 WHD investigations on the “actual salaries paid” to employees who “qualified for exemption” (
The Department followed a similar methodology when determining the appropriate long test salary level increase in 1963, using data regarding salaries paid to exempt workers collected in a 1961 WHD survey.
Salary tests set at this level would bear approximately the same relationship to the minimum salaries reflected in the 1961 survey data as the tests adopted in 1958, on the occasion of the last previous adjustment, bore to the minimum salaries reflected in a comparable survey, adjusted by trend data to early 1958. At that time, 10 percent of the establishments employing executive employees paid one or more executive employees less than the minimum salary adopted for executive employees and 15 percent of the establishments employing administrative or professional employees paid one or more employees employed in such capacities less than the minimum salary adopted for administrative and professional employees.
The Department continued to use a similar methodology when updating the long test salary levels in 1970. After examining data from 1968 WHD investigations, 1969 BLS wage data, and information provided in a report issued by the Department in 1969 that included salary data for executive, administrative, and professional employees,
In 1975, instead of following these prior approaches, the Department set the long test salary levels based on increases in the Consumer Price Index (CPI), although the Department adjusted the salary level downward “in order to eliminate any inflationary impact.” 40 FR 7091. As a result of this recalibration of the 1970 levels, the long test salary level for the executive and administrative exemptions was set at $155, while the professional level was set at $170. The salary levels adopted were intended as interim levels “pending the completion and analysis of a study by [BLS] covering a six month period in 1975,” and were not meant to set a precedent for future salary level increases.
As reflected in Table A, the short test salary level increased in tandem with the long test level throughout the various rulemakings since 1949. Because the short test was designed to capture only those white collar employees whose salary was sufficiently high to indicate a stronger likelihood of exempt status and thus warrant a less stringent duties requirement, the short
The salary level test was most recently updated in 2004, when the Department abandoned the concept of separate long and short tests, opting instead for one “standard” test, and set the salary level associated with the new standard duties test at $455 for executive, administrative, and professional employees. Due to the lapse in time between the 1975 and 2004 rulemakings, the salary threshold for the long duties tests (
The Department in the 2004 Final Rule based the new “standard” duties tests on the short duties tests (which did not limit the amount of nonexempt work that could be performed), and tied them to a single salary test level that was updated from the long test salary (which historically had been paired with a cap on nonexempt work).
In determining the new salary level in 2004, the Department reaffirmed our oft-repeated position that the salary level is the “best single test” of exempt status.
In summary, the regulatory history reveals a common methodology used, with some variations, to determine appropriate salary levels. In almost every case, the Department examined a broad set of data on actual wages paid to salaried employees and then set the long test salary level at an amount slightly lower than might be indicated by the data. In 1940 and 1949, the Department set the long test salary levels by looking to the average salary paid to the lowest level of exempt employees. Beginning in 1958, the Department set the long test salary levels to exclude approximately the lowest-paid 10 percent of exempt salaried employees in low-wage regions, employment size groups, city sizes, and industry sectors, and we followed a similar methodology in 1963 and 1970. The levels were based on salaries in low-wage categories in order to protect the ability of employers in those areas and industries to utilize the exemptions and in order to mitigate the impact of salaries in higher-paid regions and sectors. In 1975, the Department increased the long test salary levels based on changes in the CPI, adjusting downward to eliminate any potential inflationary impact.
In 2004, the Department eliminated the short and long duties tests in favor of a standard duties test (that was similar to the prior less rigorous short test) for each exemption and a single salary level for executive, administrative, and professional employees. This most recent revision established a standard salary level of $455 per week using earnings data of full-time salaried employees (both exempt and nonexempt) in the South and in the retail sector. As in the past, the Department used lower-salary data sets to accommodate those businesses for which salaries were generally lower due to geographic or industry-specific reasons.
To restore the effectiveness of the salary test, in the NPRM the Department proposed to set the standard salary level equal to the 40th percentile of weekly earnings of full-time salaried workers nationally. Using salary data from 2013, the proposed methodology resulted in a standard salary level of $921 per week, or $47,892 annually. The Department estimated that, by the time of publication of a Final Rule, the proposed methodology would result in a standard salary level of approximately $970 per week, or $50,440 annually.
In proposing to update the salary threshold, the Department sought to reflect increases in actual salary levels nationwide since 2004. As the Department explained in the NPRM, when left at the same amount over time, the effectiveness of the salary level test as a means of determining exempt status diminishes as the wages of employees entitled to overtime increase and the real value of the salary threshold falls.
The Department also sought to adjust the salary level to address our conclusion that the salary level we set in 2004 was too low given the Department's elimination of the more rigorous long duties test. As discussed above, for many decades the long duties test—which limited the amount of time an exempt employee could spend on nonexempt duties and was paired with a lower salary level—existed in tandem
The importance of ensuring that the standard duties test is not paired with too low of a salary level is illustrated by the Department's
In this rulemaking, the Department sought to correct the mismatch between the standard salary level (based on the old long test) and the standard duties test (based on the old short test). As we noted in the NPRM, we are concerned that at the current low salary level employees in lower-level management positions who would have failed the long duties test may be inappropriately classified as ineligible for overtime. At the same time, the Department proposed a lower salary level than the average salary traditionally used for the short duties test in order to minimize the potential that bona fide EAP employees, especially in low-wage regions and industries, might become overtime-protected because they fall below the proposed salary level. As the Department explained, an up-to-date and effective salary level protects against the misclassification of overtime-eligible workers as exempt and simplifies application of the exemption for employers and employees alike.
Consistent with prior rulemakings, the Department reached the proposed salary level after considering available data on actual salary levels currently being paid in the economy. Specifically, as we did in 2004, the Department used CPS data comprising full-time nonhourly employees to determine the proposed salary level. Unlike in the 2004 rulemaking, however, the Department did not further restrict the data by filtering out various employees based on statutory and regulatory exclusions from FLSA coverage or the salary requirement (such as federal employees, doctors, lawyers, and teachers).
The Department proposed to set the salary level as a percentile rooted in the distribution of earnings rather than a specific dollar amount. Because earnings are linked to the type of work salaried workers perform, a percentile serves as an appropriate proxy for distinguishing between overtime-eligible and overtime exempt white collar workers. Based on the historical relationship of the short test salary level to the long test salary level, the Department determined that a salary between approximately the 35th and 55th percentiles of weekly earnings of full-time salaried workers nationwide would work appropriately with the standard duties test. The Department proposed to set the salary level at the low end of this range—the 40th percentile of weekly earnings of full-time salaried workers nationally—to account for low-wage regions and industries and for the fact that employers no longer have a long duties test to fall back on for purposes of exempting lower-salaried workers performing bona fide EAP duties. The Department explained, however, that a standard salary threshold significantly below the 40th percentile would require a more rigorous duties test than the current standard duties test in order to effectively distinguish between white collar employees who are overtime protected and those who may be bona fide EAP employees.
The Final Rule adopts the proposed methodology for setting the standard salary level as a percentile of actual salaries currently being paid to full-time nonhourly employees, as reported by BLS based on data obtained from the CPS. However, we have adjusted the data set used in response to a substantial number of comments asserting that the salary level proposed would render overtime-eligible too many bona fide EAP employees in low-wage areas. Rather than set the salary level at the 40th percentile of weekly earnings of full-time salaried workers nationally, this Final Rule sets the salary level at the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region. Census Regions are groupings of states and the District of Columbia that subdivide the United States for the presentation of data by the United States Census Bureau. The current Census Regions are: The Northeast, the Midwest, the South, and the West.
In keeping with our practice, the Department relies on the most up-to-date data available to derive the final salary level from this methodology.
White collar employees subject to the salary level test earning less than $913 per week will not qualify for the EAP exemption, and therefore will be eligible for overtime, irrespective of their job duties and responsibilities. Employees earning this amount or more on a salary or fee basis will qualify for exemption only if they meet the standard duties test, which is unchanged by this Final Rule. As a result of this increase, 4.2 million employees who meet the standard duties test will no longer fall within the EAP exemption and therefore will be overtime-protected. Additionally, 8.9 million employees paid between $455 and $913 per week who do not meet the standard duties test—5.7 million salaried white collar employees and 3.2 million salaried blue collar employees—will now face a lower risk of misclassification.
The overwhelming majority of commenters agreed that the standard salary level needs to be increased, including many commenters writing on behalf of employers, such as the Business Roundtable, Catholic Charities USA, College and University Professional Association for Human Resources (CUPA-HR), CVS Health, the National Restaurant Association (NRA), and the Northeastern Retail Lumber Association. Multiple commenters echoed the Department's observation in the NPRM that the current standard salary level of $455 per week, or $23,660 annually, is below the 2014 poverty threshold for a family of four.
The Department also received multiple comments, including comments from the American Sustainable Business Council and the Heartland Alliance for Human Needs and Human Rights, expressing concern that the current salary level facilitates the misclassification of overtime-eligible employees as overtime exempt. The RAND Corporation submitted a study estimating that 11.5 percent of salaried workers are misclassified as exempt—and therefore do not receive overtime compensation—even though their primary duty is not exempt work or they earn less than the current salary level, while a human resource professional from Florida “estimate[d] that 40 percent of those employees my clients class[ify] as . . . exempt are really non-exempt.”
A few commenters, however, such as the National Grocers Association (NGA), urged the Department to maintain the current salary level of $455 per week. For example, the National Lumber and Building Material Dealers Association stated that the current salary level is appropriate for managers in many sectors and regions. Mutual of Omaha requested that the Department create a “grandfathered exemption,” by applying the current salary level to currently exempt employees.
The Department received a significant number of comments in response to our proposal to set the standard salary level equal to the 40th percentile of weekly earnings of full-time salaried employees nationally (estimated to be $970 per week, or $50,440 per year, in 2016). Many commenters endorsed the proposed salary level as an appropriate dividing line between employees performing exempt and overtime-protected work, but others objected that it was either too low or too high. The majority of employees and commenters representing employees believed the proposed salary level amount was appropriate or should be increased, while the majority of employers and commenters representing them believed the salary level amount should be lower than the threshold the Department proposed.
A large number of commenters supported the proposed salary level either by explicitly endorsing the proposed increase or supporting the Department's proposed rule generally. Commenters who supported the salary level included thousands of individual employees, writing independently or as part of comment campaigns, and organizations representing employees (such as the American Association of Retired Persons (AARP), the Coalition of Labor Union Women, National Council of La Raza, the National Domestic Workers Alliance (NDWA), the National Partnership for Women & Families (Partnership), Service Employees International Union (SEIU), the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW), and many others). Some employers and human resource professionals also supported the proposed increase. For example, the owner of a hardware store in Minneapolis explained that he had observed “large businesses abuse their employees for many years by misclassifying them as exempt from overtime,” and stated that the Department's proposal would “help bring things back in line.” H-E-B stated that it pays “competitive wages,” and is “supportive of doubling the minimum salary threshold to the proposed amount of $50,400,” although it urged the Department to consider making regional adjustments because other retailers pay lower wages based on geographic differences. Some Members of Congress expressed support for the Department's proposal, although other Members of Congress opposed it.
The Department received many comments from those who endorsed the proposal (as well as those seeking a higher salary level) asserting that a significant increase to the current salary level is necessary to effectuate Congress' intent to extend the FLSA's wage and hour protections broadly to most workers in the United States.
The Department agrees with commenters that a significant increase in the salary threshold is required to ensure the FLSA's overtime protections are fully implemented. The salary level test should provide an “index to the `bona fide' character of the employment for which exemption is claimed” and ensure that the EAP exemption “will not invite evasion” of the FLSA's minimum wage and overtime requirements “for large numbers of workers to whom the wage-and-hour provisions should apply.” Stein Report at 19. The current salary level, however, is less than the 10th percentile of weekly earnings of full-time salaried workers both nationally and in the South. The salary threshold's function in differentiating exempt from nonexempt employees takes on greater importance, moreover, when there is only one standard duties test that has no limitation on the amount of nonexempt work that an exempt employee may perform, as has been the case since 2004. As the Department has long recognized, if too low a salary level accompanies a duties test that does not limit nonexempt work, employers may utilize the salary test to employ “otherwise nonexempt employees,” who perform large amounts of nonexempt work, “for excessively long workweeks.” 40 FR 7092. The Department believes that the effect of the 2004 Final Rule's pairing of a standard duties test based on the short duties test (for higher paid employees) with a salary test based on the long test (for lower paid employees) was to exempt from overtime many lower paid workers who performed little EAP work and whose work was otherwise indistinguishable from their overtime-eligible colleagues.
Many commenters (including some that believe that the proposed salary level is reasonable) urged the Department to choose a method that results in a higher salary level. The vast majority of these commenters, including NELA, Nichols Kaster, the Rudy, Exelrod, Zieff & Lowe law firm, the Texas Employment Lawyers Association, and the United Food and Commercial Workers International Union (UFCW), asserted that the Department should set the standard salary level equal to the 50th percentile of earnings of full-time salaried workers nationally. The Center for Effective Government stated that the Department should set the standard salary level equal to the 60th percentile of earnings of full-time salaried workers nationally. NELP recommended that the Department adjust for inflation the short test salary level adopted by the Department in 1975, or in the alternative, adopt a threshold of $1,122 per week.
Commenters, such as the UFCW, pointed out that the Department's proposed salary is lower than the average historical salary ratio associated with the short duties test, which is the basis for the standard duties test. Multiple commenters noted that the proposed salary level covers a smaller share of all salaried workers (40 percent) than the 1975 short test salary level, which covered 62 percent of full-time salaried employees.
Commenters urging a higher salary level also asserted that the Department's proposed salary level excludes from overtime protection too large a percentage of employees in traditionally nonexempt occupations and is too low to adequately minimize the risk of inappropriately classifying overtime-eligible workers as overtime exempt. AFL-CIO stated that the Department has previously set the long test salary level at an amount about 25 percent higher than the average starting salary for newly hired college graduates, and they asserted that this would yield a standard salary level of $52,000 per year. AFL-CIO contended that the salary test must be set at a “high enough level that large numbers of eligible workers are not stranded above the threshold.” NELA likewise urged the Department to “aim for a threshold where the number of non-exempt employees earning salaries above the threshold equals the number of otherwise exempt employees earning less than the threshold”—an amount we estimated in the NPRM would be roughly equal to the 50th percentile of
The Department understands commenters' concerns that the proposed standard salary level was lower than the 50th percentile of full-time salaried workers ($1,065 based on 2013 data) and updating the 1975 short test salary ($1,083 based on 2013 data). As the Department stated in the NPRM, however, we are concerned that a standard salary threshold at that level, in the absence of a lower salary long test to fall back on, would deny employers the ability to use the exemption for too many employees in low-wage areas and industries who perform EAP duties.
In contrast to commenters representing employees, a great number of commenters representing employers and many individual employers objected that the Department's proposed salary level was too high. While commenters supporting the proposed threshold or advocating for a higher threshold asserted that the proposal is lower than indicated by historical
Some commenters requesting a lower salary threshold, such as the American Association of Orthopaedic Executives, Associated Builders and Contractors (ABC), and the Montana Conservation Corps, urged the Department to instead adjust the 2004 salary level for inflation. Many others stated that the Department should set the salary level at the 20th percentile of earnings of full-time salaried employees in the South and in the retail industry, as we did in 2004.
The Department received many comments stating that by using a nationwide data set, the proposal fails to adequately account for salary disparities among regions and areas, industries, and firms of different sizes. Some commenters, including the Assisted Living Federation of America and the American Seniors Housing Association (ALFA), Jackson Lewis, and PPWO, asserted that adopting the proposal would effectively eliminate the exemption for certain industries or in certain parts of the country and, as a result, would exceed the Department's statutory authority.
Multiple commenters asserted that the proposed salary level is too high for low-wage regions.
In addition to these comments, multiple commenters noted that salaries may vary widely within a state or region, especially between rural or smaller communities and urban areas. Several commenters, including Columbia County, Pennsylvania, Community Transportation Association of the Northwest, Elk Valley Rancheria Indian Tribe, Jackson Lewis, the Jamestown S'Klallam Tribe, the National Board for Certified Counselors, the National Newspaper Association, NRF, and the Northern Michigan Chamber Alliance, commented that the proposed salary level is too high for rural areas and small communities. HR Policy Association stated that 14 percent of chief executives and 32 percent of general and operations managers in small cities and rural areas earn less than the salary level calculated using the proposed methodology and 2014 data. Commenters also compared earnings and the cost of living in lower-wage communities to very high wage urban areas and asserted that the
Several commenters also asserted that the proposed salary level ($50,440 based on projections for 2016) would have a disproportionate impact on employers in low-wage industries, such as the retail and restaurant industries. HR Policy Association stated that in the retail, accommodation, and food services and drinking places industries, over one-third of general and operations managers would fall below the proposed salary level in 2014 dollars. FMI stated that “millions of employees in retail who clearly meet the duties requirements for retail earn below $50,000.” NRA cited a 2014 survey finding that the median base salary paid to restaurant managers is $47,000 and to crew and shift supervisors is $38,000, and multiple chain restaurant businesses submitted comments stating that if the Department increased the salary level to our proposed threshold and updated it annually, “there might be no exempt employees in many of our restaurants.”
The Department also heard from multiple commenters, such as IFA, the National Federation of Independent Businesses (NFIB), NGA, the National Independent Automobile Dealers Association, the National Newspaper Association, Senator David Vitter, and Representative James Inhofe, that our proposal would have a disproportionate impact on small businesses. The Office of Advocacy of the United States Small Business Administration (Advocacy) stated that the proposed salary threshold would “add significant compliance costs . . . . on small entities, particularly to businesses in low-wage regions and in industries that operate with low profit margins.”
Several commenters, including the Chamber, Littler Mendelson, Fisher & Phillips, and the Seyfarth Shaw law firm, noted that the Department has historically adjusted the salary level to account for low-wage regions and industries and small establishments, and asserted that the Department failed to do so in this rulemaking. These and other commenters urged the Department to account for such variations by setting the salary level at a point near the lower range of salaries in the lowest-wage regions or industries. For example, among other alternatives, the Chamber asked the Department to consider setting the salary level at the 40th percentile of earnings of full-time salaried employees in Louisiana, Mississippi, and Oklahoma ($784 per week or $40,786 annually), which it described as the three states with the lowest salaries. Many other commenters, including the International Bancshares Corporation, the National Association of Federal Credit Unions, the National Council of Young Men's Christian Associations of the United States of America (YMCA), and many individual commenters, urged the Department to adopt different salary levels for different regions of the country or for different industries or sizes of businesses.
Commenters representing employee interests, however, disagreed that the Department should make further adjustment for low-wage regions and industries. EPI commented that because the Department's proposed standard salary level falls within historic short test levels, the Department's earlier adjustments to account for regional wage disparities are “baked in.”
The Department has considered these comments and appreciates the strong views in this area. While our proposal did account for lower salaries in some regions and industries by setting the salary level lower than both the average historical salary ratio associated with the short duties test ($1,019 per week according to the data set used in the Final Rule) and the median of full-time salaried workers ($1,146 according to the data set used in the Final Rule), we have determined that further adjustment to account for regional variation is warranted. The proposed salary level ($972 based on the fourth quarter 2015 data) is in the lowest quarter of the historical range of the short test salary, but it is not at the bottom of the range, and based on the comments, we are concerned that this salary would not sufficiently account for regional variation in wages. Accordingly, we have adjusted the data set used to set the salary level to further reflect salary disparities in low-wage areas. Under this Final Rule, the Department will set the standard salary level equal to the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region. Based on fourth quarter 2015 data, the lowest-wage Census Region is the South, and the 40th percentile of weekly earnings of full-time salaried workers in the South is $913.
This adjustment will ensure that the salary level “is practicable over the broadest possible range of industries, business sizes and geographic regions.” 69 FR 22171 (citing Kantor Report at 5). Setting the salary level equal to the weekly earnings of the 40th percentile of full-time salaried workers in the lowest-wage Census Region represents the 22nd percentile of
The decrease in the salary level due to the change to the lowest-wage region data set addresses commenters' concerns that the salary test would eliminate the exemption for certain industries or certain parts of the country. For example, while PPWO asserted that the proposed salary level would have excluded from the exemption
Setting the salary level equal to the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region is consistent with the Department's historical practice of examining a broad set of data on actual wages paid to salaried employees and then setting the salary level at an amount slightly lower than might be indicated by the data. In addition, this method is consistent with our previous practice of examining data broken out by geographic area in setting the salary level. The Final Rule methodology also benefits from continuity with our 2004 methodology, in which we set the salary level equal to a percentile of the earnings of full-time salaried workers in the South. Finally, the approach adopted in this Final Rule fulfills the Department's goals of making the salary methodology simpler and more transparent.
The Department believes that the standard salary level set in this Final Rule will appropriately distinguish between those who likely are bona fide EAP employees and those who likely are not, when paired with the current duties test and will not require a return to a limit on the performance of nonexempt work. The Final Rule salary level, like the Department's proposed salary threshold, exceeds the inflation-adjusted 2004 salary level and the levels suggested by the Kantor long test and 2004 methods (all of which were based on the lower long test salary), but is at the low end of the historical range of short test salary levels, based on the historical ratios between the short and long test salary levels. A substantially higher standard salary threshold, such as the levels advocated by some commenters representing employees, would fail to account for the absence of a long test, which historically allowed employers to claim the exemption at a lower salary level for employees who satisfy a more restrictive duties test. This is particularly true given that the salary threshold will apply nationwide, including in low-wage regions and low-wage industries. In the NPRM, the Department considered setting the standard salary equal to the 50th percentile of earnings of full-time salaried workers nationwide ($1,146 per week or $59,592 annually according to the data set used in this Final Rule); we also considered adjusting the 1975 short test salary level of $250 for inflation ($1,100 per week or $57,200 annually). We declined to adopt either alternative, however, due to our belief that the salary level generated through these methods would result in overtime eligibility for too many employees in low-wage regions and industries who are bona fide EAP employees.
The Department is mindful that any salary level must adequately demarcate bona fide EAP employees in higher-wage, as well as lower-wage areas. As we have previously explained when discussing the salary level to be paired with the more rigorous long duties test, the threshold “can be of little help in identifying” bona fide EAP employees when “large numbers” of traditionally nonexempt workers in large cities earn more than this amount. Weiss Report at 10. By setting the salary equal to the 40th percentile of salaries in the lowest-wage Census Region, a higher percentile than we chose in 2004, the Department's methodology is sufficiently protective of employees in higher-wage regions and accounts for the fact that the standard salary level will be paired with a less rigorous standard duties test that does not specifically limit the amount of nonexempt work that can be performed. The $913 salary level is within the historical range of short test salary levels, based on the ratios between the short and long test salary levels, albeit at the low end of that range. To the extent that salaries in lower-wage regions have converged with salaries elsewhere in the country, as some commenters suggested, tying the salary level to salaries in the lowest-wage Census Region is even less likely to result in a threshold that is inappropriate for other areas.
The Department believes the Final Rule methodology strikes an appropriate balance between minimizing the risk of employers misclassifying overtime-eligible workers as exempt, while reducing the undue exclusions from exemption of bona fide EAP employees. As the Department explained in the NPRM, we have long recognized that there will always be white collar overtime-eligible employees who are paid above the salary threshold, as well as employees performing EAP duties who are paid below the salary threshold. Under the Final Rule, 5.7 million white collar employees who fail the standard duties test will now also fail the salary level test eliminating their risk of misclassification as exempt. The Department estimates that 732,000 of these white collar salaried workers are overtime-eligible but their employers do not recognize them as such.
Other measures confirm the appropriateness of the new standard salary level. The Department has traditionally considered newly hired college graduates to be overtime eligible and the Final Rule salary level is slightly higher than the average salary for college graduates under 25 years old.
To the extent that some commenters advocated an even further downward adjustment to the salary level to account for low-wage regions and industries, the Department believes that such an adjustment would not be appropriate given that the Department has decided not to introduce a specific limitation on the performance of nonexempt work into the standard duties test. Moreover, we note that the standard salary level must be practicable in high-wage areas as well as in low-wage ones. As we have previously stated, the salary threshold “can be of little help in identifying” bona fide EAP employees when “large numbers” of traditionally nonexempt workers in high wage areas earn in excess of the salary level. Weiss Report at 10. In California and New York, for example, 69 percent of first-line supervisors in construction, 51 percent of paralegals and legal assistants, and 31 percent of secretaries and administrative assistants earn $913 or more per week, despite the fact that the probability of these workers passing the standard duties test is between 0 to 10 percent. With respect to commenters who expressed concern that employees performing the same duties will be exempt in one location and overtime protected in another, the Department notes that this has always been the case and may occur at any salary level. Lowering the salary threshold below the amount set in this Final Rule would result in a salary level that is inappropriate for traditionally nonexempt workers in high wage areas, especially when paired with the less rigorous standard duties test.
The $913 salary level adopted in this Final Rule corresponds to the low end of the historical range of salaries for the short duties test on which the current standard duties test is based ($889 to $1,231). The Department considered the possibility of adopting a salary level equal to the 35th percentile of weekly earnings of full-time salaried employees in the South, which would yield a salary level of $842 per week based on fourth quarter 2015 data. However, given that this would result in a salary level lower than the bottom of the historical range of short test salary levels, based on the historical ratios between the short and long test salary levels, the Department determined that setting the salary level at the 35th percentile of the lowest-wage Census Region would not work effectively with the standard duties test. The Department also considered adopting a higher salary level within the historical range of short test salaries as advocated by many employee representatives, but we remain concerned about the adverse effect such a threshold might have on low-wage regions. Accordingly, the Department has concluded that the 40th percentile of weekly earnings of full-time salaried workers in the South represents the best dividing line between employees who are overtime eligible and those who may not be overtime eligible, when paired with the standard duties test.
Historically the Department has looked to low-wage industries as well as low-wage regions in setting the long test salary and, in 2004, we looked specifically to the retail industry in setting the standard salary level.
With respect to the Chamber's suggestion that the Department limit the data set to the three lowest-wage states in the South (for which the 40th percentile of weekly earnings is $784), this methodology yields a salary level significantly below the historical range of short test salary levels and for all the reasons discussed above would
The Department also declines to adopt different salary levels for different regions of the country or for different industries or sizes of businesses. The Department has always maintained a salary level applicable to all areas and industries. As the Department explained when we rejected regional salary thresholds in the 2004 Final Rule, adopting multiple different salary levels is not administratively feasible “because of the large number of different salary levels this would require.” 69 FR 22171. Furthermore, as discussed earlier, the Department believes the methodology adopted in this Final Rule will adequately account for commenters' concerns about geographic and other disparities by setting the salary level based on salaries in the lowest-wage Census Region.
In addition to asserting that the proposed salary level is inappropriate for low-wage regions and industries, commenters requesting a lower salary level also criticized the methodology the Department used in our proposal, took issue with the justifications underpinning the proposal, and predicted that the proposed salary level would negatively impact employers and employees. Some commenters criticized the Department for using a different percentile to set the salary threshold than it has in the past.
Several commenters also disagreed with the Department's explanation that it was necessary to set a percentile that would not only reflect increases in nationwide salary levels since 2004, but also correct for the fact that the salary level set in 2004 was too low—when paired with a duties test based on the historical short duties test—to effectively screen out overtime-protected white collar employees from the exemption. Many of these commenters asserted that the Department did account for the elimination of the long duties test, by increasing “the percentile used from 10th to 20th.” Littler Mendelson;
The Department disagrees with these comments, and we continue to believe that the salary level set in 2004 was too low to effectively screen out from the exemption overtime-protected white collar employees when paired with the standard duties test. As an initial matter, we disagree with commenters' suggestion that the standard duties test does not closely approximate the historic short duties test because of minor differences between the two tests. In 2004, the Department described these differences as merely “de minimis,” and explained that the new standard duties test is “substantially similar” to the old short duties test. 69 FR 22192-93; 69 FR 22214. The key difference between the old short test and the old long test was that the long test imposed a bright-line 20 percent cap on the amount of time an exempt employee could spend on nonexempt duties (40 percent for employees in the retail or service industries). The short duties test, in contrast, did not impose a specific limitation on nonexempt work because the short test was intended to apply only to workers who earned salaries high enough that such a limitation was unnecessary. The standard duties test developed in 2004 takes the short test approach and does not specifically limit nonexempt work.
When moving to a standard duties test based on the short duties test in 2004, the Department relied on the methodology we had historically used to set the long test salary threshold, with two changes. First, the Department set the salary level based on the earnings of exempt
Although the Department also recognized the need to make an additional adjustment to the long test salary level methodology because of the move to the standard duties test,
Several commenters that stated that the Department's proposed threshold is too high asserted that the proposal alters the purpose of the salary test and inappropriately minimizes the role of the duties test by excluding from the exemption too many employees who satisfy the standard duties test. In support of this point, SHRM noted the Department's estimate that 25 percent of white collar workers subject to the salary level test who currently meet the duties test would be overtime-protected under the Department's proposed salary level. HR Policy Association stated that, if the salary level was set according to the Department's proposed methodology, 25 percent of accountants and auditors, 24 percent of business and financial operation managers, and 11 percent of “chief executives” would not qualify for the EAP exemption in 2014.
Several commenters representing employers stated that the salary level has historically been set at a level such that “employees below it would clearly not meet any duties test,” or would be very unlikely to satisfy the duties requirements. NRA;
The Chamber, FMI, and SHRM also stated that the Department lacks the authority to set wages for, or establish a salary level with the goal of, improving the conditions of executive, administrative, and professional employees. IFA asserted that because the Department's proposal makes nonexempt what IFA characterized as a significant number of employees who would clearly meet the duties test, the proposal “expands the number of employees eligible for overtime beyond what Congress envisioned.”
Commenters representing employees, however, disagreed that the purpose of the salary level is to identify employees who are very likely to fail the duties tests. NELA and other commenters asserted that the primary purpose of the salary level is to prevent employers from inappropriately classifying as exempt those who are not “bona fide” executive, administrative, or professional employees. NELA noted that the proposed threshold is lower than the salaries of roughly 41 percent of salaried workers who fail the duties test, according to the NPRM, and AFL-CIO commented that under the proposal, “the percentage of overtime-
As the Department explained in the NPRM, the purpose of the salary level test has always been to “distinguish bona fide executive, administrative, and professional employees from those who were not intended by Congress to come within these exempt categories.” 80 FR 38524. Any increase in the salary level must therefore “have as its primary objective the drawing of a line separating exempt from nonexempt employees.”
The Department does not believe that the methodology adopted in this Final Rule would defeat the exemption for too many employees who pass the standard duties test, or render the standard duties test superfluous. There will always be some employees performing EAP duties who are paid below the salary threshold, as well as overtime-eligible employees who are paid above the salary threshold (and thus whose status turns on the application of the duties test).
By contrast, of salaried white collar workers who currently meet the standard duties test, 5.0 million (22.0 percent) earn less than $913 per week, and will thus be eligible for overtime under this Final Rule. Whenever the Department increases the salary level, it is inevitable that “some employees who have been classified as exempt under the present salary tests will no longer be within the exemption under any new tests adopted.” Kantor Report at 5. As we have explained, such employees include “some whose status in management or the professions is questionable in view of their low salaries,” and some “whose exempt status, on the basis of their duties and responsibilities, is questionable.”
Commenters asserting that the Department's proposal turned the purpose of the salary level test “on its head” misconstrue the relationship between the salary level test and the duties test as it has existed throughout most of the history of the part 541 regulations. The fact that an employee satisfies the duties test, especially the more lenient standard duties test, does not alone indicate that he or she is a bona fide executive, administrative, or professional employee. The salary level test and duties test have always worked in tandem to distinguish those who Congress intended the FLSA to protect from those who are “bona fide” EAP employees. The Department has long recognized, moreover, that “salary is the best single indicator of the degree of importance involved in a particular employee's job,” Weiss Report at 9, and “the best single test of the employer's good faith in characterizing the employment as of a professional nature.” Stein Report at 42. Thus, the Department acknowledged shortly after we first promulgated the part 541 regulations that, in the absence of a clause “barring an employee from the exemption if he performs a substantial amount of nonexempt work,” it becomes “all the more important” to set the salary level “high enough to prevent abuse.” Stein Report at 26. This inverse correlation between the salary level and the duties requirements was the basis of the separate short and long tests, which co-existed until 2004.
As reflected in many comments favoring a lower salary level, the Department historically paired the long duties test—which limited that amount of nonexempt work an exempt employee could perform—with a salary level designed to minimize the number of employees satisfying that test who would be deemed overtime-eligible based on their salaries. Even then, the Department noted that the long test salary level should exclude the “great bulk” of nonexempt employees from the EAP exemption. Weiss Report at 18. When the Department enacted the short test in 1949, however, we recognized that this more permissive “short-cut test” for determining exempt status—which did not specifically limit the amount of time an exempt employee could spend on nonexempt duties—must be paired with a “considerably higher” salary level.
The standard duties test adopted in 2004, and unchanged by this Final Rule, is essentially the same as the old short duties test. It does not specifically limit the amount of time an exempt employee
Some commenters representing employers also raised concerns about the Department's use of the CPS data on full-time nonhourly employees. The Chamber and Fisher & Phillips advocated that rather than calculate the salary level using the CPS data, the Department should create our own data set of exempt salaried employees drawn from WHD investigations and field research. NAM stated that the CPS data provides an “apples-to-oranges” comparison because it reflects all nonhourly compensation, while the Department's proposal excludes certain forms of compensation (for example, some incentive pay) from counting toward the salary threshold, and other commenters made similar assertions. The Chamber, Fisher & Phillips, and the Iowa Association of Business and Industry (IABI) also disagreed with the Department's conclusion that CPS data on compensation paid to nonhourly workers is an appropriate proxy for compensation paid to salaried workers. Employees sampled might be paid on a piece-rate or commission basis, for example, and thus, the Chamber stated, the “non-hourly worker category is at best a rough and imprecise measure of workers paid on the basis required for exempt status.” In addition, IABI, the International Foodservice Distributors Association, and others criticized the Department for declining to further restrict the CPS sample by filtering out various categories of employees—such as teachers, lawyers, or federal employees—based on statutory and regulatory exclusions from FLSA coverage or the salary requirement.
The Department continues to believe, as we did in 2004, that CPS data is the best available data for setting the salary threshold. The CPS is a large, statistically robust survey jointly administered by the Census Bureau and BLS, and it is widely used and cited by industry analysts. It surveys 60,000 households a month, covering a nationally representative sample of workers, industries, and geographic areas and includes a breadth of detail (
The Department considers CPS data representing compensation paid to nonhourly workers to be an appropriate proxy for compensation paid to salaried workers, as we explained in the NPRM.
Finally, the Department disagrees that we should have excluded the salaries of employees in various job categories, such as teachers, doctors, and lawyers, because they are not subject to the part 541 salary level test. These white collar professionals are part of the universe of executive, administrative, and professional employees who Congress intended to exempt from the FLSA's minimum wage and overtime requirements. Including them in the data set achieves a sample that is more representative of EAP salary levels throughout the economy. Moving to an even more standardized sample that does not require adjustments also serves the Department's goal of making the salary methodology as transparent, accessible, and as easily replicated as possible, and is consistent with the President's directive to simplify the part 541 regulations.
Many employers and commenters representing them also expressed concern about the magnitude of the Department's proposed increase from the 2004 salary level. Under the proposal, the salary level would have increased from $455 a week to $972 per week based on fourth quarter 2015 data, a 113.6 percent overall increase and 9.5 percent average per year increase. Under the Final Rule, the salary level will increase to $913 per week, a 100.7 percent overall increase and 8.4 percent average per year increase. Several commenters, including the Chamber, Littler Mendelson, and NAHB, described the proposed percentage increase in the salary level as “unprecedented.” Many commenters urged the Department to gradually phase-in an increase to the salary level. SHRM, for example, stated that a phased-in approach will provide some flexibility to employers, allowing them to gather information about the hours that currently nonexempt employees work and to budget for any increased wages and other costs. Independent Sector noted that an appropriate phase-in period would allow non-profit organizations to adjust to a new salary level without reducing programs and services. Some commenters advocating an incremental approach, such as PPWO and the Chamber, opposed the proposed salary level, but requested a gradual phase-in if the Department moves forward with the proposal. Others did not oppose the Department's proposed threshold, so long as the Department phases in the increase.
Contrary to some commenters' assertions, the magnitude of the salary increase proposed by the Department is not unprecedented. The 2004 Final Rule
Commenters identified many impacts that they believed would flow from the proposed increase in the standard salary level. Commenters representing employers and employees differed dramatically on some of the predicted impacts of the rule. In addition, where commenters representing employers and employees agreed on likely outcomes, they viewed the advantages and disadvantages of those outcomes quite differently.
Many employers and their representatives stated that employers would not be able to afford to increase the salaries of most of their currently exempt employees to the proposed level. Therefore, they stated that they were likely to reclassify many of these employees to overtime-protected status, which they asserted would disadvantage the employees in a number of ways and would not increase their total compensation. In contrast, employee advocates predicted that workers will benefit from the increased salary level; those who receive a salary increase to remain exempt will benefit directly, and those who are reclassified as overtime eligible will benefit in other ways, as detailed below.
Employers and their representatives, including AH&LA, CUPA-HR, NAM, NRF, and the National Small Business Association (NSBA), suggested that they would reclassify many employees to overtime-protected status. For example, the NGA surveyed its members, and 98 percent stated they would reclassify some currently exempt workers, and 80 percent stated that they would reclassify 50 percent or more because they cannot afford to increase their salaries. NCCR commented that one restaurant chain stated it likely would reclassify 90 percent of its managers and another company with more than 250 table service restaurants estimated that 85 percent of its managers have base salaries below the proposed threshold. CUPA-HR stated that 87 percent of those responding to its survey of higher education human resource professionals stated “they would have to reclassify
Many employers and their representatives stated that they would convert newly nonexempt employees to hourly pay and pay them an hourly rate that would result in employees working the same number of hours and earning the same amount of pay as before, even after accounting for overtime premium pay. Also, some employers indicated they might reduce their workers' hours, especially over time, in an attempt to avoid paying any overtime premium pay, so the formerly exempt workers' hours and pay ultimately could be lower.
Some commenters gave specific estimates of the percentage of newly nonexempt employees who would have their overtime hours limited. Associated General Contractors of America (AGC) surveyed its construction contractor members and more than 60 percent expected to institute policies and practices to ensure that newly overtime-eligible employees do not work more than 40 hours per week. ANCOR surveyed service provider organizations and more than 70 percent stated that they would prohibit or significantly restrict overtime hours. SHRM similarly commented that 70 percent of its survey respondents stated they would implement restrictive overtime policies. NRF cited an Oxford Economics report and stated that 463,000 retail workers would be reclassified to nonexempt status and those employees who work overtime would be converted to hourly pay, with their earnings remaining the same after their hourly rates of pay were adjusted, while an additional 231,500 retail employees would be reclassified to nonexempt status and have their hours and earnings reduced.
Not all employers indicated such high numbers of employees would be reclassified, converted to hourly pay, or limited in hours. For example, NAM stated that 41 percent of manufacturers stated they would reclassify employees and 37.2 percent stated they would then reduce employees' hours. NAHB stated that 33 percent of survey respondents indicated they would need to make some change regarding construction supervisors, and 56 percent of that subgroup indicated they would take steps to minimize their overtime. However, only 13 percent of respondents stated they would reduce salary, and only 13 percent stated they would switch employees from a salary to an hourly rate.
Numerous employers and their representatives, including AH&LA, CUPA-HR, NCCR, Nebraska Furniture Mart, NRA, NRF, OneTouchPoint, Pizza Properties, Seyfarth Shaw, SHRM, SIFMA, and the Salvation Army, also commented that the employees who were reclassified to nonexempt status would be further disadvantaged because they would lose valuable fringe benefits, such as life insurance, long-term disability insurance, increased vacation time, incentive compensation, tuition reimbursement, and increased retirement contributions. They noted that many employers offer such benefits only to exempt employees, or provide them to exempt employees at a greater rate or at a reduced cost. In addition, ANCOR and others stated that nonexempt workers' fringe benefits would be negatively affected because employers would take funds away from such benefits in order to pay for the increased costs of the rule. AGC surveyed its construction contractor members, and 40 percent expected
Employer groups also stated that employees reclassified to nonexempt status and converted to hourly pay would be harmed by the loss of flexibility and the loss of the guarantee of receiving the same salary every workweek. Employers and their representatives, including AH&LA, American Bankers Association (ABA), the Chamber, FMI, IFA, New Jersey Association of Mental Health and Addiction Agencies, OneTouchPoint, PPWO, SIFMA, Seyfarth Shaw, and SHRM, asserted that exempt status gives employees the flexibility to come in late, leave early, and respond to unexpected events such as taking a sick child to the doctor. Moreover, they can do so without fear of losing pay for the time spent away from work. Newly overtime-eligible employees, these commenters asserted, will have to account for their time and they will have to think more carefully about taking unpaid time off to deal with personal and family issues. Employer representatives noted that another benefit of exempt status is that many employers allow exempt employees to perform some of their work remotely and outside of normal business hours, such as from home during the evening, as best suits the employees' personal schedules.
Employer groups also stated that employees reclassified to nonexempt status will lose out on after-hours management training programs and committee meetings and thus have fewer opportunities for career advancement.
Many employers and their representatives also emphasized that the loss of exempt status will have a negative impact on employee morale. They stated that employees sought out their management role and view their exempt status as an indication of the employer's recognition of their achievements and their position as part of the management team. They stated that the loss of exempt status will be perceived as a demotion and devaluation of their roles in the organization, even if other aspects of their compensation remain the same.
Finally, employer representatives identified a number of other negative consequences that they believed would flow from the adoption of the proposed increase in the standard salary level. For example, some employer groups, including FMI, NRF, and WIPP, emphasized that they believed employers would eliminate full-time jobs and create part-time jobs. FMI, NGA, Seyfarth Shaw, and SHRM indicated that employers would use part-time workers to ensure that newly overtime-eligible employees did not have to work overtime hours. ANCOR, NGA, Seyfarth Shaw, and the YMCA also predicted that, as the hours of the newly nonexempt workers are restricted, employers will respond by increasing the workload burden and scope of responsibility of the managers and supervisors who remain exempt.
Employees and employee advocates, on the other hand, predicted that workers would benefit in a variety of ways from the proposed increase in the standard salary level. First, they saw direct benefits from the proposed salary because, for those who remain exempt but currently earn less than the proposed increase, they will receive additional pay each week in order to raise them to the new salary level. Employees who are reclassified to nonexempt status will get more time outside of work to spend with their families or to engage in leisure activities if their hours are reduced, and thus they will have a better work-life balance; alternatively, they will be paid time-and-a-half for any overtime hours they work. Finally, work opportunities will be spread as workers who had been unemployed or underemployed will gain additional hours. Employee advocates viewed these outcomes as consistent with the fundamental purpose of the FLSA's overtime provision.
Some advocates, including AFL-CIO, AFT, and NELP, emphasized the benefits of spreading employment in light of the harms that come from working long hours, citing studies showing that long hours are related to stress and injuries at the workplace and increased incidences of certain chronic diseases like heart disease, diabetes, and depression. They also cited studies showing the high cost to businesses associated with absenteeism and turnover due to workplace stress and stated that productivity would improve
EPI disputed the employers' claim that wages and hours would remain the same after employees were reclassified to nonexempt status. EPI emphasized that this view assumes that employees have no bargaining power. However, EPI stated that a “consistent finding of both labor and macroeconomics is that nominal wages are `sticky,' meaning that employers rarely will lower them.” EPI concluded this is particularly likely to be the case now, given that the unemployment rate for college graduates was just 2.6 percent in July 2015 and for those in “management, professional, and related” occupations was just 3.1 percent. Therefore, employers will not be able to reduce employees' wage rates when they are reclassified to nonexempt status to the full extent that would be necessary for the employees to receive no additional compensation for overtime hours worked. NELP similarly emphasized that, at a time when even low-wage employers are raising their starting wages in order to attract and retain a qualified workforce, it would be “a foolhardy business practice” for employers to risk losing formerly exempt workers by decreasing their wages and hours.
Worker advocates also disputed employers' claims that workers would lose privileges and flexibility after they were converted. For example, EPI pointed to research based on the General Social Survey showing that salaried workers and hourly workers experience similarly limited workplace flexibility at levels below $50,000 per year. The research showed that 43-44 percent of hourly workers paid between $22,500 and $49,999 were able to “sometimes” or “often” change their starting or quitting times. That percentage only increased to 53-55 percent for salaried workers in that same range. Only when salaries rose above $60,000 did 80 percent of salaried workers report being able to “sometimes” or “often” change their starting or quitting times. Employees paid hourly actually reported more flexibility in the ability to take time off during the work day to take care of personal matters or family members, with 41 percent of hourly workers earning $40,000-$49,999 stating it was “not at all hard” compared to only 34 percent of salaried workers. Finally, salaried workers reported slightly greater levels of work stress than hourly workers, and they worked mandatory overtime at the same frequency as hourly workers and more days of overtime in general.
Many of the comments from individual exempt employees similarly emphasized their lack of flexibility. For example, a retail store manager described working 55-60 hours a week, with store staffing kept at the bare minimum of two-person coverage. Therefore, the manager has little “flexibility when an employee calls out sick. I have to pick up the slack.” A chef similarly stated that he routinely works 20-30 hours of overtime per week, and has to modify his schedule to meet the demands of the business, including by filling in if an overtime-eligible cook gets sick. Another exempt employee who reported working 1136 hours of overtime in three years (an average of approximately 49 hours of work per week) stated, “[i]f I complete my work in 30 hours I still have to stay for the required work hours of the company & longer as required or requested.” A manager of a community home for the intellectually disabled concurred, stating that the homes “have to be staffed 24 hours a day, 365 day[s] per year. To reduce[ ] organizational overtime, managers are expected to work when employees call in sick, are on leave, and when a client is in the hospital and needs a 24 hour sitter. Managers also pitch in to help other homes when there is a need.” Other exempt workers similarly noted that they are scheduled to staff specific shifts and also are required to fill in for hourly workers who call out sick, when positions are vacant, when extra hours are needed such as around the holidays, or when the employer has to cut payroll to meet its targets.
With regard to the loss of “status,” NELP commented that, even if employers do reclassify some employees to nonexempt status, there is no reason to consider that a demotion. NELP stated the employer can continue to give nonexempt employees whatever job titles are appropriate and is not required to otherwise diminish their stature. SEIU emphasized that it is not the designation of “exempt” that provides status to workers, but rather the pay and benefits that should accompany that designation. For example, most registered nurses, who perform bona fide professional duties and whose earnings typically exceed the proposed salary, nonetheless prefer to be paid hourly and be overtime eligible. SEIU concluded that “[b]eing classified as ineligible for overtime is little comfort to a worker who routinely works more than forty hours a week and can barely afford child care for the time she is missing with her family.” The UAW, representing postdoctoral scholars, made the same point regarding status, concluding that “their low pay indicates that their employers do not view them or treat them as bona fide professionals.”
Numerous individual employees also stated that they would not perceive a change from exempt to overtime-protected status as a demotion. For example, one employee stated that he sometimes works seven days and more than 55 hours per week, and that he would “gladly move down to non-exempt and punch a time card. At least I would finally be paid fairly for all the hours I am putting in.” A retail store manager similarly stated that he works an average of 55-60 hours per week and looks forward to either receiving an increased salary or the return of his personal life. He rejected the view that exempt employees would feel demoted by a change in status, saying he does not want a meaningless title and would not “be embarrassed if my employees find out I've been bumped to hourly again.” Another store manager with 12 years of experience emphasized “I am NOT concerned with the transition from being exempt to non exempt if that were to happen.” A convenience store manager who works an average of 60-65 hours per week stated that 7 of the 8 exempt employees he knows quit in the past year due to being overworked without any additional compensation, and he stated that workers feel that an exempt position is “a demotion rather than a promotion.” Another exempt employee stated that he believes that businesses often use salaried positions as a way to cut down on overtime costs, and that the employers “who are bemoaning the loss of `status' for their employees are probably those who have used this trick to get more hours worked for less money.”
In response to some employers' assertions that they will reclassify many of their currently exempt employees to overtime-protected status, convert them to hourly pay, modify their pay so that they work the same number of hours and earn the same amount, and potentially reduce their hours in the long run, the Department estimates that 60.4 percent
The Department recognizes that these outcomes are averages and some employees ultimately may receive lower earnings if their employers reduce their hours more extensively in an effort to ensure that no overtime hours are worked. However, such employees will receive extra time off. Therefore, the Department partially concurs with the comments of the individual employees and employee advocates who stated that the overall impact of the rule would benefit employees in a variety of ways, whether through an increased salary, overtime earnings when they have to work extra hours, time off, and/or additional hours of work for those who were previously unemployed or underemployed.
Some employers also asserted that employees reclassified as nonexempt would lose fringe benefits such as life insurance, disability insurance, increased vacation time, and bonuses and other incentive compensation that they provide only to exempt employees. The Department notes that employers may choose to continue to provide such benefits to workers who employers like ABA and IFA described as “critically important”; the design and scope of such fringe benefit and incentive compensation programs are within the employers' control. We see no compelling reason why employers cannot redesign their compensation plans to provide such fringe benefits and bonus payments based upon, for example, the employees' job titles rather than based upon their exemption status.
With regard to the employer claim that employees reclassified to overtime-protected status would lose flexibility in their schedule or the ability to take a few hours off when needed for personal purposes, the Department notes that the employees who are affected by this Final Rule currently earn a salary between $455 per week and $913 per week (or between $23,660 and $47,476 per year). The results of the General Social Survey
Employers also asserted that employees whose exemption status changes would lose the ability to work from home and outside of normal business hours, and they would lose the ability to attend after-hours training opportunities and meetings or to stay late to “get the job done.” The Department understands employers' concerns regarding the need to control and keep accurate records of the work hours of overtime-eligible employees.
Regarding the employer assertion that the change in exemption status will harm employees because they will not be able to take time off without losing pay for the time away from work, the Department notes that employers are not required to change employees' pay basis from salaried to hourly simply because they are no longer exempt. Employers may continue to pay employees a salary, even when the employees are entitled to overtime pay if they work in excess of 40 hours per week.
Finally, employers asserted that the loss of exempt status would have a negative impact on employees' morale. However, the Department believes that for most employees their feelings of importance and worth come not from their FLSA exemption status but from the increased pay, flexibility and fringe benefits that traditionally have accompanied exempt status, as well as from the job responsibilities they are assigned. None of these are incompatible with overtime protection. Many exempt employee commenters expressed significant concern and low morale regarding their current situation, and they looked forward to an improved situation under the new rule. Given the employers' emphasis on the important roles that these employees play in the success of their organizations, the Department anticipates that employers will strive to adapt to this rule in a way that minimizes the financial impact on their business while providing the maximum benefits, flexibility, and opportunities to their employees. If employers make these changes in a way that communicates the value they continue to place on the contributions of newly overtime-eligible workers, we are confident that employers can prevent employees from seeing their new entitlement to overtime protection as a demotion.
The Department also received several comments predicting the impact increasing the salary level would have on litigation. Commenters representing employees, such as the International Association of Fire Fighters (IAFF), stated that increasing the threshold would more clearly demarcate between employees who are entitled to overtime and those who are not, decreasing misclassification, and therefore, litigation, involving the EAP exemption. According to the joint comment submitted by 57 labor law professors, “the excessive importance of the duties test has resulted in the relatively high volume of litigation surrounding the exemptions and the many successful claims that have been asserted against employers in recent years,” so raising the salary level “will benefit employers by providing them more certainty and relieve them of the litigation and other costs of disputes over classification and misclassification.” Weirich Consulting & Mediation (Weirich Consulting) commented in support of the salary level change because it will make it easier “to determine more efficiently—and without needless litigation—whether or not particular employees are exempt.” Other commenters representing employers disagreed, however, with Jackson Lewis, NAM, and the Wage and Hour Defense Institute predicting that finalizing the proposed salary level would increase (rather than decrease) litigation. Jackson Lewis commented that the duties test is the main driver of litigation over the EAP exemption, and “there will be no end to litigation” so long as employers must continue to apply the standard duties tests to employees earning above the salary threshold. Jackson Lewis and NAM further asserted that the rule will result in additional litigation brought by “very dissatisfied” newly overtime-protected employees. Finally, Fisher & Phillips commented that the “collateral results” of selecting a particular salary level, including avoiding or reducing litigation, are not appropriate factors for setting the salary level required for the EAP exemption.
As we stated in the NPRM, the number of wage and hour lawsuits filed in federal courts increased substantially in the period between 2001 and 2012, from approximately 2,000 to approximately 8,000 per year, with stakeholders advising the Government Accountability Office that one of the reasons for the increased litigation was employer confusion about which workers should be classified as EAP exempt.
Although we did not establish the standard salary level in this Final Rule for the purpose of reducing litigation, we believe that reduced litigation will be one of the beneficial impacts of that increase. The salary level will once again serve as a clear and effective line of demarcation, thereby reducing the potential for misclassification and litigation.
A substantial number of commenters also addressed the impact that the proposed standard salary would have on non-profit employers. While many of the concerns that the non-profit employers expressed were the same as those identified by other employers, some of these commenters also addressed particular concerns that they believe they would face due to their non-profit status.
Many non-profit employers, including Habitat for Humanity, the National Multiple Sclerosis Society, the New Jersey Association of Mental Health and Addiction Agencies, Operation Smile, Catholic Charities, and the U.S. Public Interest Research Group (USPIRG), emphasized that non-profits generally pay lower salaries than for-profit employers, and therefore the proposed salary level would not serve as an effective dividing line between employees performing exempt and overtime-protected work in the non-profit sector.
For example, USPIRG stated that 75 percent of employees it has classified as exempt receive a salary below the 40th percentile of full-time salaried workers nationally. Operation Smile commented that the proposed standard salary would increase its payroll costs by nearly $1 million per year and affect more than 50 percent of its workforce. Habitat for Humanity similarly stated that the majority of its affiliates pay their highest paid employee less than $50,440 and estimated that approximately 40 percent of its affiliates' staff members would be directly affected by the proposed salary increase.
A number of non-profit commenters, including the Alliance for Strong Families and Communities, ANCOR, Catholic Charities, Easter Seals, Habitat for Humanity, and USPIRG, emphasized that they do not have the same ability as other employers to increase prices or reduce the profits paid to shareholders to compensate for the increased costs of the proposed salary; some noted this is because the prices for the services they provide are set in government contracts or by Medicaid, or because their revenue is based on grants reflecting labor costs at the time the grant is made and there may be no option for seeking an increase in funding. Several nonprofits expressed concern that they are constrained in their ability to increase salaries for their staff because funders evaluate them based on their ability to keep overhead, including salary costs, low, or because the terms of their grants may strictly limit how much of the grant can be allocated for overhead.
Nevertheless, despite their concerns regarding the potential impact of the proposed salary level, many non-profit employers expressed their general support for the intent and purpose of the rule.
Other commenters indicated that the impact on non-profit employers would not be as significant as most non-profits feared. For example, the comment submitted by 57 labor law professors noted that an economist found that management employees working for non-profits earned an average of $34.24 per hour in 2007, which far exceeds the proposed salary level, and that they presumably earn more than that now. Therefore, they concluded that the regulations “should not have a deleterious effect on these valuable organizations or their efforts to accomplish their important missions.” EPI also stated that, where a non-profit is engaged in revenue-producing activities and, thus, is competing with for-profit businesses, it “is only fair” that “it should be held to the same employment standards” to achieve a level playing field with regard to the employees who are involved with that commercial business or who are engaged in interstate commerce. Other commenters, such as the Wisconsin Association of Family and Children's Agencies, questioned the wisdom of a non-profit exemption, explaining that for-profit agencies may perform the same services as non-profits and rely on the same government funding streams and a non-profit exemption would not help the similarly situated for-profit service providers.
The Department recognizes and values the enormous contributions that non-profit organizations make to the country. Nonprofit organizations provide services and programs that benefit many vulnerable individuals in a variety of facets of life, including services that benefit the vulnerable workers who the Department also works to protect by ensuring that their workplaces are fair, safe, and secure. In response to the commenters' concerns, we note that (as discussed in detail above) we have modified the proposed salary level to account for the fact that salaries are lower in some regions than others. This change yields a salary at the low end of the historical range of short test salaries. This lower final salary level will also provide relief for non-profit employers, just as it does for employers in low-wage industries.
However, regarding the commenters' suggestions that we create a special exemption from the salary requirement, a lower salary level, a delayed
The Department concludes that such special treatment is not necessary or appropriate. As the comment from the 57 labor law professors noted, a study of National Compensation Survey data showed that the average hourly wage of full-time management employees in the not-for-profit sector was $34.24 per hour in 2007 ($1,369 per 40-hour workweek), which substantially exceeds the Final Rule's required salary of $913 per week.
Based on CPS data, the Department projects that for FY 2017, the median weekly earnings for affected workers in non-profits will be $741.68 while the median weekly earnings of affected workers in the private sector will be $745.54. The Department recognizes however, that non-profit entities may have a higher share of affected workers than for-profit entities, but does not believe that this will unduly impact this sector. If all affected workers in the non-profit sector who regularly work overtime were increased to the new salary level this would increase the total amount that non-profits pay EAP workers by 0.5 percent, compared to an increase of 0.3 percent in other sectors.
Finally, the Department also received comments from a number of non-profit higher education institutions. As discussed above, some commenters from the higher education community also asked for guidance on the application of the EAP exemption to educational institutions. Additionally, however, several commenters expressed concern about the impact that the Final Rule would have on higher education, with some suggesting a lower salary level for educational institutions.
Commenters representing research institutions raised concerns about the impact of the proposed rule on postdoctoral researchers. For example, CUPA-HR noted that the National Institutes of Health (NIH) stipend levels for post-doctoral researchers are “well below” the proposed salary level and that post-doctoral researchers with less than five years of experience would no longer meet the salary level for exemption. The Department notes that the Final Rule salary level based on the 40th percentile in the lowest-wage Census Region addresses some of these concerns and results in a salary level met by the NIH FY 2016 stipend level for post-doctoral researchers with at least three years of experience and is only $208 a year above the stipend level for a post-doctoral researcher with two years of experience.
Like non-profit employers, other commenters, including local governments,
Conversely, some commenters requested that the Department apply the
A number of comments, including a joint comment from the AIA-PCI, requested that the Department prorate the new salary level for part-time employees. The Department declines this request. That employers currently “can afford to pay part-time exempt employees the full salary required for exempt status, even if they work just 15 or 20 hours per week,” as Seyfarth Shaw noted in support of this request, merely underscores the need to significantly increase the 2004 salary level. The Department has never prorated the salary level for part-time positions, and we considered and rejected a special rule for part-time employees performing EAP duties in 2004.
Finally, a small number of commenters, including the National Automobile Dealers Association, suggested that the Department should eliminate the salary level test entirely, so that the exempt status of every employee would be determined on the basis of their job duties and responsibilities alone. The Department has repeatedly rejected this approach, and we do so again in this rulemaking. The Department has long recognized that “the amount of salary paid to an employee is the `best single test' of exempt status,” and is the principal delimiting requirement preventing abuse. 69 FR 22172; Stein Report at 24. Further, as the Department explained in 2004, eliminating the salary test is contrary to the goal of simplifying the application of the exemption, which the President has directed us to do in this rulemaking, and would require a “significant restructuring of the regulations,” including the “use of more rigid duties tests.” 69 FR 22172.
As explained in our proposal, the Department has historically applied a special salary level test to employees in American Samoa because minimum wage rates there have remained lower than the federal minimum wage.
The Department received only one comment on this aspect of our proposal—Nichols Kaster supported the proposed increase. We conclude that the proposed methodology remains appropriate, and the Final Rule accordingly sets the special salary level for American Samoa at 84 percent of the standard salary level set in the rule, which equals $767 per week. The Department has revised § 541.600(a) accordingly.
The Department has permitted employers to classify as exempt employees in the motion picture producing industry who are paid at a base rate of at least $695 per week (or a proportionate amount based on the number of days worked), so long as they meet the duties tests for the EAP exemptions.
The Department did not receive any substantive comments on this subject; two commenters, Nichols Kaster and the UAW, offered general support for this proposal. The Final Rule adopts the methodology set forth in our proposal, and using the new standard salary level
The Department also received approximately a dozen comments concerning application of the proposed salary level to Puerto Rico. Nearly all of these commenters urged the Department to either exempt Puerto Rico from the updated standard salary level requirement (thus keeping the salary level at $455) or to reinstate a special salary level test for Puerto Rico (set between the current and proposed salary levels).
As indicated in the NPRM, the Department has consistently assessed compliance with the salary level test by looking only at actual salary or fee payments made to employees and, with the exception of the total annual compensation requirement for highly compensated employees, has not included bonus payments of any kind in this calculation. During stakeholder listening sessions held prior to the publication of the NPRM, several business representatives asked the Department to include nondiscretionary bonuses and incentive payments as a component of any revised salary level requirement. These stakeholders conveyed that nondiscretionary bonuses and incentive payments are an important component of employee compensation in many industries and stated that such compensation might be curtailed if the standard salary level was increased and employers had to shift compensation from bonuses to salary to satisfy the new standard salary level.
In recognition of the increased role bonuses play in many compensation systems, and as part of the Department's efforts to modernize the overtime regulations, the Department sought comments in the NPRM regarding whether the regulations should permit nondiscretionary bonuses and incentive payments to count towards satisfying a portion of the standard salary level test for the executive, administrative, and professional exemptions.
The requirement that exempt employees be paid on a salary basis has been a part of the Department's part 541 regulations since 1940. As the Department said at that time, “a salary criterion constitutes the best and most easily applied test of the employer's good faith in claiming that the person whose exemption is desired is actually of such importance to the firm” that he or she is properly within the exemption. Stein Report at 26,
The Department received a variety of comments concerning whether the regulations should permit nondiscretionary bonuses and incentive payments to satisfy a portion of the standard salary level test. Commenters representing employers generally supported this change as an improvement over the current regulations, though many objected that the option the Department was considering was too restrictive. Most of the commenters representing employees that addressed this idea opposed it on the grounds that it would complicate the test for exemption and undermine the worker protections established by the salary basis requirement.
Commenters representing employers offered a range of reasons for generally supporting the inclusion of nondiscretionary bonuses and incentive
WorldatWork conducted a survey of its human resources manager members and found that “62% of respondents said their employers offer nondiscretionary incentive bonuses tied to productivity and/or profitability.” Several trade associations reported similar feedback from their members. The World Floor Covering Association stated that its “members have indicated that many managers and administrators receive bonuses based on the sales of the stores that they manage or oversee,” and the National Pest Management Association stated that 93 percent of its member companies reported providing some form of nondiscretionary bonuses. The Chemical Industry Council of Illinois and the National Council of Farmer Cooperatives respectively emphasized that nondiscretionary bonuses “are an integral part” or “play an important role” within an employee's total compensation package. RILA noted that in the retail industry “many retail managers and other exempt employees earn bonuses or other incentive payments designed to encourage a sense of ownership consistent with their important leadership roles within the organization,” and that “[c]ounting non-discretionary bonuses toward the minimum threshold for exemption is consistent with the purpose of the salary level test—the payment, criteria, or amount of these bonuses often reflects the exempt status of the recipients.”
Many commenters that opposed the Department's proposed increase to the standard salary level, including CalChamber Coalition, Fisher & Phillips, FMI, Littler Mendelson, and the National Association of Professional Insurance Agents, acknowledged that allowing employers to satisfy a portion of the salary level with bonuses and incentive payments would to some extent mitigate the financial burden of the proposed increase. Other commenters, including IFA and the Sheppard Mullin law firm, stated that not allowing nondiscretionary bonuses and incentive payments to satisfy some portion of the increased salary level would likely reduce the prevalence of those forms of compensation.
Among commenters that supported the inclusion of nondiscretionary bonuses and incentive payments in the standard salary guarantee amount, many objected that the option considered in the Department's NPRM was too restrictive to be of much practical use for employers. For example, several commenters representing employers criticized the Department's proposal to cap the crediting of nondiscretionary bonuses or incentive payments at no more than 10 percent of the standard salary level, noting that bonuses, incentive payments, and commissions often comprise a far greater portion of an exempt employee's total compensation. The Chamber stated that “unless the Department reconsiders its proposed $50,440 salary level, a limit of 10 percent (or, $5,044) is too low to provide any relief or make the additional administrative burdens worth the effort.” FMI, the National Association of Truck Stop Operators, Printing Industries of America, RILA, Weirich Consulting, and a number of other commenters requested that the Department allow such compensation to count for up to 20 percent of the standard salary level. Other commenters suggested a higher percentage, including CalChamber Coalition (at least 30 percent), ACRA (at least 40 percent), and HR Policy Association (50 percent). Many commenters, including Fisher & Phillips, the National Beer Wholesalers Association, and the National Pest Management Association, opposed the imposition of any percentage cap on the proportion of the salary level test that could be satisfied with such payments. Several commenters, however, supported the Department's 10 percent limitation.
Commenters also criticized the Department's decision to consider crediting nondiscretionary bonuses and incentive payments toward the salary level test only if they are paid on a monthly or more frequent basis. According to AIA-PCI and PPWO, such a limitation fails to account for the fact that bonus payments “are typically made less often than monthly because they are tied to productivity, revenue generation, profitability, and other larger and longer-term business results that can fluctuate significantly on a month-to-month basis.”
Several commenters requested that the Department allow employers to make catch-up (or “true-up”) payments to eliminate the risk of non-compliance in the event that an employee's bonuses or incentive payments drop such that the employee fails to satisfy the salary level requirement in a given period. For example, SIFMA wrote that they saw “no basis for distinguishing the use of true-up payments outside of the context of highly compensated employees,” and remarked that “[a]llowing true-up payments to count helps ensure that exempt employees are receiving the guaranteed income they anticipated and is consistent with the historical salary basis approach of ensuring guaranteed income.” If annual catch-up payments are not permitted, NRA urged the Department “to permit employers to make catch-up payments based on when they pay the bonuses,
Many commenters that supported the crediting of incentive payments urged the Department to also allow employers to credit commissions. Several commenters agreed with PPWO that “all forms of compensation should be used
Other commenters urged the Department to count discretionary bonuses toward the salary level. For example, PPWO stated that “[s]uch payments are in many ways even more reflective of an individual employee's efforts and contributions (and by implication their exercise of independent judgment and other characteristics of the duties' test) than nondiscretionary bonuses.”
Many commenters opposed permitting nondiscretionary bonuses and incentive payments to satisfy a portion of the standard salary level test. Some commenters stated that nondiscretionary bonuses and incentive payments do not indicate an employee's exempt status. For example, NELA and Rudy, Exelrod, Zieff & Lowe wrote that the types of nondiscretionary bonuses described in the Department's regulations—including “bonuses that are announced to employees to induce them to work more steadily, rapidly, or efficiently; bonuses to remain with the employer; attendance bonuses; individual or group production bonuses; and bonuses for quality and accuracy of work”—are “intended to incentivize workers of all types to perform their duties well; but, do not afford them any benefits of ownership.” These commenters noted further that lower level employees whom they have represented also received these types of bonuses, and thus, the commenters concluded that such bonuses “have no bearing on whether an employee should be excluded from overtime requirements.” The Georgia Department of Administrative Services and the Mississippi State Personnel Board each cautioned that there is “no guarantee that the work rewarded by the bonus or incentive payment will be FLSA exempt in nature,” while KDS Consulting stated that crediting bonuses and incentive payments would undermine the premise “that management values the salaried worker's position for some reason outside of time and task.”
Several commenters asserted that allowing nondiscretionary bonuses and incentive payments to satisfy a portion of the standard salary level would dramatically complicate application of the EAP exemptions, and introduce periodic uncertainty regarding the exempt status of employees who would need such payments to meet the salary level requirement. Nichols Kaster stated that allowing nondiscretionary bonuses and incentive payments to satisfy 10 percent of the standard salary level “could alter employees' exempt status on a weekly basis,” and put employers in a position where they “would incur substantial compliance costs reviewing their payroll
Commenters also contended that allowing nondiscretionary bonuses and incentive payments to satisfy a portion of the standard salary level would undermine the scheduling flexibility and income security associated with exempt status, as codified in the salary basis requirement. Nichols Kaster opined that such a change “erodes the salary basis test . . . [by] replac[ing] the certainty of a salary with the uncertainty of fluctuating compensation,” and would have the practical effect of reducing the standard salary level. NELA and Rudy, Exelrod, Zieff & Lowe agreed, stating that the Department's proposal “runs contrary to the stated purpose of the salary basis test, which is to make sure exempt employees are guaranteed a minimum level of income that is dependable and predictable to meet their families' monthly expenses before they are exempted from the protections of the overtime provisions of the FLSA.” These commenters further indicated that “[c]hanging the salary threshold calculation to include nondiscretionary bonuses would also create a perverse incentive to employers to move towards implementing more deferred compensation pay structures.” Nichols Kaster wrote that “an exempt employee who chooses not to leave work early for a parent-teacher conference for fear of missing a weekly production metric loses some of the benefit of her exempt status: The receipt of her full pay for any week in which she performs any work without regard to the number of days or hours worked” (internal quotation marks and citation omitted). Moreover, Nichols Kaster asserted that “an `attendance bonus' that penalizes an employee for partial day absences would be nothing more than an end-around the existing prohibition on partial day deductions from salary.”
Finally, some commenters warned of possible negative consequences that might result from allowing bonuses and incentive payments to satisfy a portion of the standard salary level. For example, the Georgia Department of Administrative Services and the New Mexico State Personnel Board stated that crediting such payments would create “a competitive disadvantage for public sector employers,” because public employers are not able to provide non-discretionary bonuses and incentive payments. KDS Consulting speculated that allowing bonuses and incentive payments to satisfy a part of the standard salary level would undermine the incentivizing value of such payments, to the extent that employers must pay them to maintain the exempt status of their employees.
After considering the comments, the Department has decided to permit nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard weekly salary level test, provided these forms of compensation are paid at least quarterly. The Final Rule revises
The Department analyzed comments mindful of the need to ensure that the salary level test accounts for employer payment practices without compromising the critical function of the salary basis test, which is to serve as a key indicator of exempt status. Commenters representing employer interests persuasively explained that nondiscretionary bonuses are an important part of many employer compensation systems that cover EAP employees. Modifying the tests for exemption to incorporate this fact is consistent with the President's directive to modernize the part 541 regulations. The Department also recognizes the concerns expressed by employee advocates, however, that in some instances nondiscretionary bonuses may not be indicative of exempt status and that counting such compensation toward the standard salary level may undermine the flexibility and income security associated with exempt status. While we share the concern that some bonus and incentive programs cover both overtime exempt and overtime-eligible employees, and the correlation of those programs with exempt status is therefore questionable, we are persuaded overall that the provision of nondiscretionary bonus and incentive payments has become sufficiently correlated with exempt status (for example, as evidence of the overtime exempt employee's exercise of management skill or exercise of independent judgment) that its inclusion on a limited basis in the standard salary requirement is appropriate. However, because such payments also correlate directly or indirectly in many instances with either the quantity or quality of work performed, we believe that careful limits must be set on how nondiscretionary bonuses and incentive pay are applied to the salary level test.
The Department also sought comments on the appropriateness of including commissions as part of nondiscretionary bonuses and other incentive payments that could partially satisfy the standard salary level test. In the NPRM, we raised the concern that it may be inappropriate to count commissions toward the salary level because employees who earn commissions are usually sales employees who—with the exception of outside sales employees—are generally unable to satisfy the duties test for the EAP exemptions. Comments from the Chamber, FMI, AT&T, and others have convinced us that it is not uncommon for employees who are not sales personnel, such as supervisors of a sales team, to earn commissions based on the sales of the employees they supervise. Since such supervisors may satisfy the duties test, the Department has concluded that it is appropriate to treat commissions like other types of nondiscretionary bonuses and permit them to be used to satisfy a portion of the salary level test. Accordingly, we have concluded that permitting commissions to count against a limited portion of the standard salary will not undermine the effectiveness of the salary basis test in identifying exempt employees. This change will also ensure that exemption status does not depend on (and that this rulemaking does not interfere with) whether an employer chooses to label or structure a nondiscretionary incentive payment as a “bonus” or as a “commission.” This change is also consistent with the Department's position that certain “registered representatives” in the securities and financial services industry who receive commissions may qualify for the administrative exemption.
In the NPRM, the Department stated that we were not considering expanding the salary level test calculation to include discretionary bonuses or changing the exclusion of board, lodging, or other facilities from the salary calculation, a position that the Department has held consistently since the salary requirement was first adopted. The Department also declined to consider including in the salary requirement payments for medical, disability, or life insurance, or contributions to retirement plans or other fringe benefits. The Department reemphasizes here that such forms of compensation remain excluded from the salary level test calculation.
Many commenters asked the Department to increase beyond 10 percent the portion of the standard weekly salary level employers could satisfy using nondiscretionary bonuses and incentive payments. After consideration, the Department declines these requests. Because the Department has long found that the payment of a fixed predetermined salary not subject to change based on the quantity or quality of work is a strong indicator of exempt EAP status, it is important to strictly limit the percentage of the salary requirement that nondiscretionary bonuses and incentive payments can satisfy. Accordingly, setting the limit above 10 percent could undermine the premise of the salary basis test by depriving workers of a predetermined salary that does not fluctuate because of variations in the quality or quantity of their work and thus is indicative of their exempt status.
The Department takes note of comments from government employers that expressed their view that inclusion of nondiscretionary bonuses and incentive payments in the salary level creates a competitive disadvantage for them. The Department believes that by limiting to 10 percent the amount of nondiscretionary bonuses and commissions that can count toward the required weekly minimum salary level, we strike an appropriate balance which allows employers to use expanded sources of income to meet the required salary level, does not unduly harm government employers, and ensures that the salary basis requirement remains “a valuable and easily applied criterion that is a hallmark of exempt status.” 69 FR 22175. The Department also acknowledges the concern articulated by AFL-CIO that this change to the part 541 regulations may result in employees with similar job duties being classified differently depending on the criteria for the bonuses. However, such discrepancies are unavoidable with a salary requirement and already exist, for example, when regional differences in pay structure result in two employees performing the same job in different locations having different exemption status.
The Department also requested comments on whether payment on a monthly basis is an appropriate interval for nondiscretionary bonuses to be credited toward the weekly salary requirement. Numerous commenters stated that a policy requiring payment no less frequently than on a monthly basis would fail to reflect current bonus
In response to commenter concerns, the Department has also determined that it is appropriate to permit a “catch-up” payment at the end of each quarter. This will help decrease the administrative burden on employers and ensure that exempt employees receive the compensation to which they are entitled. The Department declines to permit employers to make a yearly catch-up payment like under the test for highly compensated employees, as this would significantly undermine the integrity of the salary basis requirement, which ensures that exempt workers receive the standard salary level on a consistent basis so that it serves as the hallmark of their exempt status. This concern is not implicated in the HCE context because such employees must receive the entire standard salary amount each pay period on a salary or fee basis and the annual catch-up payment applies only to that part of total annual compensation in excess of the standard salary amount.
The Final Rule permits employers to meet the standard salary level requirement for executive, administrative, and professional exempt employees by making a catch-up payment within one pay period of the end of the quarter. In plain terms, each pay period an employer must pay the exempt executive, administrative, or professional employee on a salary basis at least 90 percent of the standard salary level required in §§ 541.100(a)(1), 541.200(a)(1), or 541.300(a)(1), and, if at the end of the quarter the sum of the salary paid plus the nondiscretionary bonuses and incentive payments (including commissions) paid does not equal the standard salary level for 13 weeks, the employer has one pay period to make up for the shortfall (up to 10 percent of the standard salary level). Any such catch-up payment will count only toward the prior quarter's salary amount and not toward the salary amount in the quarter in which it was paid. For example, assume Employee A is an exempt professional employee who is paid on a weekly basis, and that the standard salary level test is $913 per week. In January, February, and March, Employee A must receive $821.70 per week in salary (90 percent of $913), and the remaining $91.30 in nondiscretionary bonuses and incentive payments (including commissions) must be paid at least quarterly. If at the end of the quarter the employee has not received the equivalent of $91.30 per week in such bonuses, the employer has one additional pay period to pay the employee a lump sum (no greater than 10 percent of the salary level) to raise the employee's earnings for the quarter equal to the standard salary level.
The Department reemphasizes that this rulemaking does not change the requirement in § 541.601(b)(1) that highly compensated employees must receive at least the standard salary amount each pay period on a salary or fee basis without regard to the payment of nondiscretionary bonuses and incentive payments. While few commenters addressed this precise issue, the Clearing House Association urged the Department to permit all types of bonuses and incentive payments to satisfy the entire HCE total compensation requirement, including the standard salary amount due each pay period. While nondiscretionary bonuses and incentive payments (including commissions) may be counted toward the HCE total annual compensation requirement, the HCE test does not allow employers to credit these payment forms toward the standard salary requirement. We conclude that permitting employers to use nondiscretionary bonuses and incentive payments to satisfy the standard salary amount is not appropriate because employers are already permitted to fulfill almost two-thirds of the HCE total annual compensation requirement with commissions, nondiscretionary bonuses, and other forms of nondiscretionary deferred compensation (paid at least annually). Thus, when conducting the HCE analysis employers must remain mindful that employees must receive the full standard salary amount each pay period on a salary or fee basis.
Finally, nothing adopted in this Final Rule alters the Department's longstanding position that employers may pay their exempt EAP employees additional compensation of any form beyond the minimum amount needed to satisfy the salary basis and salary level tests.
As noted in the NPRM, the Department's 2004 Final Rule created a new highly compensated exemption for certain EAP employees. Section 541.601(a) provides that such employees are exempt if they earn at least $100,000 in total annual compensation and customarily and regularly perform any one or more of the exempt duties or responsibilities of an executive, administrative, or professional employee. Section 541.601(b)(1) states that employees must receive at least $455 per week on a salary or fee basis, while the remainder of the total annual compensation may include commissions, nondiscretionary bonuses, and other nondiscretionary compensation. The regulation also clarifies that total annual compensation does not include board, lodging, and other facilities, and does not include payments for medical insurance, life insurance, retirement plans, or other fringe benefits. Pursuant to § 541.601(b)(2), an employer is permitted to make a final “catch-up” payment during the final pay period or within one month after the end of the 52-week period to bring an employee's compensation up to the required level. If an employee does not work for a full year, § 541.601(b)(3) permits an employer to pay a pro rata portion of the required annual compensation, based upon the number of weeks of
The Department stated in the NPRM that we continue to believe that an HCE test for exemption is an appropriate means of testing whether highly compensated employees qualify as bona fide executive, administrative, or professional employees, but we proposed to increase the total annual compensation requirement and update it automatically on an annual basis. In the 2004 Final Rule, the Department concluded that the requirement for $100,000 in total annual compensation struck the right balance by matching a much higher compensation level than was required for the standard salary level test with a duties test that was significantly less stringent than the standard duties test, thereby creating a test that allowed only appropriate workers to qualify for exemption.
In the NPRM, the Department proposed to update § 541.601 by increasing the total annual compensation required for the highly compensated test in order to ensure that it remains a meaningful and appropriate standard when matched with the minimal duties test. The Department noted that over the past decade, the percentage of salaried employees who earn at least $100,000 annually has increased substantially to approximately 17 percent of full-time salaried workers, more than twice the share who earned that amount in 2004; therefore, we proposed to increase the total annual compensation requirement to the annualized weekly earnings of the 90th percentile of full-time salaried workers nationally ($122,148 in 2013) to bring the annual compensation requirement more in line with the level established in 2004. Consistent with the 2004 regulations, the Department also proposed that at least the standard salary requirement must be paid on a salary or fee basis. The Department did not propose any changes to the HCE duties test.
Commenters provided both support for, and opposition to, the Department's proposal to increase the total annual compensation requirement for the HCE exemption, with some commenters preferring a higher compensation level and others preferring a lower level. Additionally, some commenters suggested that the HCE exemption should be eliminated entirely, while others suggested that the HCE duties test should be modified or eliminated. Both commenters representing employers and those representing employees generally provided much less comment on, and analysis of, the HCE proposal than they did regarding the other issues raised in the NPRM, however, with many commenters mentioning the HCE proposal only in passing or not at all.
Among those who supported the proposal as written, the American Federation of Government Employees (AFGE) indicated that the “new salary threshold for the HCE exemption provides a more accurate representation of which employees might be classified as exempt from the FLSA based on their salary,” and stated that the 90th percentile of annual earnings of full-time salaried workers “provides an objective basis for determining which employees are truly `highly-compensated' and likely to meet the qualifications of exemption from the FLSA.” The Printing Industries of America also supported the proposal, stating that “we believe this is an appropriate level for this particular test.” The Partnership indicated that increasing the HCE compensation threshold to the 90th percentile accounts for the fact that its 2004 value has eroded over time and “is appropriate to ensure that only the most highly paid employees are categorically excluded from overtime requirements, as was the rule's intent when it was adopted in 2004.”
Some commenters stated that the proposed HCE total annual compensation requirement should be increased so that the percentage of employees falling within the new compensation level matched the percentage covered in 2004. For example, NELA and Rudy, Exelrod, Zieff, & Lowe indicated that “[i]n 2004, 6.3 percent of full-time salaried workers earned a salary higher than the HCE compensation level of $100,000 . . . [so in] order to maintain the . . . 93.7 percentile figure, the Department would need to increase the HCE compensation level to $150,000 per year.”
Other commenters opposed the Department's proposed increase to the HCE exemption's total annual compensation requirement. Tracstaffing opined that there “is no compelling reason to increase the minimum salary level for highly compensated salaried employees.” H-E-B similarly stated that “[t]here is no public policy justification for paying overtime to an individual receiving a six figure annual income.” SIFMA advocated “maintaining the $100,000 threshold for the highly compensated test, as the `bright line' $100,000 mark furthers the goal of simplifying the analysis of who qualifies for the test.” The Chamber, the National Lumber and Building Material Dealers Association, NSBA, PPWO, Seize This Day Coaching, and several other
The Department has considered the comments regarding the HCE test for exemption and revises § 541.601 to set the total annual compensation required for the highly compensated exemption at the annualized weekly earnings of the 90th percentile of full-time salaried workers nationally as proposed ($134,004 based on the fourth quarter of 2015). The Department disagrees with comments asserting that the HCE exemption compensation level should not be increased. The highly compensated earnings level should be set high enough to avoid the unintended exemption of employees who clearly are outside the scope of the exemptions and are entitled to the FLSA's minimum wage and overtime pay protections.
The Department notes that it has been 12 years since the HCE annual compensation level was set and, as with the standard salary level, the 2004 value has eroded over time. In FY2017, approximately 20 percent of full-time salaried workers are projected to earn at least $100,000 annually, about three times the share who earned that amount in 2004.
Additionally, the Department proposed to maintain the requirement that at least the standard salary amount must be paid on a salary or fee basis. Under the current rule, employees for whom the HCE exemption is claimed must receive the full standard salary amount of $455 weekly on a salary or fee basis.
A few commenters requested a regional adjustment for the HCE salary level. The Chamber stated that the “Department should set the highly compensated test using actual salary levels of exempt employees working in the South and in the retail sector that would meet the highly compensated exemption requirements.” The Department notes that no regional adjustment has been made to the HCE compensation level in this Final Rule, just as this was not part of the 2004 Final Rule's determination of the compensation level required for the HCE exemption. The HCE exemption must use a national wage rate to effectively ensure that workers such as secretaries in high-wage areas, such as New York City and Los Angeles, are not inappropriately exempted based upon the HCE exemption's minimal duties test.
The Department proposed in the NPRM to annually update the HCE total annual compensation requirement. As explained in greater detail in the automatic updating section, the Department will automatically update the HCE compensation level every three years, beginning on January 1, 2020.
The Department did not propose any changes to the HCE duties test created in 2004 and makes no change to the HCE duties test in this Final Rule. With respect to the call by some commenters to eliminate the duties test for the HCE exemption, the Department notes that we have consistently declined to adopt a salary-only test, because our statutory authority is to define and delimit who is employed in a bona fide executive, administrative or professional capacity, and salary alone is not an adequate definition. In the 2004 Final Rule, the Department expressed our agreement with commenters “that the Secretary does not have authority under the FLSA to adopt a `salary only' test for exemption, and reject[ed] suggestions from employer groups to do so,” and further noted that “[t]he Department has always maintained that the phrase `bona fide executive, administrative, or professional capacity' in the statute requires the performance of specific duties.”
With respect to Nichols Kaster's comment asserting that the HCE exemption lacks a meaningful duties test, the Department notes that pursuant to § 541.601(a), HCE employees must customarily and regularly perform any one or more of the exempt duties or responsibilities of an executive, administrative, or professional employee as identified in the regulations. As noted in the 2004 Final Rule, the “Department continues to find that employees at higher salary levels are more likely to satisfy the requirements for exemption as an executive, administrative, or professional employee.” 69 FR 22174. Therefore, “the purpose of section 541.601 was to provide a short-cut test for such highly compensated employees who have almost invariably been found to meet all the other requirements of the regulations for exemption.”
As the Department noted in the NPRM, even a well-calibrated salary level that is fixed becomes obsolete as wages for nonexempt workers increase over time. Lapses between rulemakings have resulted in EAP salary levels that are based on outdated salary data, and thus are ill-equipped to help employers assess which employees are unlikely to meet the duties tests for the exemptions. To ensure that the salary level set in this rulemaking remains effective, the Department proposed to modernize the regulations by establishing a mechanism for automatically updating the standard salary test, as well as the total annual compensation requirement for highly compensated employees. The Department explained that the addition of automatic updating would ensure that the salary test level is based on the best available data (and thus remains a meaningful, bright-line test), produce more predictable and incremental changes in the salary required for the EAP exemptions, and therefore provide certainty to employers, and promote government efficiency.
The Department sought comments on two alternative automatic updating methodologies. One method would update the threshold based on a fixed percentile of earnings of full-time salaried workers. The other method would update the threshold based on changes in the Consumer Price Index for All Urban Consumers (CPI-U). The Department also proposed to automatically update the total annual compensation requirement for the HCE exemption with the same method chosen to update the standard salary test. Regardless of the method selected, the Department proposed that automatic updating for both thresholds would occur annually, but invited comment regarding whether a different updating frequency would be more appropriate. Finally, the Department proposed to publish the updated rates at least 60 days before they take effect, and invited comment regarding whether the updated rates should take effect based on the effective date of the Final Rule, on January 1, or on some other specified date. The Department received many comments in response to these proposals.
The Final Rule establishes that the Department will automatically update the standard salary level test by maintaining the salary level at the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region. The Department will update the annual compensation requirement for highly compensated employees by maintaining this level at the annualized value of the 90th percentile of the weekly earnings of full-time salaried workers nationwide. In response to commenter concerns, the Department has modified the frequency and advance-notice elements of the updating mechanisms. The Final Rule establishes that automatic updates to the standard salary level and the HCE annual compensation requirements will occur every three years on the first of the year, and that the Department will publish the updated rates in the
Most commenters that addressed automatic updating focused on the merits of the Department's proposal, but some discussed our authority to automatically update the salary level.
Organizations representing employee interests, including AFL-CIO and NWLC, asserted that the Department has authority to establish an automatic updating mechanism through notice and comment rulemaking. These commenters stated that just as the Department has authority under 29 U.S.C. 213(a)(1) to establish the salary level test, we likewise have authority to automatically update the salary level to ensure it remains effective. Several commenters emphasized that Congress has never limited the Department's ability to update the salary level. For example, EPI stated that “Congress in 1938 gave the authority to define and delimit the terms `bona fide executive, administrative, or professional' to the Secretary of Labor and has never taken it back, except with respect to very particular occupations,” and a comment from 57 labor law professors similarly stated that automatic updating is “within [the Department's] discretion and authority” because “Congress granted the agency wide discretion in implementation of the statutory language.” Other commenters, including AFSCME and NELP, highlighted that automatic updating is consistent with the FLSA's purpose.
In contrast, a number of organizations representing employer interests challenged the Department's authority to add an updating mechanism. Many of these commenters, including ABC, ALFA, CUPA-HR, NRA, PPWO, and Seyfarth Shaw, stated that Congress has never granted the Department authority to institute automatic updating, and asserted that section 13(a)(1)'s silence on this issue reflects that Congress did not intend the salary level test to be automatically updated. These and other commenters stressed that whereas Congress has never amended section 13(a)(1) to expressly include automatic updating, Congress has expressly authorized indexing under other
These comments reveal disagreement about the scope of the Department's delegated authority under section 13(a)(1) to define and delimit the EAP exemptions. The Department disagrees with the position that section 13(a)(1)'s silence on automatic updating forecloses the Department from establishing an updating mechanism. While it is true that section 13(a)(1) does not reference automatic updating, it also does not reference a salary level or salary basis test, a duties test, or other longstanding regulatory requirements. Rather than set precise criteria for defining the EAP exemptions, Congress delegated that task to the Secretary by expressly giving the Department the broad authority to define and delimit who is a bona fide executive, administrative, or professional employee. As we explained in the NPRM, since 1938 the Department has used this authority to promulgate many significant regulatory changes to the EAP exemptions, including adding a separate salary level for professional employees and a separate duties test for administrative employees in 1940, adopting separate short and long test salary levels in 1949, and eliminating the long duties test and creating a single standard salary level test and a new HCE exemption in 2004. These changes were all made without specific Congressional authorization. Despite numerous amendments to the FLSA over the past 78 years, Congress has not altered the Department's authority to promulgate, update, and enforce the salary test regulations. The Department concludes that just as we have authority under section 13(a)(1) to establish the salary level test, we likewise have authority to adopt a methodology through notice and comment rulemaking for automatically updating the salary level to ensure that the test remains effective. This interpretation is consistent with the well-settled principle that agencies have authority to “ `fill any gap left, implicitly or explicitly, by Congress.' ”
That other statutes expressly provide for indexing does not alter our interpretation of the FLSA. The Department's authority to set and update the salary level test is based in the language of the FLSA, and the fact that there are indexing provisions in other statutes does not limit that authority. Moreover, three of the four non-indexed FLSA wage rates that the Chamber and other commenters referenced—the section 6(a)(1) minimum wage, the minimum hourly wage for exempt computer employees under section 13(a)(17), and the cash wage for tipped employees under section 3(m)—are set by statute.
The Department also received several comments stating that automatic updating violates section 13(a)(1)'s mandate that the Secretary define and delimit the EAP exemption from “time to time.” For example, the Chamber commented that this statutory language gives “no indication that Congress wanted to put these regulations on auto-pilot,” but instead supports that “Congress
The Department also received several comments asserting that automatic updating violates the APA and section 13(a)(1)'s requirement that the EAP exemption be defined and delimited by regulations of the Secretary subject to the provisions of the APA. These commenters asserted, albeit on slightly different grounds, that notice and comment rulemaking must precede any salary level change. CUPA-HR emphasized that under section 13(a)(1) any updating must be done by regulation, and EEAC asserted that “the FLSA exemptions have the full force and effect of law” and the “APA requires notice-and-comment rulemaking each time an agency issues, repeals, or amends a legislative rule.” NRF stated that any increase should be “based on an individualized evaluation of economic conditions rather than an automatic arbitrary formula,” and several commenters stressed that the Department must consider prevailing conditions and provide for public comment before updating the salary level.
The Department believes that automatically updating the salary level fully complies with the APA and section 13(a)(1). Through this rulemaking the Department is promulgating an automatic updating mechanism by regulation and in accordance with the APA's notice and comment requirements. The updating mechanism is not an “arbitrary formula,” but the product of an exhaustive rulemaking process that took into consideration the views of thousands of commenters. These comments raised a wide range of relevant issues, including the impact of an updating mechanism, and greatly influenced the content of the Final Rule. For example, in response to these comments (and as discussed in detail below) the Department adopted a fixed percentile approach to automatic updating, changed the updating frequency from annually to every three years, increased the period between announcing the updated salary level and the effective date of the update from 60 days to at least 150 days, and set January 1 as the effective date for future salary level updates. As to commenter concerns about accounting for prevailing economic conditions, both the NPRM and this Final Rule contain detailed 10-year projections of the costs and transfers associated with automatic updating.
Relatedly, a few commenters interpreted our NPRM statement that automatic updating would remove “the need to continually revisit this issue through resource-intensive notice and comment rulemaking,” 80 FR 38537, as an attempt to impermissibly circumvent the APA.
The Department also received several comments highlighting that in two prior rulemakings we rejected commenter requests to automatically update the salary level. Specifically, some commenters raised that in our 1970 rulemaking we stated, in response to a comment, that automatic updating would “require further study,” 35 FR 884, and that we declined a similar request in 2004.
Several commenters, including IFA and Littler Mendelson, specifically referenced our refusal to institute inflation-based indexing in the 2004 Final Rule. In that rulemaking we stated, in response to a comment, that “the Department has repeatedly rejected requests to mechanically rely on inflationary measures when setting the salary levels in the past because of concerns regarding the impact on lower-wage geographic regions and industries.” 69 FR 22172. We then stated that such “reasoning applies equally when considering automatic increases to the salary levels” and that “the Department believes that adopting such approaches in this rulemaking is both contrary to congressional intent and inappropriate.”
These commenters' reading of the 2004 Final Rule is overly broad, as we did not conclude that the Department lacks legal authority to institute automatic updating. Our reference to automatic updating simply reflected our conclusion at that time that an inflation-based updating mechanism, such as one based on changes in the prices of consumer goods, that unduly impacts low-wage regions and industries would be inappropriate. As explained in the NPRM, closer examination reveals that concerns raised when setting a new salary level using an inflation index are far less problematic in the automatic updating context.
Several commenters, including CUPA-HR and FMI, also deemed the Department's proposal inconsistent with our statement in the 2004 Final Rule that “the Department finds nothing in the legislative or regulatory history that would support indexing or automatic increases.” 69 FR 22171. But as explained in our proposal, the lack of on-point legislative history—either favoring or disfavoring automatic updating—is unsurprising given the origin and evolution of the salary level test. Congress did not set forth any criteria, such as a salary level test, for defining the EAP exemptions, but instead delegated that task to the Secretary. The Department established
The Department also received several comments addressing the impact of automatic updating on compliance with the Regulatory Flexibility Act (“RFA”) and Executive Order 13563, Improving Regulation and Regulatory Review. Seyfarth Shaw urged the Department to not proceed with automatic updating in part because this mechanism would “effectively bypass[]” these authorities. PPWO raised similar RFA concerns and characterized the Department's rulemaking as a “ `super-proposal,' deciding once and for all what (in the Department's belief) is best without consideration of its impact now or in the future.” PPWO further stated that “it would not be possible for the Department to accurately estimate the impact of the automatic increases in future years as the workforce and the economy are always changing.”
The RFA requires a regulatory flexibility analysis to accompany any agency rule promulgated under 5 U.S.C. 553.
Similarly, Executive Order 13563 directs agencies to take certain steps when promulgating regulations, including using the “best available techniques to quantify anticipated present and future benefits and costs as accurately as possible” and adopting regulations “through a process that involves public participation.” 76 FR 3821 (Jan. 18, 2011). The current rulemaking fully satisfies all aspects of Executive Order 13563,
Finally, Fisher & Phillips and the Southeastern Alliance of Child Care Associations stated that because the Department did not propose specific regulatory text concerning automatic updating, “adoption of any such indexing mechanism would be unlawful and without effect” under the APA. These commenters did not specify the provision of the APA that is purportedly violated. The APA requires that the notice of proposed rulemaking published in the
The Department proposed to establish automatic updating mechanisms to ensure that the standard salary test and the HCE total annual compensation requirement remain meaningful tests for distinguishing between bona fide EAP workers who are not entitled to overtime and overtime-protected white collar workers, and continue to work effectively with the duties tests. The Department's proposal explained that this change would ensure that these thresholds are based on the best available data and reflect prevailing salary conditions, and will produce more predictable and incremental changes in the salary required for the EAP exemptions. The Department received numerous comments addressing our automatic updating proposal.
Commenters were sharply divided over whether the Department should automatically update the salary level.
Commenters that supported automatic updating focused primarily on the benefits of maintaining an up-to-date salary level. Many commenters agreed with the Department's proposal, stating that automatic updating is a transparent way to maintain an effective salary level and avoid the negative effects of infrequent salary level updates. For example, NELP stated that automatic updating “is by far the most reasonable, efficient and predictable way to ensure that the standard for exemption remains true to the statute's intended purposes,” AFL-CIO stated that a “transparent updating process would provide greater certainty and predictability for employers and workers alike,” and
Commenters supporting automatic updating also frequently discussed, and viewed the Department's proposal as a solution to, the Department's past inability to regularly update the salary level. These commenters emphasized that automatic updating would increase predictability in both the frequency and size of salary level changes, benefiting employers and employees.
Some commenters that supported automatic updating, including Athens for Everyone, NELA, Rudy, Exelrod, Zieff & Lowe, and many others, stressed that a fixed salary level harms employees because inflation causes the salary threshold's real value to decline over time. AFSCME submitted campaign comments from 24,122 of its members who agreed that “overtime protections have been eroded by inflation,” and highlighted the “need to index these protections to keep them from being eroded again in the future.” NELA and Rudy, Exelrod, Zieff & Lowe also stated that this decline particularly harms workers earning just below the fixed salary level when it is first set, because they will “soon see that figure fall below their salary” and lose overtime protection even if “the real value of their salary stays entirely constant.” Likewise, Nichols Kaster stated that infrequent salary level updates have harmed workers earning just above the salary threshold when it is first set, as these workers have “no protection against working long hours for diminishing returns.”
A number of commenters also raised the related view that automatic updating would decrease inappropriate classification of lower salaried white collar employees as exempt. AFGE, IAFF, and others noted that the salary level's effectiveness at distinguishing between exempt and nonexempt workers diminishes over time as the wages of employees increase and the real value of the salary threshold falls. SEIU and a number of worker advocacy groups, including Equal Justice Center, NDWA, and Texas RioGrande Legal Aid, asserted that infrequent salary level updates have permitted employers to sweep too many low-salaried workers into the exemption, with NELP citing the proximity of the current salary threshold to the poverty level as a “potent example” of how the “current method of setting fixed levels results in outdated thresholds and ballooning numbers of workers improperly subject to employer classification as exempt.” Some commenters, including AFL-CIO and UFCW, asserted that failing to regularly update the standard salary level also exposes growing numbers of workers who fail the standard duties test to the “risk of misclassification.”
The Department received numerous comments from employers and groups representing employers opposing the introduction of an automatic updating mechanism. These commenters raised a variety of concerns and urged the Department not to finalize this aspect of our proposal. Consistent with how many commenters organized their comments, these views are aptly separated into two broad categories: Those addressing whether automatic updating is appropriate as a general matter, and those discussing potential financial and administrative effects of automatically updating the salary levels on an annual basis. Both of these broad categories of comments are discussed below.
Some commenters cited the Department's past refusal to institute automatic updating and emphasized that the part 541 regulations have benefited from the rulemaking process. For example, the Chamber, FMI, and others stated that rulemaking has generated vigorous public debate about the salary levels, and that the Department has increased and decreased proposed salary levels in response to public comment—including in 2004 when the Department increased the proposed salary level and HCE compensation requirements in our final rule. PPWO stated that the “Department's own actions in reaching out to the regulated community before publication of the NPRM, as well as soliciting input on the salary level in the NPRM itself, demonstrate the importance of notice-and-comment on the salary level.”
Many commenters stated that the Department should only update the salary level when conditions warrant, not automatically. CUPA-HR commented that the rates of increase and the duration between updates have always varied as the Department has tailored the salary levels “to ensure that the exemptions remained true to their purpose in the face of changing workforces and changing economic circumstances.” NGA cited the statement in the 2004 Final Rule that “salary levels should be adjusted when wage survey data or other policy concerns support such a change,” 69 FR 22171, and stated that the Department should only change the salary level when changes in earnings are substantial. Similarly, AH&LA, Island Hospitality Management, NCCR, and NRF all stated that a salary increase “should be based on an individualized evaluation of economic conditions rather than an automatic arbitrary formula.” Other commenters expressed similar views.
Several commenters raised the related concern that automatic updating could harm the economy by increasing the financial burden on employers during economic downturns. The Chamber stated that either proposed updating method would be slow to reflect actual economic conditions, and would prevent employers from “lowering salaries to quickly respond to decreased revenue experienced in bad economic times.” Fisher & Phillips stated that automatic updating during periods of high inflation could “contribute to a serious inflationary spiral.” Analogizing to the minimum wage context, CalChamber Coalition stated that automatic updates during economic downturns may lead employers to reclassify more employees as nonexempt, reduce hours, and increase layoffs.
Some commenters worried that automatic updating would create an untenably high salary level that would harm low-income regions and industries, and small businesses. For example, Alpha Graphics stated that automatic updating would produce “an inappropriately high level in a matter of a few years,” and NGA stated that salary level increases would harm independent grocers with low profit margins because the updating mechanism “would not provide the necessary protection for low-wage industries and geographic areas.”
Several commenters asserted that updating is problematic regardless of the updating method the Department chooses, with some suggesting that the salary level and automatic updating are incompatible concepts. Seyfarth Shaw stated that any updating method “would establish an ad hoc, artificially-created level determined by statistical assumptions.”
As to the effect of automatic updating on salary level predictability, PPWO stated that “it will be difficult, if not impossible, for employers and employees to determine with precision each year's new salary level in advance of the Department's pronouncement in the
The Department recognizes that our automatic updating proposal has elicited strong and diverse reactions from stakeholders. After review of submitted comments, the Department remains convinced that instituting an automatic updating mechanism is the best means of ensuring that the salary level test continues to provide an effective means of distinguishing between overtime-eligible white collar employees and those who may be bona fide EAP employees, and continues to work appropriately with the duties test.
The Department shares commenters' concerns that a fixed and outdated salary level increases the number of low-salaried employees at risk of being inappropriately classified as exempt as the real value of the salary threshold falls, and that workers earning near the fixed salary level when it is set are particularly vulnerable. The Department also agrees with commenters that the updates to the salary level should reflect prevailing economic conditions. The Department's updating mechanism directly addresses both of these issues by ensuring that the salary test level is based on the best available data and reflects current salary conditions. As explained in more detail below, the Department will use the updating mechanism established under new § 541.607 to reset the salary level using the most recent BLS data on earnings for salaried workers. Linking the salary level to earnings ensures that economic changes that impact employee salaries are reflected in the salary level test. Also, because regular updates will ensure that the salary level is in step with prevailing economic conditions, the Department does not believe that the updating mechanism will lead to undue salary level increases during economic downturns or other inopportune times. Salary level changes will occur at regular intervals using a set methodology and a publicly available data source. This improvement to the current regulations will benefit employers and employees by replacing infrequent, and thus more drastic, salary level changes with gradual changes occurring at predictable intervals.
The Department is committed to ensuring that the updating mechanism yields a salary that is appropriate for low-wage industries and geographic areas. As previously discussed in section IV.A.iv., in response to commenters' concerns, the Department is setting the salary level at the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region (currently the South). Commenters raised similar concerns about using a nationwide data set for automatic updating. The reasons that supported changing from a national to a regional data set in the standard salary level setting context apply equally in the salary updating context, and new § 541.607 accordingly incorporates this data set change.
Experience has shown that the salary level test is only a strong measure of exempt status if it is up to date, and that left unchanged the test becomes substantially less effective as wages for overtime-protected workers increase over time. As we explained in the NPRM, competing regulatory priorities, overall agency workload, and the time-intensive nature of notice and comment rulemaking have all contributed to the Department only having updated the salary level once since 1975 (in 2004). In the 2004 Final Rule the Department expressed the intent to “update the salary levels on a more regular basis,” 69 FR 22171, yet more than a decade has passed since the last update. While some commenters viewed this inaction and the Department's past decision not to institute automatic updating as reason for withdrawing our current proposal, we believe this history underscores the appropriateness of adding an automatic updating provision to the regulations.
Contrary to several commenters' concerns, prior Department statements about the salary level test in no way undermine the Department's decision now to incorporate an automatic updating mechanism into the regulations. The Department's statement that the “line of demarcation” between exempt and nonexempt employees “cannot be reduced to a standard formula,” 80 FR 38527, simply reflects
The Department agrees with commenters that stated that automatic updating will increase predictability in both the frequency and size of salary level changes, benefiting employers and employees alike. We find to be unfounded comments that salary level unpredictability is evident from our statement that “the public will not be able to exactly replicate the weekly earnings and percentiles [used to calculate the salary level] from the public-use files made available by BLS.” 80 FR 38528 n.24. This explanatory footnote addressed the public's ability to duplicate BLS' deciles table using the public-use data. The referenced discrepancy is very small, and in no way compromises the public's ability to estimate future salary level changes based on the trend in quarterly earnings data published by BLS.
The essentially ministerial act of applying the updating mechanism to maintain the salary level underscores why the Department does not share commenter concerns about resetting the salary level without further rulemaking. The Department agrees with commenters that past salary level changes have benefited from (and required) notice and comment rulemaking. This rulemaking is no exception, as public feedback was critical to finalizing the new standard salary level and the automatic updating mechanism. In response to public comments, the Department has changed the data set used for setting and updating the salary level, and (as discussed in greater detail below) chosen to update the salary using the “fixed percentile” approach, increased the period between notice of the updated salary level and its effective date, and changed the updating frequency. But unlike salary updates made up to this point, which have all involved some change to the salary setting methodology, salary level updates under new § 541.607 will use a fixed methodology that (through this rulemaking) has already been subject to notice and comment. Public feedback was critical to finalizing the updating mechanism, but is unnecessary when simply maintaining the salary level using this mechanism. Of course, should the Department choose to make any changes to the updating methodology in the future, such changes would require notice and comment rulemaking.
The Department also disagrees with commenters that stated that we should simply reallocate agency resources as necessary to maintain an updated salary level. Whereas most regulations require a one-time expenditure of resources to promulgate, and then once issued can remain both unchanged and forceful for many years if not decades, without automatic updating the Department would have to engage in nearly continuous rulemaking to ensure that the salary test accurately reflects employee salary levels. The new automatic updating mechanism will enable the Department to maintain an effective and up-to-date salary level, while preserving our ability to revisit the underlying salary setting methodology through rulemaking as future conditions warrant. For the above reasons, the Department is finalizing our proposal to institute a regulatory mechanism for automatically updating the salary level.
The Department received many comments expressing concern about the financial and administrative burden that annual updating would impose on employers. In particular, many commenters stated that annual updating would require employers to conduct a yearly “classification analysis”—to assess employee exemption status and determine whether salary increases to preserve exempt status are warranted—and then incur additional costs implementing any changes. AIA-PCI;
The annual salary increase proposed by the Department will require an employer to: Analyze whether business conditions allow a salary increase or whether they need to reclassify employees as non-exempt; prepare new compensation plans for reclassified employees; develop materials to explain the reclassification to employees; review timekeeping and payroll systems to ensure compliance with the FLSA recordkeeping requirements and compliant overtime calculations; review or adopt new policies for the reclassified employees, including policies prohibiting off-the-clock work, when employees will be permitted to work overtime, payment for waiting time, training time and travel time, etc.; train the reclassified employees, and the managers who supervise them on recording time and other wage-hour topics. If the salary change is implemented as proposed, a large number of workers will have to be added to timekeeping systems. This may require server and system upgrades to account for the additional users. Best practices take time.
Multiple commenters also emphasized that annual updating would negatively impact employer budgets and budget planning. NALP, NGA, NRF, Wendy's, and others stated that not knowing employee exemption status from year to year would make it more difficult for employers to forecast costs or profit margins. CUPA-HR stated that in response to a survey of its members about the Department's proposal, 91 percent of respondents stated that automatic updating as proposed would
Several commenters expressed concern that updating could create “salary compression” issues and impede employers' ability to give merit-based salary increases. To illustrate these interrelated concerns, SHRM provided a hypothetical in which ten exempt employees earn $975 per week (above the 2016 salary level of $970 predicted in the NPRM), and an employer budgets for a three percent annual salary increase (totaling $15,210). SHRM contended that without automatic updating the employer could reward better performing employees with large raises and give lower raises or no raise to average or poor performers. If, however, the salary level were automatically increased by two percent, the employer “would be required to adjust all ten salaries up to $989 per week in order to maintain their exempt status,” significantly reducing the total amount available for merit increases. SHRM concluded that after several automatic updates “the gap in pay between more senior and less senior, more experienced and less experienced, or more productive and less productive employees will become smaller over time, creating significant morale problems and other management challenges.” AIA-PCI stated that automatic updating would in many instances place “an artificial obligation on the company to provide a salary increase to an underperforming employee . . . simply to maintain the employee's exempt status,” and NGA stated that if “managers know they will receive an automatic raise each year by meeting minimum performance standards, they have little incentive to work increased hours and take on more responsibility while also maintaining a high performance level.” Relatedly, several commenters, including IFA, Littler Mendelson, and Fisher & Phillips, stated that in addition to raising employee salaries to maintain their exempt status, employers will have to raise the salaries of those earning above the salary threshold to avoid compression in compensation scales among exempt employees.
Some commenters stated that automatic updating would also adversely impact employees. AH&LA, NRF, and others stated that annual updating would create instability in employee compensation and benefits (which are often tied to exempt status) and that employers would likely reduce exempt employee benefits to cover annual updating's administrative costs. Similarly, AT&T stated that uncertainty about employees' year-to-year exemption status will likely cause companies to “hedge against unanticipated overtime payments, thereby putting downward pressure on annual salary increases.” Other commenters stated that possible changes in exempt status and employers' inability to provide merit increases will undermine employee morale.
The Department acknowledges employers' strong views on the financial and administrative considerations associated with annual automatic updating, and we agree that updating the salary level annually may increase the impact on employers. In particular, we agree that this change may require employers to reassess employee exemption status more frequently and in some instances to more closely monitor hours of newly overtime-eligible employees. These costs are discussed in greater detail in the Department's economic impact analysis,
The Department believes that in several respects commenters overstated the impact of automatic updating on employers. In some instances commenters failed to account for existing employer practices. For example, the concern that automatic updating will require employers to develop policies and trainings to explain reclassification to newly overtime-eligible employees ignores that employers already have overtime-eligible employees and thus typically have these procedures in place. Additionally, many commenters conflated the distinction between costs associated with the current salary increase (to $913), and those due to future automatic updates. For example, the cost of adding newly overtime-eligible workers to timekeeping systems and reviewing timekeeping and payroll systems to ensure compliance with FLSA recordkeeping requirements are likely overstated. These costs are primarily incurred when employees are initially reclassified, and the Department predicts that the number of reclassified employees at future updates will be much smaller than the number reclassified at the initial salary increase since the updating mechanism will change the salary level regularly and incrementally, and the salary level is based on actual wages of salaried workers.
The Department is also not persuaded that automatic updating (at any frequency) will force employers to reward underperforming employees, impede merit-based pay increases, or create salary compression issues. These interrelated concerns arise from the faulty premise that the automatic updating mechanism will in effect require employers to increase salaries of all affected workers. This is not the case as employers have many options for managing their workforces. The updating mechanism simply adjusts the salary level to ensure that it reflects prevailing salary conditions and can effectively work in combination with the duties test to identify exempt and nonexempt employees. Because any increase in the salary level is based on actual increases in workers' salaries, employers may find that they are already paying their exempt employees wages above the updated salary level. Where this is not the case, employers can respond to salary level updates by (for example) increasing employee pay to retain overtime exempt status,
The Department is more persuaded by commenter concerns that
Commenters that favored automatic updating often also favored annual updates.
In response to commenter concerns about the burdens of annual updating, and mindful of the range of views expressed on the appropriate updating frequency, new § 541.607 provides that updating will occur every three years. This change from the Department's proposal strikes an appropriate balance between ensuring that the salary level remains an effective “line of demarcation” and not burdening employers or their workforces with possible changes to exemption status on a yearly basis. Increasing the time period between updates will also decrease the direct costs associated with updating because regulatory familiarization costs are only incurred in years in which the salary is updated and the number of affected workers will drop in years in which the salary is unchanged leading to lower managerial costs in those years. Triennial updates using a fixed and predictable method should significantly mitigate the annual budget planning concerns that commenters raised. Additionally, employers will always know when the salary level will be updated, and between updates can access BLS data to estimate the likely size of this change. Lengthening the updating frequency to three years also responds to commenter concerns that minor year-to-year fluctuations in employee earnings should not trigger reclassification analyses.
The Department's proposal discussed and requested comments on two alternative updating methodologies—updating using a fixed percentile of full-time salaried employee earnings or using the CPI-U. As we explained in our proposal, the fixed percentile approach would allow the Department to reset the salary level test by applying the same methodology proposed to set the initial salary level, whereas the CPI-U approach would update the salary amount based on changes to the CPI-U—a commonly used economic indicator for measuring inflation. The Department's proposal did not express a preference for either updating method and instead sought comments on these two alternatives.
The Department received numerous comments addressing these two proposed updating methods, although many commenters that supported automatic updating did not express a methodology preference.
The majority of commenters that supported automatic updating and expressed a methodology preference favored the fixed percentile approach. Many of these commenters explained that the reasons for initially setting the salary level at a fixed percentile of earnings of full-time salaried workers also supported updating using the same method. For example, NWLC stated that just as the Department determined that “looking to the actual earnings of workers provides the best evidence of the rise in prevailing salary levels and, thus, constitutes the best source for setting the proposed salary requirement,” 80 FR 38533, automatic updating should be based on changes in earnings rather than changes in prices. AFGE, EPI, IWPR, NEA, and many others agreed that salary level updates should reflect changes in wages and not prices, and thus favored updating using a wage index (
Commenters that favored the fixed percentile approach also highlighted the link between wages and the EAP exemptions' purpose and function. NELP stated that using a wage index is consistent with the fact that the exemptions are intended to cover higher-paid employees in the workforce, and NELA stated that this method reflects “the fact that the EAP exemption is, in many respects,
Of the relatively few commenters representing employer interests that supported some form of automatic updating, several favored the fixed percentile method. For example, SIGMA (which favored automatically updating a salary level based on the 2004 method every three to five years) stated that this approach “will help the threshold keep pace with actual wage changes in the market,” while an inflation-based index “will risk harming workers and businesses” because inflation and wages “can increase at very different rates.” Printing Industries of America and at least eight of its member businesses agreed that “[a]ny indexing should reflect wage changes.” Similarly, CVS Health and several non-profit commenters (which incorporated or referenced a comment submitted by ANCOR) favored the fixed percentile approach over the CPI-U, provided in part that the Department account for regional salary level disparities and update the salary level on a less frequent basis than annually.
Most commenters representing employers opposed any form of automatic updating, and many of these commenters strongly opposed automatic updating using the fixed percentile method. The predominant concern among commenters that opposed the fixed percentile approach was that this method would produce drastic increases in the salary threshold level arising from the updating method itself, rather than from market forces. Some of these commenters predicted that employers will respond to each salary level update by converting all or a certain percentage of all full-time salaried employees earning below the new EAP salary level to hourly status.
Given these predictions, several commenters estimated the impact that automatic updating using the fixed percentile approach would have on the salary level. Many stated that salary level growth would far exceed the 2.6 percent average annual growth rate for the 40th percentile of full-time salaried workers' weekly earnings that the Department estimated occurred between 2003 and 2013, 80 FR 38587.
Most commenters representing employee interests did not discuss whether automatic updating using the fixed percentile approach would lead employers to convert large numbers of newly nonexempt employees to hourly status. One exception was EPI, which stated that employer projections of accelerated salary growth due to mass conversion of employees to hourly pay were inaccurate because they underestimated employee bargaining power by failing to account for low unemployment rates and the fact that “nominal wages are `sticky,' meaning that employers rarely will lower them.” EPI added that employers will have a difficult time converting salaried workers to hourly status because the new salary level will “establish a clearly observable new norm in the workplace” and so it will “be obvious to employees that any reclassification will be done to disadvantage them.” For these reasons, EPI concluded that the “wholesale reclassification of current salaried workers to hourly status . . . seems an unlikely outcome.”
While employer commenters that opposed the fixed percentile approach generally focused on the concerns discussed above, some commenters also objected to this approach based on the same concerns they raised with respect to the underlying salary level. Commenters criticized the CPS data set,
The Department also received many comments from organizations and individuals favoring automatic updating using the CPI-U. Overall, these commenters addressed this issue in less detail than those that favored the fixed percentile approach, often only stating that the salary level should be updated based on inflation. While the majority of these comments favoring updating using the CPI-U came from individuals, a few employers and commenters representing them also supported this approach. For example, HMR Acquisition Company favored indexing the salary level to inflation (provided the Department also lowers and phases in the new salary level requirement). Many individual commenters also recommended updating using the CPI-U. For example, one human resources professional suggested increasing the salary biennially “with the national rate of inflation,” another human resources professional favoring this method stated that changes in the CPI-U are “smaller and easier for employers to absorb,” and
As previously discussed, among commenters representing employer interests that opposed any form of automatic updating, concerns that the fixed percentile approach would quickly escalate the salary level led some commenters to reluctantly prefer the CPI-U. However, these commenters often stressed that they only preferred this method if the Department refused to withdraw the automatic updating proposal, and they generally did not provide any additional grounds for supporting use of the CPI-U as an updating mechanism. The Colorado Youth Corps Association and Firehouse Subs appeared to support automatic updating using the CPI-U provided that the Department set the initial salary level lower. NRA (which opposed either updating method) provided similar qualified support, stating that “for CPI-U indexing to be considered reasonable, the salary level itself needs to be reasonable.”
Other commenters representing employer interests that opposed any form of automatic updating provided reasons not to update the salary level using the CPI-U. The Chamber, FMI, and others stressed that prices and salaries are only correlated in the long-run. Seyfarth Shaw opined that the “CPI-U is a volatile index” and that the basket of goods used to calculate the CPI-U is “not tied in any direct way to employees' wages rates” and is “not an appropriate indicator of wage growth (or decline).” Relatedly, ACRA stated that the fact that there have “been periods where the CPI-U has outpaced wages and other periods where wages have grown faster than CPI-U” illustrates that the CPI-U is “an unreliable benchmark for wages.”
Several commenters worried that updating using the CPI-U would have an adverse impact on low-wage regions and industries because inflation does not impact all regions uniformly. For example, Dollar Tree observed that the CPI-U “focuses exclusively on urban areas, and therefore fails to account for the rural economy and cost of living,” and Lutheran Services in America Disability Network stated that this updating method “will disproportionately impact different regions, potentially worsening the income disparity and inadvertently harming workers.”
Finally, a few commenters suggested that the Department automatically update the salary level using methods other than those discussed in the NPRM. For example, AFL-CIO and AFSCME urged the Department to consider updating the salary level using BLS' Employment Cost Index for total compensation of management, professional, and related workers.
The Department recognizes commenters' strong views on the proposed automatic updating alternatives and has considered the comments concerning this issue. The Department has determined that automatically updating the salary level using a fixed percentile of earnings will best ensure that the salary level test effectively differentiates between bona fide EAP workers who are not entitled to overtime and overtime-eligible white collar workers and continues to work effectively with the duties test. Accordingly, new § 541.607 will reset the salary level triennially using the same methodology used in this rulemaking to set the initial salary level—the 40th percentile of earnings of full-time salaried workers in the country's lowest-wage Census Region.
The Department agrees with the view of many commenters that the same reasons that justify setting the salary level at a fixed percentile of earnings of full-time salaried workers also support updating using this method. As explained at length in section IV.A., setting the initial salary level equal to the 40th percentile of earnings of full-time salaried workers in the South reflects the Department's best determination of the appropriate line of demarcation between exempt and nonexempt workers. This method provides necessary protection for workers by accounting for the elimination of the more stringent long duties test, while at the same time not excluding from exemption too many employees performing EAP duties in low-wage geographic areas, and yielding a lower salary that is appropriate across industries. Likewise, applying this same methodology for automatic updating is the most effective and transparent way to ensure that future salary levels continue to fulfill these objectives and work appropriately with the duties test.
Unlike the CPI-U method, updating the salary level based on the 40th percentile of earnings of full-time salaried workers in the country's lowest-wage Census Region also eliminates the risk that future salary levels will deviate from the underlying salary setting methodology established in this rulemaking. Ensuring that the salary level does not depart from the designated percentile ensures that the salary level does not become too low—leading to an increased risk of inappropriate classification of low-salaried employees as exempt—or too high—depriving employers of the exemption for employees performing bona fide EAP duties, and also ensures that the standard salary level continues to work effectively with the standard duties test. For the same reasons, the Department also declines to automatically update the salary level using any of the suggested alternatives (such as the Employment Cost Index, GS-Pay Scale, and others). These methods would result in different salary level setting and updating methodologies and thus increase the risk of future salary levels diverging from the appropriate line of demarcation between exempt and nonexempt workers, which would in turn necessitate additional rulemaking to reset the salary level or updating methodology.
The Department also concludes that it is preferable to update the salary level based on changes in earnings rather
Commenters that opposed the fixed percentile approach focused primarily on their concern that this methodology would lead to drastic salary level increases that would render the EAP exemptions virtually obsolete in certain industries and geographic areas. The linchpin of this “ratcheting” argument—and the crux of most opposition to the fixed percentile updating method—is the belief that employers will respond to an automatically updated salary level by converting newly nonexempt workers to hourly status, thus removing them from the data set of full-time salaried workers. The Department examined this issue closely and concludes that past experience and the comments themselves do not substantiate commenter concerns.
To evaluate the likelihood that salary level increases will lead employers to convert affected employees to hourly pay status, the Department first examined historical data concerning how employers responded to the 2004 Final Rule's salary increase. This prior rulemaking raised the standard salary level to 182 percent of the short test salary level—from $250 to $455.
In addition to the lack of historical data supporting commenters' concerns, commenters failed to persuasively support their key assumption that automatically updated salary levels will lead to widespread conversion of employees to hourly pay status. Most of these commenters, including Dollar Tree, Jackson Lewis, and several others simply stated—without citing any supporting data—that automatic updating would produce this effect, with several commenters mistakenly contending that such a conversion to hourly status was automatic. Even those commenters that provided more detailed economic analyses often rested their views on the same faulty assumption. For example, the submitted Oxford Economics letter assumed “that the lowest 40% of the salaried full-time wage distribution in 2016 were converted to hourly status.” Some commenters predicted the impact of automatic updating on the salary level if a set percentage of employees were converted to hourly pay. For example, HR Policy Association predicted the effect if “the bottom 20 percent of salaried employees” were converted to hourly status, and the Chamber and PPWO (quoting an article from Edgeworth Economics) commented on the impact if 25 percent “of the full-time nonhourly workers earning less than [the 40th percentile salary level] were re-classified as hourly.” But while these commenters stressed the purported impact of these employee conversion rates on the salary level, none explained why these rates are accurate estimates of employer responses.
The Department believes that commenters that asserted that “ratcheting” will occur have greatly overestimated the number of employees that employers may convert to hourly status, and the impact that any such conversion would have on the salary level. Some commenters assumed that
Other commenters predicted that employers would convert all (or a significant percentage of) affected EAP employees to hourly status. The Department believes that these predications are also inaccurate because they fail to account for whether the affected employees work overtime. As discussed in the economic impact analysis of this Final Rule, the majority of workers affected by this rulemaking do not work more than 40 hours per week, and so employers will have no need to change their compensation and can continue to pay them a salary. Even as to those affected EAP workers who will become nonexempt and regularly or occasionally work overtime (which the Department estimates will be approximately 39 percent of the total number of affected EAP workers when the salary level is updated to $913), there is no reason to believe that employers will engage in wholesale conversion of these employees to hourly status. Employers commented at great length during outreach discussions prior to the publication of the NPRM and in the submitted comments that employees desire to be salaried because of status concerns. Also, the FLSA and regulations promulgated under it expressly permit paying nonexempt employees a salary so long as they receive overtime compensation when they exceed 40 hours during a workweek.
To the extent that some affected EAP workers are converted to hourly status and not included in the BLS data set of all salaried workers, the Department believes this will have a negligible impact on the salary level because this group would not constitute more than a small fraction of the population of full-time salaried workers that comprises the data set used to calculate the salary level. The Department believes that employers will have little incentive to change the pay status of those affected employees who do not work overtime (60.4 percent of affected employees); similarly, employers will not change the salaried status of those employees who work overtime and whose salary is raised to maintain their exempt status (2.3 percent of affected employees). The Department therefore believes that an upper bound estimate of any potential “ratcheting” effect would assume the conversion to hourly pay status of all newly nonexempt employees working either occasional or regular overtime (approximately 37.3 percent of affected employees). Based on this assumption, the Department estimated that the salary level as set in this Final Rule (based on weekly earnings of full-time salaried workers in the South) could be approximately two and a-half percent higher due to this effect in 2026, after three updates. This estimate is significantly smaller than the estimates provided by commenters that argued use of a fixed percentile for updating would lead to widespread conversion of salaried employees to hourly pay status.
The sample used to set the standard salary level—full-time salaried workers in the South—represents 20 million workers, including, for example, blue-collar salaried workers to whom this rulemaking does not apply and overtime-eligible white collar employees. The Department estimates that 671,000 affected EAP employees in the South regularly or occasionally work overtime, which represents just 3.3 percent of the sample. For the reasons discussed above, many of these workers are likely to remain salaried. But as noted above, even if we assume that all affected employees who occasionally or regularly work overtime are converted to hourly pay status (and therefore are no longer part of the sample), the impact on the salary level will be minimal because they constitute such a small percentage of the sample. For the same reasons, the Department does not share commenter concerns that the salary level will drastically increase if employers raise affected employees' salaries to preserve their exempt status. The Department estimates that approximately 43,000 affected employees in the South will fall into this category, constituting just 0.2 percent of the 20 million workers in the sample.
For the above reasons, the Department concludes that automatically updating the salary level using a fixed percentile of earnings will not cause the salary level to diverge from prevailing economic conditions, and thus we do not share commenters' concerns about “ratcheting” or believe that they provide a basis for declining to adopt the fixed percentile updating method. Moreover, the Department's decision to reset the salary level triennially (instead of annually) would further minimize any ratcheting if such an effect were to occur.
Beyond concerns about a possible ratcheting effect, commenters raised relatively few additional objections to the fixed percentile method of automatic updating. The Department agrees with commenters that updating the salary level using an inappropriate earnings percentile would produce an improper salary level. However, for the reasons previously discussed at length, the Department has concluded that setting the salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region produces the appropriate line of demarcation between exempt and nonexempt workers. Similarly, the Department's decision to change the updating mechanism from a nationwide to a regional data set addresses commenter concerns about the impact of the fixed percentile approach on low-wage regions and industries.
The Department believes that the chosen updating method is also responsive to many of the reasons that commenters provided for supporting updating using the CPI-U. For example, some commenters lauded the CPI's familiarity and widespread acceptance. The CPS data set is publicly available, as is BLS' deciles table for Census Regions that the Department will use for automatic updates. Other commenters stressed that updating using the CPI-U would ensure that the salary level keeps pace with inflation. These commenters were generally concerned with the adverse effect of a fixed salary level, as opposed to the effect of updating using the CPI-U versus another approach. The Department believes that a regularly updated salary level reflecting changes in salaries paid will largely alleviate this inflation concern, particularly to the extent that changes in wages and prices are correlated over time. For all the above reasons, the Department has decided to automatically update the salary level using the 40th percentile of earnings of full-time salaried workers in the country's lowest-wage Census Region.
The Department's proposal also sought public comment on whether automatic updates to the salary level should take effect based on the effective date of the Final Rule, on January 1, or on some other specified date. The majority of commenters that addressed this issue favored January 1. For example, Tinker Federal Credit Union stated that this date corresponds with when their internal pay changes become effective, and AH&LA stated that updating the salary level mid-year could cause newly nonexempt employees to “lose eligibility for a bonus and fringe benefits that he or she was counting on when the year began.” Other commenters, including Nichols Kaster, Quicken Loans, and several small businesses, also favored January 1. In contrast, other organizations favored a July 1 effective date for automatically updated salary levels. ANCOR and numerous other non-profit organizations favored this date because their funding is linked to state budget cycles, and the “majority of states have a budget cycle that ends in June.”
As multiple commenters observed, employers operate on varying fiscal calendars, and so it is impossible for the Department to select an effective date for automatically updated salary levels that will suit everyone. After reviewing commenter submissions on this issue, the Department has determined that future automatic updates to the salary level will take effect on January 1. The Department believes this effective date aligns with the pay practices of many employers and, when combined with the 150-day advance notice period, will best promote a smooth transition to new salary levels. While we recognize that some commenters favored new rates taking effect on July 1 to account for state budgeting cycles, any disruption caused by the January 1 effective date is mitigated by the Department's decision to update the salary level every three years and increase the amount of notice before automatically updated rates take effect. These changes ensure that those who favored a different effective date have ample notice of both when the Department will issue new salary levels and when these rates will apply.
The Department also proposed to publish a notice with the new salary level in the
In response to commenter concerns, the Department is increasing from 60 to at least 150 days the amount of notice provided before the updated salary level takes effect. The Department believes that this change will provide employers sufficient time to adjust to the new salary level, especially since (as previously discussed) between updates employers will be able to access BLS data to help anticipate the approximate size of the salary level change, while also ensuring that salary level updates are based on the most recent available data. This increase to 150 days is also more than the amount of notice the Department has provided in each of our prior rulemakings increasing the salary threshold. Accordingly, § 541.607(g) states that the Department will publish notice of the new salary level no later than 150 days before the updated rate takes effect.
As discussed in more detail in the economic impact analysis, the Department will set the new salary level using BLS' deciles table of Census Regions, without modifying the data in any way.
The Department also proposed to update the HCE total annual compensation requirement with the same method and frequency used to update the standard salary level test. Relatively few commenters specifically addressed this aspect of the Department's proposal, and those that did generally supported updating using the same method—the fixed percentile approach or the CPI-U—used for updating the standard salary level.
Finally, the Department proposed to automatically update the special salary level test for employees in American Samoa by keeping it at 84 percent of the standard salary level, and to automatically update the base rate test for motion picture industry employees by changing the base rate proportionately to the change in the standard salary level.
Examination of the duties performed by the employee has always been an integral part of the determination of exempt status, and employers must establish that the employee's “primary duty” is the performance of exempt work in order for the exemption to apply. Each of the categories included in section 13(a)(1) has separate duties requirements. As previously discussed, from 1949 until 2004 the regulations contained two different duties tests for executive, administrative, and professional employees depending on the salary level paid—a long duties test for employees paid a lower salary, and a short duties test for employees paid at a higher salary level. The long duties test included a 20 percent limit on the time spent on nonexempt tasks (40 percent for employees in the retail or service industries). In the 2004 Final Rule, the Department replaced the differing short and long duties tests with a single standard test for executive, administrative, and professional employees that did not include a cap on the amount of nonexempt work that could be performed.
The Department has always recognized that the salary level test works in tandem with the duties requirements to identify bona fide EAP employees and protect the overtime rights of nonexempt white collar workers. The Department has often noted that as salary levels rise a less robust examination of the duties is needed. This inverse correlation between the salary level and the need for an extensive duties analysis was the basis of the historical short and long duties tests. While the salary provides an initial bright-line test for EAP exemption, application of a duties test is imperative to ensure that overtime-eligible employees are not swept into the exemption. While the contours of the duties tests have evolved over time, the Department has steadfastly maintained that meeting a duties test remains a core requirement for the exemption.
As explained in the NPRM, however, the Department is concerned that under the current regulations employees in lower-level management positions may be classified as exempt and thus ineligible for overtime pay even though they are spending a significant amount of their work time performing nonexempt work. In such cases, there is a question as to whether the employees truly have a primary duty of EAP work. The Department believes that our pairing in the 2004 rulemaking of a standard duties test based on the less stringent short test for higher paid employees, with a salary level based on the long test for lower paid employees, has exacerbated these concerns and led to the inappropriate classification as EAP exempt of employees who pass the standard duties test but would have failed the long duties test. As we noted in the NPRM, this issue can arise when a manager is performing exempt duties less than 50 percent of the time, but it is argued that those duties are sufficiently important to nonetheless be considered the employee's primary duty. It can also arise when a manager who is performing nonexempt duties much of the time is deemed to perform exempt duties concurrently with those nonexempt duties, and it is argued the employee is exempt on that basis.
While the Department believed that the proposed salary level increase, coupled with automatic updates to maintain the effectiveness of the salary level test, would address most of the concerns relating to the application of the EAP exemption, we invited comments on whether adjustments to the duties tests were also necessary. The Department did not propose any specific changes to the duties tests, but instead requested comment on a series of specific issues:
A. What, if any, changes should be made to the duties tests?
B. Should employees be required to spend a minimum amount of time performing work that is their primary duty in order to qualify for exemption? If so, what should that minimum amount be?
C. Should the Department look to the State of California's law (requiring that 50 percent of an employee's time be spent exclusively on work that is the employee's primary duty) as a model? Is some other threshold that is less than 50 percent of an employee's time worked a better indicator of the realities of the workplace today?
D. Does the single standard duties test for each exemption category appropriately distinguish between exempt and nonexempt employees? Should the Department reconsider our decision to eliminate the long/short duties tests structure?
E. Is the concurrent duties regulation for executive employees (allowing the performance of both exempt and nonexempt duties concurrently) working appropriately or does it need to be modified to avoid sweeping nonexempt employees into the exemption? Alternatively, should there be a limitation on the amount of nonexempt work? To what extent are exempt lower-level executive employees performing nonexempt work?
Finally, the Department solicited feedback regarding whether to add additional examples of specific occupations to the regulations to provide guidance in administering the EAP exemptions, particularly for employees in the computer and information technology industries.
After considering the comments received in response to the questions posed in the NPRM, the Department has decided against making any changes to the standard duties test or adding new examples to the regulations at this time. The Department recognizes that stakeholders have strong and divergent views about the standard duties test. We also recognize that changes to the duties test can be more difficult for employers and employees to both understand and implement. As explained in greater detail below, the Department believes that the standard salary level adopted in this Final Rule coupled with automatic updating in the future will adequately address the problems and concerns that motivated the questions posed in the NPRM about the standard duties test.
As an initial matter, many commenters asserted that the Department lacks the legal authority to enact any changes to the job duty requirements in this Final Rule without first proposing specific regulatory changes in a new NPRM. As we explained earlier with respect to our automatic updating mechanism, nothing in the APA or other referenced laws requires an agency's proposal to include regulatory text for all provisions that may appear in a final rule.
There were some areas of agreement among the commenters in response to the questions posed in the NPRM. For example, a wide cross-section of commenters opposed the idea of reintroducing the long test/short test structure that existed before the 2004 rulemaking. A joint comment submitted by 57 labor law professors stated “it is now true that reimplementation of the two-tiered standards would serve to complicate, rather than simplify, the test for the exemption currently in use.” Commenters representing employers stated that resurrecting the pre-2004 long test/short test structure would contravene the President's expressed intent to modernize and simplify the FLSA's overtime regulations, and expressed concern about the burden such an approach would impose.
Many commenters also seemed to appreciate the inverse relationship between the duties test and the salary level test. For example, although it disagreed with the Department's proposed standard salary level, HR Policy Association stated it “strongly agrees with the Department that the proposed salary level increase addresses the concerns relating to executive employees performing nonexempt duties.”
Comments on the merits of changing the current duties requirements were sharply divergent, with many employee advocates supporting additional requirements to strengthen the standard duties test and most employer organizations strongly opposing any changes. Commenters representing employees generally asserted that changes to the standard duties test are needed to narrow the scope of an FLSA exemption they believe has been applied too broadly, as well as to reduce litigation and compliance costs attributable to the ambiguity and subjectivity of the primary duty test. Commenters representing employers generally opposed changes to the current duties test on the grounds that the kind of changes contemplated by the Department in the NPRM would be excessively burdensome and disruptive for employers and undermine the President's goal of modernizing the EAP regulations.
As a general matter, commenter views on the adequacy of the regulation's existing duty requirements reflected their broader disagreement over whether employees who pass the primary duty test but perform substantial amounts of nonexempt work should qualify as “bona fide” EAP workers. AFL-CIO, AFT, and SEIU, for example, stated that the standard duties test undermines the breadth of coverage critical to the success of the FLSA by allowing employers to exempt too many workers performing substantial amounts of nonexempt work, including workers earning more than the standard salary level proposed in the Department's NPRM. In contrast, the American Staffing Association and NSBA stated that the standard duties test appropriately emphasizes the importance of an employee's primary duty, not incidental nonexempt tasks he or she may also perform. Several commenters representing employers asserted that the duties test must account for the fact that exempt employees now perform more of their own clerical duties without the support of nonexempt administrative support staff.
Employee and employer organizations similarly disagreed over whether the current standard duties test adequately works to prevent the misclassification of workers who do not meet the duties test and thus should receive overtime pay. Commenters representing employees, like NELP, stated that ambiguities in the existing duty requirements “enable employers to easily and successfully manipulate employee job titles to sweep more workers into the EAP exemptions.” Some employers, however, disagreed that non-compliance by employers is prevalent, with SHRM asserting that there is no evidence that the standard duties test leads to “mass misclassification of employees.” The New Jersey Employers Association commented that purported non-compliance in specific industries like restaurant or retail does not justify imposing burdensome new requirements on all employers throughout the entire economy.
Commenter views diverged even more sharply in response to the specific issues raised for consideration. Many employee advocates supported the introduction of a minimum requirement for time spent on an employee's primary duty to the standard duties test. A large number of these commenters endorsed the adoption of a California-style rule, which would require at least 50 percent of an employee's time to be spent exclusively on work that is the employee's primary duty.
In support of such requirements, AFL-CIO, EPI, NELA, Nichols Kaster, and several other commenters asserted that employees who spend a majority of their time performing nonexempt duties should not qualify under the law as “bona fide” EAP workers. Legare, Attwood & Wolfe stated that while the percentage of time an employee spends performing duties is not a perfect indicator of her primary duty, it is a “very good proxy.” ELC, the Moreland law firm, NELA, and several others asserted that adding a “bright-line” quantitative component to the standard duties test would simplify compliance or reduce FLSA litigation attributable to the subjectivity of the primary duty test, while AFL-CIO stated that implementing a more objective duties test would lead to fewer “anomalous outcomes” from court decisions analyzing similar sets of facts.
Several commenters representing employers addressed the issue of concurrent duties—that is, the provision in the executive duties test that permits employees to perform nonexempt duties while simultaneously performing exempt management duties.
While few commenters representing employees specifically addressed the concurrent duties provision, many endorsed California's duties test, which NWLC observed does not allow employers to credit “time during which non-exempt work is performed concurrently.”
Commenters representing employers strongly opposed the addition of any kind of limitation on the performance of nonexempt work to the standard duties test and any revisions to the concurrent duties regulation, stating that such changes would fail to account for the realities of the modern workplace.
AIA-PCI, NFIB, PPWO, and many others objected that introducing a cap on nonexempt work to the standard duties test would also impose significant recordkeeping burdens on employers, and several commenters, including the Chamber, Littler Mendelson, and RILA, noted that the Department previously acknowledged such concerns in the 2004 Final Rule.
After considering the comments, the Department has decided against adding a quantitative limitation on the performance of nonexempt work in the standard duties test, or making any other revisions to the duties test in this rulemaking. The Department continues to believe that, at some point, a disproportionate amount of time spent on nonexempt duties may call into question whether an employee is, in fact, a bona fide EAP employee. We also understand the concerns of some commenters that contend that the qualitative nature of the primary duty test may allow the classification of lower-level employees as exempt and thus ineligible for overtime pay even though they are spending a significant amount of work time performing nonexempt work. The Department expects that setting the standard salary level at the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region and updating that salary level on a regular basis going forward will address these concerns, which we believe are most prevalent among low-salaried white collar employees. While this salary level is lower than that proposed in the NPRM, the Department believes that it is sufficient to work effectively in combination with the current duties test. The Department will consider the impact of this rule going forward to ensure that the salary level and the duties test continue to work together to appropriately distinguish between exempt EAP employees and overtime-protected white collar workers.
The Department also understands the concerns of employers and their advocates that prohibiting managers from “pitching-in” could negatively affect the workplace. The Department believes, however, that there is an important difference between a manager who occasionally demonstrates how to properly stock shelves to instruct a new employee, or who occasionally opens an additional cash register to assist in clearing a line of waiting customers, and a manager who must routinely perform significant amounts of nonexempt work because her employer does not provide appropriate staffing on all shifts.
In the NPRM, the Department also sought feedback regarding whether additional occupation examples should be added to the regulations, and, if so, which specific examples would be most helpful to include. Some commenters, including the American Staffing Association, the Maryland Chamber of Commerce, and the Poarch Band of Creek Indians, agreed that adding new examples to the regulations would be helpful in applying the EAP exemption. The American Trucking Association stated that additional regulatory examples would be particularly useful for clarifying the administrative employee exemption, which many commenters asserted is more ambiguous than the executive or professional exemptions. A number of commenters offered specific suggestions of occupations they would like to see addressed in the regulations.
ABA and several commenters representing employees, including AFL-CIO, however, asserted that regulatory examples distract from the longstanding principle that job titles alone are insufficient to establish the exempt status of an employee. Nichols Kaster stated that regulatory examples of exempt occupations “encourage employers to manipulate job descriptions to classify non-exempt employees as exempt.” Finally, AFL-CIO and NELA each stated that including additional examples of generally exempt or generally nonexempt occupations is neither helpful nor necessary.
Upon further consideration, the Department has decided against introducing any new examples to the existing regulations in this rulemaking. We note that the existing examples in the regulations do not provide categorical exemptions for certain occupations but instead set out typical job duties associated with specific occupations which if performed by an employee generally would, or generally would not, qualify the employee for exemption. In all instances, it is the application of the duties test to the specific facts of the employee's work that determines whether the employee satisfies the requirements for the EAP exemption. Although the Department received feedback on suggested regulatory examples from some commenters, the stakeholder input we received overall did not justify the introduction of any new examples into the EAP regulations at this time.
The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501
OMB has assigned control number 1235-0018 to the Fair Labor Standards Act (FLSA) information collections. OMB has assigned control number 1235-0021 to Employment Information Form collections, which the Department uses to obtain information from complainants regarding FLSA violations. In accordance with the PRA, the Department solicited comments on the FLSA information collections and the Employment Information Form collections in the NPRM published July 6, 2015,
FLSA section 11(a) provides that the Secretary of Labor may investigate and gather data regarding the wages, hours, or other conditions and practices of employment in any industry subject to the FLSA, and may enter and inspect such places and such records (and make such transcriptions thereof), question such employees, and investigate such facts, conditions, practices, or matters deemed necessary or appropriate to determine whether any person has violated any provision of the FLSA. 29 U.S.C. 211(a). The information collection approved under OMB control number 1235-0021 provides a method for the Wage and Hour Division of the U.S. Department of Labor to obtain information from complainants regarding alleged violations of the labor standards the agency administers and enforces. This Final Rule revises the existing information collections previously approved under OMB control number 1235-0018 (Records to be Kept by Employers—Fair Labor Standards Act) and OMB control number 1235-0021 (Employment Information Form).
This Final Rule does not impose new information collection requirements; rather, burdens under existing requirements are expected to increase as more employees receive minimum wage and overtime protections due to the proposed increase in the salary level requirement. More specifically, the changes adopted in this Final Rule may cause an increase in burden on the regulated community because employers will have additional employees to whom certain long-established recordkeeping requirements apply (
A number of commenters also expressed concern about potential changes to the duties tests. Some commenters specifically articulated concern about implementing a percentage duties test.
An agency may not conduct an information collection unless it has a currently valid OMB approval, and the Department has submitted the identified information collection contained in the proposed rule to OMB for review under the PRA under the Control Numbers 1235-0018 and 1235-0021.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of a regulation and to adopt a regulation only upon a reasoned determination that the regulation's net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity) justify its costs. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility.
Under Executive Order 12866, the Office of Management and Budget (OMB) must determine whether a regulatory action is a “significant
The Fair Labor Standards Act (FLSA or Act) requires covered employers to: (1) Pay employees who are covered and not exempt from the Act's requirements not less than the federal minimum wage for all hours worked and overtime premium pay at a rate of not less than one and one-half times the employee's regular rate of pay for all hours worked over 40 in a workweek, and (2) make, keep, and preserve records of the persons employed by the employer and of the wages, hours, and other conditions and practices of employment. It is widely recognized that the general requirement that employers pay a premium rate of pay for all hours worked over 40 in a workweek is a cornerstone of the Act, grounded in two policy objectives. The first is to spread employment (or, in other words, reduce involuntary unemployment) by incentivizing employers to hire more employees rather than requiring existing employees to work longer hours. The second policy objective is to reduce overwork and its detrimental effect on the health and well-being of workers.
The FLSA provides a number of exemptions from the Act's minimum wage and overtime pay provisions, including one for bona fide executive, administrative, and professional (EAP) employees. Such employees perform work that cannot easily be spread to other workers after 40 hours in a week and that is difficult to standardize to any timeframe; they also typically receive more monetary and non-monetary benefits than most blue collar and lower-level office workers. The exemption applies to employees employed in a bona fide executive, administrative, or professional capacity and for outside sales employees, as those terms are “defined and delimited” by the Department. 29 U.S.C. 213(a)(1). The Department's regulations implementing these “white collar” exemptions are codified at part 541.
For an employer to exclude an employee from minimum wage and overtime protection pursuant to the EAP exemption, the employee generally must meet three criteria: (1) The employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the “salary basis test”); (2) the amount of salary paid must meet a minimum specified amount (the “salary level test”); and (3) the employee's job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (the “duties test”). The Department has periodically updated the regulations governing these tests since the FLSA's enactment in 1938, most recently in 2004 when, among other revisions, the Department created the standard duties test and paired it with a salary level test of $455 per week. The Department also established an abbreviated duties test for highly compensated employees (HCE)—
As a result of inflation, the real value of the standard salary and HCE compensation thresholds have fallen significantly since they were set in 2004, making them inconsistent with Congress' intent to exempt only “bona fide” EAP workers, who typically earn salaries well above those of any workers they may supervise and presumably enjoy other privileges of employment such as above average fringe benefits, greater job security, and better opportunities for advancement. Stein Report at 21-22. For example, the annualized equivalent of the standard salary level ($23,660, or $455 per week for 52 weeks) is now below the 2015 poverty threshold for a family of four ($24,036).
The premise behind the standard salary level test and the HCE total annual compensation requirement is that employers are more likely to pay higher salaries to workers in bona fide EAP jobs. A high salary is considered a measure of an employer's good faith in classifying an employee as exempt, because an employer is less likely to have misclassified a worker as exempt if he or she is paid a high wage. Stein Report at 5; Weiss Report at 8.
The salary level requirement was created to identify the dividing line distinguishing workers who may be performing exempt duties from the nonexempt workers whom Congress intended to be protected by the FLSA's minimum wage and overtime provisions. Throughout the regulatory history of the FLSA, the Department has considered the salary level test the “best single test” of exempt status. Stein Report at 19. This bright-line test is easily observed, objective, and clear.
The salary level test has been updated seven times since it was implemented in 1938. Table 1 presents the weekly salary levels associated with the EAP exemptions since 1938, organized by exemption and long/short/standard duties test.
In 2004, the Department set the standard salary level at $455 per week. Following more than ten years of inflation, the purchasing power, or real value, of the standard salary level test has eroded substantially, and as a result increasingly more workers earn above the salary threshold. Between 2004 and 2015, the real value of the standard salary level declined 20.3 percent, calculated using the Consumer Price Index for all urban consumers (CPI-U).
As a result of the erosion of the real value of the standard salary level, more and more workers lack the clear protection the salary level test is meant to provide. Each year that the salary level is not updated, its utility as a distinguishing mechanism between exempt and nonexempt workers declines. The Department has revised the levels just once in the 41 years since 1975. In contrast, in the 37 years between 1938 and 1975, salary test levels were increased approximately every five to nine years. In our 2004 rulemaking, the Department stated the intention to “update the salary levels on a more regular basis, as it did prior to 1975,” and added that the “salary levels should be adjusted when wage survey data and other policy concerns support such a change.” 69 FR 22171. Now, in order to restore the value of the standard salary level as a line of demarcation between those workers for whom Congress intended to provide minimum wage and overtime protections and those workers who may be performing bona fide EAP duties, and to maintain its continued validity, in this Final Rule the Department is setting the standard salary level equal to the 40th percentile of weekly earnings of all full-time salaried workers in the lowest-wage
In addition, this Final Rule has introduced a mechanism to automatically update the standard salary and HCE total annual compensation levels every three years, with the first update taking effect on January 1, 2020. This triennial automatic updating will preserve the effectiveness of the salary level as a dividing line between nonexempt workers and workers who may be exempt, eliminate the volatility associated with previous changes in the thresholds, and increase certainty for employers with respect to future changes. It will also simplify the updating process, as the Department will simply publish a notice in the
The Department estimated the number of affected workers and quantified costs and transfer payments associated with this Final Rule. To produce these estimates, the Department used data from the CPS, a monthly survey of 60,000 households conducted by the U.S. Census Bureau. Many of the data variables used in this analysis are from the CPS's Merged Outgoing Rotation Group (MORG) data. The impacts calculated by the Department in this analysis are based on FY2013-FY2015 data projected to reflect FY2017. The Department used the same data available to the public to analyze the impact of this Final Rule.
Some commenters, such as the United States Chamber of Commerce (Chamber), National Retail Federation (NRF), and the Florida Department of Economic Opportunity (FL DEO), expressed concern that the estimated impacts in the Preliminary Regulatory Impact Analysis (PRIA) are not replicable. To the extent that these commenters suggested that the entire PRIA was based on non-public data, the Department emphasizes that we used the non-publicly available data only for determining percentiles of the earnings distribution. As we noted in the NPRM, the public will not be able to precisely recreate the salary amounts in the published deciles because to ensure the confidentiality of survey respondents, the data in BLS public-use files use adjusted weights and therefore minor discrepancies between internal BLS files and public-use files exist.
The Department estimates that in FY2017, there will be 44.8 million white collar salaried employees who do not qualify for any other FLSA exemption and therefore may be affected by a change to the Department's part 541 regulations (Table 7). Of these workers, the Department estimates that 29.9 million would be exempt from the minimum wage and overtime pay provisions under the part 541 EAP exemptions (in the baseline scenario without the rule taking effect). The other 14.9 million workers do not satisfy the duties tests for EAP exemption and/or earn less than $455 per week (Table 7).
In Year 1, an estimated 4.2 million workers will be affected by the increase in the standard salary level test (Table 2). This figure consists of currently EAP-exempt workers subject to the salary level test who earn at least $455 per week but less than the 40th percentile of full-time salaried workers in the South ($913). Additionally, an estimated 65,000 workers will be affected by the increase in the HCE compensation test.
Three direct costs to employers are quantified in this analysis: (1) Regulatory familiarization costs; (2) adjustment costs; and (3) managerial costs. Regulatory familiarization costs are the costs incurred to read and become familiar with the requirements of the rule. Adjustment costs are the costs accrued to determine workers' new exemption statuses, notify employees of policy changes, and update payroll systems. Managerial costs associated with this Final Rule occur because hours of workers who are newly entitled to overtime may be more closely scheduled and monitored to minimize or avoid overtime hours worked.
The costs presented here are the combined costs for both the change in the standard salary level test and the HCE annual compensation level (these will be disaggregated in section VI.D.iii.). Total average annualized direct employer costs over the first 10 years are estimated to be $295.1 million, assuming a 7 percent discount rate; hereafter, unless otherwise specified, average annualized values will be presented using the 7 percent real discount rate (Table 2). Deadweight loss (DWL) is also a cost but not a direct employer cost. DWL is a function of the difference between the wage employers are willing to pay for the hours lost, and the wage workers are willing to take for those hours. In other words, DWL represents the decrease in total economic surplus in the market arising from the change in the regulation. The Department estimates average annualized DWL to be $9.2 million.
In addition to the costs described above, this Final Rule will also transfer income from employers to employees in the form of wages. The Department estimates average annualized transfers will be $1,189.1 million. The majority of these transfers are attributable to the FLSA's overtime provision; a far smaller share is attributable to the FLSA's minimum wage requirement. Transfers also include additional pay to increase the salaries of some affected EAP workers who remain exempt.
Employers may incur additional costs, such as hiring new workers. These other potential costs are discussed in section VI.D.iii. Benefits of this Final Rule are discussed in section VI.D.vii.
The following terminology and abbreviations will be used throughout this RIA.
The Department also notes that the terms
This section explains the methodology used to estimate the number of workers who are subject to the EAP exemptions. In this Final Rule, as in the 2004 Final Rule, the Department estimated the number of EAP exempt workers because there is no data source that identifies workers as EAP exempt. Employers are not required to report EAP exempt workers to any central agency or as part of any employee or establishment survey.
The estimates of EAP exempt workers are based on data drawn from the CPS MORG, which is sponsored jointly by the U.S. Census Bureau and the BLS. The CPS is a large, nationally representative sample of the labor force. Households are surveyed for four months, excluded from the survey for eight months, surveyed for an additional four months, then permanently dropped from the sample. During the last month of each rotation in the sample (month 4 and month 16), employed respondents complete a supplementary questionnaire in addition to the regular survey.
Although the CPS is a large scale survey, administered to 60,000 households representing the entire nation, it is still possible to have relatively few observations when looking at subsets of employees, such as exempt workers in a specific occupation employed in a specific industry, or workers in a specific geographic location. To increase the sample size, the Department pooled together three years of CPS MORG data (FY2013 through FY2015). Earnings for each FY2013 and FY2014 observation were inflated to FY2015 dollars using the CPI-U, and the weight of each observation was adjusted so that the total number of potentially affected EAP workers in the pooled sample remained the same as the number for the FY2015 CPS MORG. Thus, the pooled CPS MORG sample uses roughly three times as many observations to represent the same total number of workers in FY2015. The additional observations allow the Department to better estimate certain attributes of the potentially affected labor force.
Next, this pooled sample was adjusted to reflect the FY2017 economy by further inflating wages and sampling weights to project to FY2017. The Department applied two years of wage growth based on the average annual growth rate in median wages. The wage growth rate is calculated as the geometric growth rate in median wages using the historical CPS MORG data for occupation-industry categories from FY2006 to FY2014.
The geometric wage growth rate was also calculated from the BLS' Occupational Employment Statistics (OES) survey and used as a validity check.
The employment growth rate is the geometric annual growth rate based on the ten-year employment projection from BLS' National Employment Matrix (NEM) for 2014 to 2024 within an occupation-industry category. An alternative method is to spread the total change in the level of employment over the ten years evenly across years (constant change in the number employed). The Department believes that on average employment is more likely to grow at a constant percentage rate rather than by a constant level (a decreasing percentage rate). To account for employment growth, the Department applied the growth rates to the sample weights of the workers. This is because the Department cannot introduce new observations to the CPS MORG data to represent the newly employed.
In addition to the calculations described above, some assumptions had to be made to use these data as the basis for the analysis. For example, the Department eliminated workers who reported that their weekly hours vary and provided no additional information on hours worked. This was done because the Department cannot estimate impacts for these workers since it is unknown whether they work overtime and therefore unknown whether there would be any need to pay for overtime if their status changed from exempt to nonexempt. The Department reweighted the rest of the sample to account for this change (
To estimate the number of workers covered by the FLSA and subject to the Department's part 541 regulations, the Department excluded workers who are not protected by the FLSA or are not subject to the Department's regulations for a variety of reasons—for instance, they may not be covered by, or considered to be employees under, the FLSA. These workers include:
• Military personnel,
• unpaid volunteers,
• self-employed individuals,
• clergy and other religious workers, and
• federal employees (with a few exceptions described below).
Many of these workers are excluded from the CPS MORG: Members of the military on active duty, unpaid volunteers, and the self-employed. Religious workers were excluded from the analysis after being identified by their occupation codes: `clergy' (Census occupational code 2040), `directors, religious activities and education' (2050), and `religious workers, all other' (2060). Most employees of the federal government are covered by the FLSA but are not subject to the Department's part 541 regulations because their entitlement to minimum wage and overtime pay is regulated by the Office of Personnel Management (OPM).
Table 3 presents the Department's estimates of the total number of workers, and the number of workers covered by the FLSA and subject to the Department's part 541 regulations, in FY2005 and FY2017. The Department projected that in FY2017 there will be 159.9 million wage and salary workers in the United States. Of these, in the baseline scenario without changes in the salary levels, 132.8 million would be covered by the FLSA and subject to the Department's regulations (83.0 percent). The remaining 27.2 million workers would be excluded from FLSA coverage for the reasons described above and delineated in Table 4.
After limiting the analysis to workers covered by the FLSA and subject to the Department's part 541 regulations, several other groups of workers are identified and excluded from further analysis since they are unlikely to be affected by this Final Rule. These include:
• Blue collar workers,
• workers paid hourly, and
• workers who are exempt under certain other (non-EAP) exemptions.
The Department excludes a total of 87.9 million workers from the analysis for one or more of these reasons, which often overlapped (
Also excluded from further analysis were workers who are exempt under certain other (non-EAP) exemptions. Although some of these workers may also be exempt under the EAP exemptions, even if these workers lost their EAP exempt status they would remain exempt from the minimum wage and/or overtime pay provisions based on the non-EAP exemption, and thus were excluded from the analysis. We excluded an estimated 4.5 million workers, including some agricultural and transportation workers, from further analysis because they will be subject to another (non-EAP) overtime exemption.
In the 2004 Final Rule the Department excluded some of these workers from the population of potentially affected EAP workers, but not all of them. Agricultural and transportation workers are two of the largest groups of workers excluded from this analysis, and they were similarly excluded in 2004. Agricultural workers were identified by occupational-industry combination.
After excluding workers not subject to the Department's FLSA regulations and workers who are unlikely to be affected by this Final Rule (
• Be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the salary basis test);
• earn at least a designated salary amount; the salary level has been set at $455 per week since 2004 (the salary level test); and
• perform work activities that primarily involve executive, administrative, or professional duties as defined by the regulations (the duties test).
The 2004 Final Rule's HCE test requires the employee to pass the same standard salary basis and salary level tests. However, the HCE duties test is much less restrictive than the standard duties test, and the employee must earn at least $100,000 in total annual compensation, including at least $455 per week paid on a salary or fee basis, while the balance may be paid as nondiscretionary bonuses and commissions.
As discussed above, the Department included only nonhourly workers in the analysis using the CPS variable PEERNHRY, which identifies workers as either hourly or nonhourly. For the purpose of this rulemaking, the Department considers data representing compensation paid to nonhourly workers to be an appropriate proxy for compensation paid to salaried workers. The Department notes that we made the same assumption regarding nonhourly workers in the 2004 Final Rule.
Some commenters, such as the Chamber and the National Association of Convenience Stores (NACS), expressed concern that the Department is using “nonhourly” workers to approximate “salaried” workers, even though this may include workers who are paid on a piece-rate, a day-rate, or largely on bonuses or commissions. The Panel Study of Income Dynamics (PSID) provides additional information on how nonhourly workers are paid. In the PSID, respondents are asked how they are paid on their main job and are asked for more detail if their response is other than salaried or hourly. Possible responses include piecework, commission, self-employed/farmer/profits, and by the job/day/mile. The Department analyzed the PSID data and found that relatively few nonhourly workers were paid by methods other than salaried. The Department is not aware of any statistically robust source that more closely reflects salary as defined in our regulations, and the commenters did not identify any such source.
Weekly earnings are available in the CPS MORG data, which allowed the Department to estimate how many nonhourly workers pass the salary level tests.
NACS also asserted that the CPS MORG earnings data are unreliable because they “are self-reported and are therefore not subject to verification.” The Department acknowledges that the CPS, like all surveys, involves some measurement error. However, based on the literature measuring error in CPS earnings data, the Department believes that measurement error should not significantly bias its results.
The CPS MORG data do not capture information about job duties, and at the time of writing the NPRM, there were no data available on the prevalence of EAP exempt workers. Due to this data limitation, the Department used occupational titles, combined with probability estimates of passing the duties test by occupational title, to estimate the number of workers passing the duties test. This methodology is very similar to the methodology used in the 2004 rulemaking, and was the best available data and methodology. To determine whether a worker met the duties test, the Department used an analysis performed by WHD in 1998 in response to a request from the GAO. Because WHD enforces the FLSA's overtime requirements and regularly assesses workers' exempt status, WHD's representatives were uniquely qualified to provide the analysis. The analysis was used in both the GAO's 1999 white collar exemptions report
WHD's representatives examined 499 occupational codes, excluding nine that were not relevant to the analysis for various reasons (one code was assigned to unemployed persons whose last job was in the Armed Forces, some codes were assigned to workers who are not FLSA covered, others had no observations). Of the remaining occupational codes, WHD's representatives determined that 251 occupational codes likely included EAP exempt workers and assigned one of four probability codes reflecting the estimated likelihood, expressed as ranges, that a worker in a specific occupation would perform duties required to meet the EAP duties tests. The Department supplemented this analysis in the 2004 Final Rule regulatory impact analysis when the HCE exemption was introduced. The Department modified the four probability codes for highly paid workers based upon our analysis of the provisions of the highly compensated test relative to the standard duties test (Table 6). To illustrate, WHD representatives assigned exempt probability code 4 to the occupation “first-line supervisors/managers of construction trades and extraction workers” (Census code 6200), which indicates that a worker in this occupation has a 0 and 10 percent likelihood of meeting the standard EAP duties test. However, if that worker earns at least $100,000 annually, he or she has a 15 percent probability of passing the shorter HCE duties test.
The occupations identified in GAO's 1999 report and used by the Department in the 2004 Final Rule map to an earlier occupational classification scheme (the 1990 Census occupational codes). Therefore, for this Final Rule, the Department used an occupational crosswalk to map the previous occupational codes to the 2002 Census occupational codes which are used in the CPS MORG 2002 through 2010 data, and to the 2010 Census occupational codes which are used in the CPS MORG FY2013 through FY2015 data.
These codes provide information on the likelihood an employee in a category met the duties test but they do not identify the workers in the CPS MORG who actually passed the test. Therefore, the Department designated workers as exempt or nonexempt based on the probabilities. For example, for every ten public relations managers, between five and nine were estimated to pass the standard duties test (based on probability category 2). However, it is unknown which of these ten workers are exempt; therefore, the Department must determine the status for these workers. Exemption status could be randomly assigned with equal probability, but this would ignore the earnings of the worker as a factor in determining the probability of exemption. The probability of qualifying for the exemption increases with earnings because higher paid workers are more likely to perform the required duties, an assumption adhered to by both the Department in the 2004 Final Rule and the GAO in its 1999 Report.
The Chamber attached to its comment an Oxford Economic analysis commissioned by the NRF, which also submitted the analysis, asserting that that CPS data may not be appropriate to determine how many workers are EAP exempt, and specifically how many pass the duties test. The Oxford Economics analysis contends that occupational titles in the CPS are less accurate than the OES survey, a BLS-published data set based on employer surveys, because the occupational titles in the CPS are self-reported, while occupational titles in the OES survey are reported by firms, and are therefore better suited to obtain information on actual occupations. Oxford Economics asserts in their Appendix A that there is title-inflation in the CPS data, which would imply that the Department's number of affected workers was overestimated. Similarly, the Chamber described the CPS job title information as based on “brief, limited individual verbal responses.”
The Department acknowledges that an establishment survey (like the OES) may more accurately reflect the occupational titles applied to workers by individual employers; however, we note that businesses, like workers, may also have an incentive to inflate or deflate occupational titles. In addition, Oxford Economics and the Chamber overstate the presumed weaknesses of the CPS occupation classification. When the CPS reports occupation codes, occupation is generally determined from the initial, in-person, in-depth interview with the respondent, and the interviewer is directed to determine the respondent's duties and responsibilities, not merely accept the occupational title at face value; Census coders then assign the occupation code based on the interview.
Moreover, there are important shortcomings of the OES, which made it an inappropriate data source for the Department's purposes. First, the OES data do not include individual level data. For example, earnings are not disaggregated by respondent; only select decile estimates are presented. This does not allow estimation of the number of workers earning at least $455.
The Chamber expressed concern that the probability codes used to determine the share of workers in an occupation who are EAP exempt are 17 years old and therefore out of date. Similarly, the Economic Policy Institute (EPI) commented that we underestimated the number of exempt workers for this reason. The Department acknowledges these codes were developed in 1998 for use by the GAO in its study of the part 541 exemptions, but we believe the probability codes continue to accurately estimate exemption status given the fact that the standard duties test is not substantively different from the former short duties tests reflected in the codes.
The Partnership to Protect Workplace Opportunity (PPWO) cited an Edgeworth Economics article asserting that the probability codes are inappropriate because there is evidence that the relationship between salaries and job duties assumed by the Department is not valid. The article provides the following example: “the median pay of `Occupational Therapists' is more than twice as high as the median pay of `First Line Supervisors/Managers of Retail Sales Workers,' yet the DOL places `Occupational Therapists' in the 10 to 50 percent category for managerial and professional duties, while 50 to 90 percent of the positions in `First Line Supervisors/Managers of Retail Sales Workers' were determined to include managerial and professional duties.” However, this criticism is not valid since the positive relationship between salary levels and passing the duties test was assumed within probability code categories, not between probability code categories. The probability codes only reflect the likelihood within an occupation of passing the duties test, not the probability of being exempt.
The Department estimated that of the 44.8 million salaried white collar workers considered in the analysis, 29.9 million qualified for the EAP exemptions under the current regulations (Table 7). However, some of these workers were excluded from further analysis because they would not be affected by the Final Rule. This excluded group contains workers in named occupations who are not required to pass the salary requirements
In response to the NPRM, the FL DEO conducted their own analysis of the number of Florida workers potentially affected by the proposed rule and asserted that the Department's analysis in the NPRM overestimates “by 195,000 the number of Florida workers who will qualify for overtime.” The Department's NPRM estimated that 370,000 workers would be affected in Florida whereas the FL DEO estimated 175,100.
There are three groups of workers who qualify for the EAP exemptions: (1) Those passing only the standard EAP test (
The Final Rule sets the EAP standard salary level at the 40th percentile of the weekly earnings distribution of full-time salaried workers in the lowest-wage Census Region (currently the South) and sets the HCE total annual compensation requirement equal to the annual earnings equivalent of the 90th percentile of the weekly earnings distribution of full-time salaried workers nationally.
In the NPRM, the Department proposed setting the EAP standard salary level at the 40th percentile of the weekly earnings distribution of full-time salaried workers nationally. In response to commenters' concerns that the proposed salary level would disqualify too many bona fide EAP employees in low-wage areas and industries, the Department limited the distribution to workers in the lowest-wage Census Region.
The Department in this rulemaking is setting the standard salary level at the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region (currently the South). This methodology differs somewhat from previous revisions to the salary levels but the general concept holds: Define a relevant population of workers, estimate an earnings distribution for that population, then set a salary level that corresponds to a designated percentile of that distribution in order for the salary to serve as a meaningful line of demarcation between those Congress intended to protect and those who may qualify for exemption. The salary setting methodology adopted in this Final Rule continues the evolution of the Department's approach. Where the methodology differs from past methodologies, the Department believes the changes are an improvement. A comparison of this new method with methods from past rulemakings, and the reasons for selecting the new method are detailed in the rest of this section.
As discussed in section IV.A., the historical methodologies used to revise the EAP salary levels have varied somewhat across the seven updates to the salary level test since it was implemented in 1938. To guide the determination of the salary level, the Department considered methodologies used previously to revise the EAP salary levels. In particular, the Department focused on the 1958 revisions and the most recent revisions in 2004. The 1958 methodology is particularly instructive in that it synthesized previous approaches to setting the long-test salary level, and the basic structures it adopted have been a touchstone to setting the long test salary level in subsequent rulemakings (with the exception of 1975).
In 1958, the Department updated the salary levels based on a 1958 Report and Recommendations on Proposed Revision of Regulations, Part 541, by Harry S. Kantor (Kantor Report). To determine the revised salary levels the Department looked at data collected during WHD investigations on actual salaries paid to exempt EAP employees, grouped by geographic region, industry groups, number of employees, and size of city. The Department then set the long test salary levels so that no more than about 10 percent of exempt EAP employees in the lowest-wage region, lowest-wage industry, smallest establishment group, or smallest city group would fail to meet the test. Kantor Report at 6-7.
A significant change in 2004 from the long test Kantor method was that the Department used the salaries of both exempt and nonexempt full-time salaried workers in the South and the retail industry to determine the required salary level (hereafter referred to as the 2004 method), rather than the salaries of exempt workers only. However, because the salaries of exempt workers on average are higher than the salaries of all full-time salaried workers, the Department selected a higher earnings percentile when setting the required salary. Based on the Department's 2004 analysis, the 20th percentile of earnings for exempt and nonexempt full-time salaried workers in the South and retail achieved a result very similar to the 10th percentile for workers in the lowest-wage regions and industries who were estimated to be exempt.
In the current rulemaking, the Department replicated the Kantor long test method and the 2004 method to evaluate and compare them to the chosen salary level.
1. Identify workers likely to be members of the population of interest.
2. Further narrow the population of interest by distinguishing the sub-population employed in low-wage categories.
3. Estimate the distribution of earnings for these workers.
4. Identify the salary level that is equal to a pre-determined percentile of the distribution.
The population of workers considered for purposes of setting the salary level depends on whether the 2004 method or the Kantor long test method is used. In replicating both methods, the Department limited the population to workers subject to the FLSA and covered by the Department's part 541 provisions, and excluded exempt EAP workers in named occupations, and those exempt under another (non-EAP) exemption. For the 2004 method, the
In the 2004 Final Rule, the Department identified two low-wage categories: The South (low-wage geographic region), and the retail industry (low-wage industry). In the current rulemaking, the Department identified low-wage categories by comparing average weekly earnings across categories for the populations of workers used in the Kantor long test method and the 2004 method. The South was determined to be the lowest-wage Census Region and was used for the 2004 method; however, the Department chose to use a more detailed geographical break-down for the Kantor long test method to reflect the geographic categories Kantor used. Therefore, for the Kantor long test method the East South Central Census Division is considered the lowest-wage geographical area.
Next, the Department estimated the distributions of weekly earnings of two populations: (1) Workers who are in at least one of the low-wage categories and in the Kantor population (likely exempt workers), and (2) workers who are in at least one of the low-wage categories and in the 2004 population (full-time salaried workers). From these distributions, alternate salary levels were identified based on pre-determined percentiles. For the Kantor long test method, the salary level for the long duties test is identified based on the 10th percentile of weekly earnings for likely EAP exempt workers, while the 2004 method salary level is identified based on the 20th percentile of weekly earnings for both exempt and nonexempt salaried workers. Using 2015 quarter 3 CPS MORG data, the Kantor long test method resulted in a salary level of $684 per week, and the 2004 method resulted in a salary level of $596 per week.
In response to the NPRM, the Iowa Association of Business and Industry (IABI) commented that the Department incorrectly replicated the Kantor long test methodology. Kantor determined the salary levels by looking separately at low-wage regions, less populated geographic regions, and low-wage industries and then identifying a single salary level that fits within these salary numbers. IABI asserted that we misapplied the methodology by aggregating these low-wage sectors into a single group. The Department disagrees with IABI that we misapplied the Kantor long-test methodology. As discussed at length in the NPRM, the Department replicated the Kantor methodology as closely as possible given changes in data availability.
The chosen methodology—the 40th percentile of full-time salaried workers in the lowest-wage Census Region—was selected because it (1) corrects for the elimination of the long duties test and allows for reliance on the current standard duties test; (2) appropriately distinguishes between workers who are eligible for overtime and those who may be EAP exempt in all regions and industries; (3) is easy to calculate and thus easy to replicate, creating transparency through simplicity; and (4) produces predictable salary levels.
The salary level test has historically been intended to serve as an initial bright-line test for overtime eligibility for white collar employees. As
The Kantor long test method sought to minimize the number of white collar employees who pass the long duties test but were excluded from the exemption by the salary threshold and therefore set the salary level at the bottom 10 percent of earnings of exempt EAP employees in low-wage regions and industries so as to prevent “disqualifying any substantial number of such employees.” Kantor Report at 5. This method was based on the long/short test structure, in which employees paid at lower salary levels were protected by significantly more rigorous duties requirements than are part of the current standard duties test. This approach, however, does not sufficiently take into account the inefficiencies of applying the duties test to large numbers of overtime-eligible white collar employees and the possibility of misclassification of those employees as exempt.
As discussed in section IV.A., for many decades the long duties test—which limited the amount of time an exempt employee could spend on nonexempt duties and was paired with a lower salary level—existed in tandem with a short duties test—which did not contain a specific limit on the amount of nonexempt work and was paired with a significantly higher salary level. In 2004, the Department eliminated the long and short duties tests and created the new standard duties test, based on the short duties test. The creation of a single standard test that did not limit nonexempt work caused new uncertainty as to what salary level is sufficient to ensure that employees intended to be overtime-protected are not subject to inappropriate classification as exempt, while minimizing the number of employees disqualified from the exemption even though their primary duty is EAP exempt work.
In the Final Rule, the Department corrects for the elimination of the long duties test and sets a salary level that works in tandem with the standard duties test to appropriately classify white collar workers as entitled to minimum wage and overtime protection or potentially exempt. Thus, while the standard salary level set by the Department is higher than the level the Kantor long test or 2004 methods would generate, it is set at the low end of the range of the historical short test levels, based on the ratios between the short test and long test levels, and much lower than the historical average for the short test. Between 1949 and 2003, the ratio of the short to long salary tests ranged from approximately 130 percent to 180 percent. The low end of this range would result in a salary level of $889; the high end would result in a salary of $1,231 (measured in FY2015 dollars). The short salary level updates between 1949 and 2003 averaged $1,100 per week (measured in FY2015 dollars).
The revised salary level also reduces the likelihood of workers being misclassified as exempt from overtime pay, providing an additional measure of the effectiveness of the salary level as a bright-line test delineating exempt and nonexempt workers. In the NPRM, the Department estimated that 13.5 percent of overtime-eligible white collar workers earning between the current salary level and the proposed salary level were misclassified. 80 FR 38559.
The Department updated our estimate of potential misclassification based on the salary level set in this Final Rule. The Department's analysis of misclassification draws on CPS data and looked at workers who are white collar, salaried, subject to the FLSA and covered by part 541 regulations, earn at least $455 but less than $913 per week, and fail the duties test. Because only workers who work overtime may receive overtime pay, when determining the share of workers who are misclassified the sample was limited to those who usually work overtime.
Table 10 provides estimates of the extent of misclassification of workers as exempt among first-line supervisors/managers in a variety of industries using the same method of looking at white collar salaried employees who fail the duties test and who report working more than 40 hours a week but do not report receiving overtime compensation.
The Department also found that the industries with the largest number of workers who fail the duties test and report working more than 40 hours a week but do not receive overtime compensation are retail trade (125,000 workers) and food services and drinking places (97,000 workers). In these industries, the Department estimates the rate of misclassification to be 41percent of food services and drinking workers and 18 percent of retail workers.
Since the NPRM was published, RAND has conducted a survey to identify the number of workers who may be misclassified as EAP exempt. The survey, a special module to the American Life Panel, asks respondents (1) hours worked, (2) whether they are paid on an hourly or salary basis, (3) their typical earnings, (4) whether they perform certain job responsibilities that are treated as proxies for whether they would justify exempt status, and (5) whether they receive any overtime pay. Using these data, Susann Rohwedder and Jeffrey B. Wenger
The Department also assessed the impact of the standard salary level as a bright-line test for EAP exemption by examining: (1) The number of salaried white collar workers who pass the standard salary level test but not the duties test and (2) the number of salaried white collar workers who pass the standard duties test but not the salary level test.
As a benchmark, the Department estimates that at the current standard salary threshold, there are 12.2 million salaried white collar workers who fail the standard duties test and are therefore overtime eligible, but earn at least the $455 threshold, while there are only 838,000 salaried white collar
Figure 3: Percentage of White Collar Salaried Workers by Earnings and Duties Test Status for National, Highest-Wage, and Lowest-Wage Regions
As illustrated in Figure 3, as the salary threshold increases there is a decrease in the share of overtime-eligible white collar workers for whom employers would be required to make an assessment under the duties test and who would be subject to possible misclassification (descending lines). At the same time, as the salary level increases there is an increase in the share of salaried white collar workers who pass the standard duties test but are screened from exemption by the salary threshold (ascending lines).
At the current salary level (far left of Figure 3), there is a very large gap between salaried white collar workers who are overtime eligible but earn at least the threshold (about 87 percent of all salaried white collar workers who fail the duties test are paid at least $455 per week) and salaried white collar workers who pass the standard duties test but do not meet the current salary level (about 4 percent of all salaried white collar workers who pass the duties test are paid less than $455 per week). At the salary level of the 40th percentile of weekly earnings of full-time salaried workers in the South ($913 per week), the percentage of overtime-eligible salaried white collar workers who earn above the threshold (and thus would be at risk of misclassification) still remains higher than the percentage of salaried white collar workers who pass the duties test but earn less than the salary threshold (and would become overtime protected).
The Department has also looked at the impact of the new salary level on these two groups of workers in low-wage (East South Central) and high-wage (Pacific) Census divisions in addition to nationally.
The method of basing the standard salary threshold on a particular percentile of weekly earnings of full-time salaried employees in the lowest-wage Census Region involves less estimation than previous updates, making it easier to implement, less prone to error, and more transparent than before. The method reduces computation by simplifying the classification of workers to just two criteria: wage or salaried, and full-time or part-time. Application of the Kantor long test method, in particular, would involve significant work to replicate since one would need to identify likely EAP exempt workers, a process which requires applying the standard duties test to determine the population of workers used in the earnings distribution. In addition, both the Kantor long test and 2004 methods exclude workers not subject to the FLSA, not subject to the salary level test, or in agriculture or transportation. The method adopted in this Final Rule is easier for stakeholders to replicate and understand because the standard duties test does not need to be applied to determine the population of workers used in the earnings distribution.
International Foodservice Distributors Association, IABI, and others criticized the Department for not restricting the CPS sample to workers subject to the part 541 regulations or subject to the salary level test. As explained in section IV.A.iv., the Department believes these white collar professionals are part of the universe of executive, administrative, and professional employees who Congress intended to exempt from the FLSA's minimum wage and overtime requirements and including them in the data set achieves a sample that is more representative of EAP salary levels throughout the economy.
A method that produces very different salary levels in consecutive years may reduce confidence that the salary levels in any given year are optimal. The growth rate using the Kantor long test method varies across years. The primary reason for this is because the Kantor long test method—or any other method that limits the data set to currently exempt workers—uses the value of the current salary level test to identify the population of workers from which the earnings distribution is determined. Therefore, the Kantor long test method limits the pool of workers in the sample used to set the salary level to those who meet the currently required salary level, while the 2004 method and the new method implemented in this Final Rule do not exclude workers with salaries below the current salary level. Since FY2004, the salary levels that would have been generated by the Kantor method increased by 3.6 percent on average annually.
For example, in 2003 the Kantor long test method's population of interest was limited to workers earning at least $155 per week (the 1975 long test salary level); in this Final Rule the Kantor long test method's population was restricted to workers earning at least $455 per week. Therefore the population considered in the Kantor long test method changes each time the salary level is changed. The Department's Final Rule, like the 2004 method, considers all full-time salaried workers and does not limit the pool to only those workers who meet the current salary level test, thus avoiding this potential shortcoming of the Kantor long test method.
When assessing the standard salary level, the Department evaluated several alternatives in addition to the level chosen. This section presents the alternative salary levels considered and the bases for identifying those alternative levels. While commenters proposed other methods for calculating the salary level, the Department determined that these alternatives remained the best comparators for evaluating the chosen salary level methodology. As shown in Table 11, the alternative salary levels evaluated are:
• Alternative 1: Inflate the 2004 weekly salary level to FY2015 dollars, which results in a salary level of $570 per week.
• Alternative 2: Use the 2004 method to set the salary level at $596 per week.
• Alternative 3: Use the Kantor long test level of $684 per week.
• Alternative 4: Use the 40th earnings percentile of full-time salaried workers nationally. This was the methodology proposed in the NPRM. This results in a salary level of $972 per week.
• Alternative 5: Adjust the salary level from the Kantor long test method to reflect the average historical ratio between the long and short test salary levels. This results in a salary level of $1,019 per week.
• Alternative 6: Inflate the 1975 short duties test salary level, which is $1,100 in FY2015 dollars.
Alternative 1 inflates the 2004 standard salary level ($455) to FY2015 dollars using the CPI-U. This produces a salary level of $570 per week. As noted above, the 2004 method sets the standard salary level at approximately the 20th percentile of full-time salaried workers in the South and retail industry. Alternative 2 applies this methodology to more recent data (quarter 3 of 2015), resulting in a salary level of $596 per week. Alternative 3 produces the salary level using the Kantor method for the long duties test, resulting in a level of $684 per week. As we explain earlier in the preamble, the Department rejected the use of these alternatives because they pair a salary level appropriate for use with the long duties test with a duties test appropriate for use with the short test salary.
Alternative 4 sets the standard salary equal to the 40th percentile of weekly earnings of all full-time salaried workers nationally. This is the approach that the Department proposed in the NPRM. This alternative uses the same methodology as this Final Rule—setting the salary level at the 40th percentile of earnings—but uses a data set including full-time salaried workers nationwide instead of limiting the population to the lowest-wage Census Region. The 40th percentile of earnings of all full-time salaried workers nationally, in the fourth quarter of 2015, is $972. As discussed in more detail in section IV.A.iv., the Department declined to adopt this method in response to commenters' concerns that the proposed salary level could disproportionately impact workers in low-wage regions and industries by inappropriately excluding from exemption too many workers who meet the duties test.
Alternative 5 (Kantor short test) is also based on the Kantor method but, whereas alternative 3 generates the salary level associated with the long duties test, alternative 5 generates a level more closely resembling the salary associated with the short duties test, which the Department set as a function of the Kantor long test. In the 2004 Final Rule, the Department replaced the structure of separate short and long duties tests with a single standard duties test based on the less restrictive short duties test, which had historically been paired with a higher salary level test. However, the Department set the standard salary level in 2004 at a level that was equivalent to the Kantor long test salary level, which was associated with the long duties test and limited the amount of nonexempt work that the employee could perform. In alternative 5, the Department therefore considered revising the standard salary level to approximate the short test salary that better matches the standard duties test. On average, the salary levels set in 1949 through 1975 were 149 percent higher for the short test than the long test. Therefore, the Department inflated the Kantor estimate of $684 by 149 percent, which generated a short salary level equivalent of $1,019 per week.
Alternative 6 inflates the 1975 short duties test salary level to $1,100 per week in FY2015 dollars. Similar to alternative 5, the Department rejected the use of a short test salary level due to the concern that it might exclude from exemption too many bona fide EAP workers in certain regions or industries.
Section VI.D. details the transfers, costs, and benefits of the new salary level and the above alternatives. A comparison of the costs and benefits supports the Department's decision to set the standard salary level of the 40th percentile of weekly earnings of all full-time salaried workers in the South ($913 per week).
The Department sets the HCE compensation level equal to the annual equivalent of the 90th percentile of the
The Department also evaluated the following alternative HCE compensation levels:
• HCE alternative 1: Leave the HCE compensation level unchanged at $100,000 per year.
• HCE alternative 2: Inflate the 2004 level using CPI-U to $125,320 per year in FY2015 dollars.
• HCE alternative 3: Set the HCE compensation level at $149,894 per year, which is approximately the annualized level of weekly earnings exceeded by 6.3 percent of full-time salaried workers. This is the same percent of such workers that exceeded the HCE compensation level in 2004.
The Department continues to believe that HCE alternative 1 is inappropriate because leaving the HCE compensation level unchanged at $100,000 per year would ignore more than 10 years of wage growth. In FY2017, approximately 20 percent of full-time salaried workers are projected to earn at least $100,000 annually, more than three times the share who earned that amount in the 2004 Final Rule analysis. HCE alternative 2 uses the CPI-U to inflate the value set in 2004 instead of using the higher wage growth over that time period, and therefore the Department does not believe this alternative accurately reflects wage growth since 2004. Finally, HCE alternative 3 would set the annual compensation level at $149,894. The Department believes this compensation level would be too high to provide a meaningful alternative test for exemption. Thus, the Department concludes that adjusting the HCE total annual compensation to reflect the 90th percentile of earnings of full-time salaried workers nationwide ($134,004) strikes the appropriate balance.
The impacts of increasing the EAP salary and compensation levels will depend on how employers respond. Employer response is expected to vary by the characteristics of the affected EAP workers. For workers who usually work 40 hours a week or less, the Department assumes that employers will reclassify these affected EAP workers as overtime-eligible and will pay them the same weekly earnings for the same number of hours worked. While these employees will become overtime eligible, employers can continue to pay their current salaries and will not need to make any adjustments as long as the employees' hours do not exceed 40 hours in a workweek. For affected EAP employees who work overtime, employers may: (1) Pay the required overtime premium for the current number of overtime hours based upon the current implicit regular rate of pay; (2) reduce or eliminate overtime hours; (3) reduce the regular rate of pay so total weekly earnings and hours do not change after overtime is paid; (4) increase employees' salaries to the new salary level; or (5) use some combination of these responses. Transfers from employers to employees and between employees, direct employer costs, and DWL depend on how employers respond to the Final Rule.
In order to increase the sample size and the reliability and granularity of results in this analysis, the Department used three years (FY2013-FY2015) of CPS MORG data to represent the FY2015 labor market. Monetary values in FY2013 and FY2014 were inflated to FY2015 dollars and the sample was reweighted to reflect the population of potentially affected workers in FY2015. Afterwards, this pooled sample was adjusted to reflect the FY2017 economy by further inflating wages and sampling weights to match projections for FY2017.
Table 12 presents the projected impact on affected workers, costs, transfers, and DWL associated with increasing the standard EAP salary level from $455 per week to the 40th earnings percentile of full-time salaried workers in the South, $913 per week; increasing the HCE compensation level from $100,000 to the 90th earnings percentile of full-time salaried workers nationally, $134,004 annually; and updating both of these levels triennially. The Department estimated that the direct employer costs of this Final Rule will total $677.9 million in the first year, with average annualized direct costs of $295.1 million per year over 10 years. In addition to these direct costs, this Final Rule will also transfer income from employers to employees. Year 1 transfers will equal $1,285.2 million, with average annualized transfers estimated at $1,189.1 million per year over 10 years. Finally, the 10-year average annualized DWL was estimated to be $9.2 million. Potential employer costs due to reduced profits and additional hiring were not quantified but are discussed in section VI.D.iii. Benefits were also not quantified but are discussed in section VI.D.vii.
Costs, transfer payments, DWL, and benefits of this Final Rule depend on the number of affected EAP workers and labor market adjustments made by employers. The Department estimated there were 22.5 million potentially affected EAP workers: that is, EAP workers who either (1) passed the salary basis test, the standard salary level test, and the standard duties test, or (2) passed the salary basis test, passed the standard salary level test, the HCE total compensation level test, and the HCE duties test. This number excludes workers in named occupations who are not subject to the salary tests or who qualify for another (non-EAP) exemption.
The Department estimated that increasing the standard salary level from $455 per week to the 40th earnings percentile of all full-time salaried workers in the lowest-wage Census Region (South, $913 per week) would affect 4.2 million workers (
Table 13 presents the number of affected EAP workers, the mean number of overtime hours they work per week, and their average weekly earnings. The 4.2 million workers affected by the increase in the standard salary level average 1.4 hours of overtime per week and earn an average of $734 per week. The average number of overtime hours is low because most of these workers (3.3 million) do not usually work overtime.
Although most affected EAP workers who typically do not work overtime might experience little or no change in their daily work routine, those who regularly work overtime may experience significant changes. The Department expects that workers who routinely work some overtime or who earn less than the minimum wage are most likely to be tangibly impacted by the revised standard salary level.
The Department considered two types of overtime workers in this analysis: regular overtime workers and occasional overtime workers.
In a representative week, an estimated 152,000 occasional overtime workers will be affected by either the standard salary level or the HCE total annual compensation level increase (3.6 percent of all affected EAP workers; this number does not match Table 13 due to rounding). They averaged 8.5 hours of overtime in weeks when they work at least some overtime. This group represents the number of workers with occasional overtime hours in the week the CPS MORG survey was conducted. In other weeks, these specific individuals may not work overtime but other workers, who did not work overtime in the survey week, may work overtime. Because the survey week is a representative week, the Department believes the prevalence of occasional overtime in the survey week, and the characteristics of these workers, is representative of other weeks (even though a different group of workers would be identified as occasional overtime workers in a different week).
In this section the Department examines the characteristics of affected EAP workers. Table 14 presents the distribution of affected workers across industries and occupations. The industry with the most affected EAP workers was education and health services (956,000 affected workers). Other industries where a large number of workers are expected to be affected are professional and business services (704,000), financial activities (571,000), and wholesale and retail trade (562,000). The industries with the largest share of potentially affected workers who are affected are “other services” (30 percent) and leisure and hospitality (30 percent). Impacts by industry are considered in section VI.D.v.
The management, business, and financial occupation category accounted for the most affected EAP workers by occupation (1.8 million). A large number of workers are expected to be affected in the professional and related occupations category (1.4 million). The occupations with the largest share of potentially affected workers who are expected to be affected are farming, fishing, and forestry (63 percent),
Some commenters expressed concern about the impacts of the rule on non-profits organizations. The Department found that workers in non-profits are somewhat more likely to be affected by the rulemaking; 25 percent of potentially affected workers in private non-profits are affected compared to 18 percent in private for-profit firms.
Table 15 presents the distribution of affected workers based on Census Regions and divisions, and MSA status. The region with the most affected workers is the South (1.7 million). However, as a share of potentially affected workers in the region, the South is not unduly affected relative to other regions (22 percent are affected compared with 16 to 19 percent in other regions). Impacts by region are considered in section VI.D.v. Although the vast majority of affected EAP workers resided in MSAs (3.8 of 4.2 million, or 89 percent), this largely reflects the fact that 86.7 percent of all workers reside in metropolitan areas.
Employers in low-wage industries, regions, and non-metropolitan areas may perceive a greater impact due to the lower wages and salaries typically paid in those areas and industries. The Department believes the salary level adopted in this Final Rule (which we have adjusted downward from the amount proposed in the NPRM to account for these low-wage areas) is appropriate. In addition, the vast majority of potentially affected workers reside in metropolitan areas and do not work in low-wage industries, and workers in low-wage regions are not unduly affected relative to other regions.
Three direct costs to employers were quantified in this analysis: (1) Regulatory familiarization costs; (2) adjustment costs; and (3) managerial costs. Regulatory familiarization costs are costs to learn about the change in the regulation, occurring primarily in Year 1 and to a lesser extent in future years when the salary and compensation levels are automatically updated (
The Department estimated costs for Year 1 assuming that the first year of the analysis will be FY2017. The Department estimated that Year 1 regulatory familiarization costs will equal $272.5 million, Year 1 adjustment costs will sum to $191.4 million, and Year 1 managerial costs will total $214.0 million (Table 16). Total direct employer costs in Year 1 are estimated to equal $677.9 million. Regulatory familiarization costs, adjustment costs and management costs are recurring and thus are projected for years 2 through 10 (section VI.D.x.).
Many commenters, including PPWO, NRF, and the National Grocers Association, stated that the NPRM underestimated the costs of complying with the rulemaking. The Assisted Living Federation of America, Associated Builders and Contractors, and the College and University Professional Association for Human Resources (CUPA-HR) stated that 80 to 90 percent of respondents to their member surveys indicated that the Department's costs estimates were understated. Throughout this analysis, the Department addresses comments relating to regulatory familiarization costs, adjustment costs, and managerial costs in turn. We also discuss costs that are not quantified and comments asserting that the regulation will result in additional unquantified costs in section VI.D.iii. Regulatory familiarization costs, adjustment costs and managerial costs associated with automatically updating the standard salary level are discussed in section VI.D.x.
Changing the standard salary and HCE total compensation thresholds will impose direct costs on businesses by requiring them to review the regulation. It is not clear whether regulatory familiarization costs are a function of the number of establishments or the number of firms. The Department believes that generally the headquarters of a firm will conduct the regulatory review for the entire company; however, some firms provide more autonomy to their establishments, and in such cases regulatory familiarization may occur at the establishment level. To be conservative, the Department uses the number of establishments in its cost estimate assuming that regulatory familiarization occurs at a decentralized level.
The Department believes that all establishments will incur some regulatory familiarization costs, even if they do not employ exempt workers, because all establishments will need to confirm whether this Final Rule includes any provisions that may impact their workers. Firms with more affected EAP workers will likely spend more time reviewing the regulation than firms with fewer or no affected EAP workers (since a careful reading of the regulations will probably follow the initial decision that the firm is affected). However, the Department does not
In the NPRM, the Department requested that commenters provide data if possible on the costs of regulatory familiarization, and a few commenters provided estimates based on personal judgments or responses by members. While the information provided may reflect the experiences of individual commenters, the information does not provide a basis for the Department to revise its estimate of time required for regulatory familiarization. The Department continues to believe that our estimate of one hour per establishment in the NPRM is a reasonable average that accounts for some businesses requiring more time while other businesses require less time.
To estimate the total regulatory familiarization costs, three pieces of information must be estimated: (1) A wage level for the employees reviewing the rule; (2) the number of hours employees spend reviewing the rule; and (3) the number of establishments employing workers. The Department's analysis assumes that mid-level human resource workers with a median wage of $24.86 per hour will review the Final Rule.
The Department estimated in the NPRM that one hour of regulatory familiarization time costs $34.19 based on the wage for a mid-level human resources worker adjusted to include benefits. We follow the same approach in this RIA; however, due to growth in wages, the wage rate used in the Final Rule is $36.22. The Chamber asserted that time spent on regulatory familiarization will generally be conducted by a manager with a base wage better approximated at $60 per hour, multiplied by a mark-up of 3.3 to cover indirect overhead and support.
In the NPRM, the Department estimated each establishment will, on average, spend one hour on regulatory familiarization. Firms with more affected EAP workers will likely spend more time reviewing the regulation than firms with fewer or no affected EAP workers. No data were identified from which to estimate in the NPRM the amount of time required to review the regulation, and the Department requested that commenters provide data if possible. The Department did not receive any reliable data from commenters, although some commenters suggested different amounts of time based on their personal judgment or surveys they conducted. The American Hotel and Lodging Association (AH&LA), the National Roofing Contractors Association, NRF and others commented that regulatory familiarization will take longer than one hour, with some stating that several individuals in each of their establishments will need to read and familiarize themselves with the new rule. AH&LA estimated it will take at least four hours per establishment to become familiar with the Final Rule. The Chamber commented that an average of 6 hours of time is appropriate because: “For the very smallest establishments a familiarization time of one to two hours may be possible, but for larger establishments the number of labor hours may amount to hundreds or more.”
The Department believes these commenters significantly overestimate the time necessary for regulatory familiarization. The EAP exemptions have been in existence in one form or another since 1938, and were updated as recently as 2004. While the 2004 rulemaking promulgated a host of changes, including revisions to the duties test, the most significant change promulgated in this rulemaking is setting a new standard salary level for exempt workers, and updating that salary level every three years. The Department believes that, on average, one hour is sufficient to time to read about and understand, for example, the change in the standard salary level from $455 to $913 per week, and we note that the regulatory text changes comprise only a few pages.
The Chamber criticized the Department for failing to estimate regulatory familiarization costs occurring after the first year, commenting that regulatory familiarization costs would repeat with each automatic update to the salary level. Upon further consideration, the Department agrees there will be some regulatory familiarization costs in future years when the salary level is updated (
Changes in the standard salary and HCE compensation levels will impose direct costs on firms by requiring them to re-determine the exemption status of employees, update and adapt overtime policies, notify employees of policy changes, and adjust their payroll systems. The Department believes the size of these costs will depend on the number of affected EAP workers and will occur in any year when exemption status is changed for any workers. To estimate adjustment costs three pieces of information must be estimated: (1) A wage level for the employees making the adjustments; (2) the amount of time spent making the adjustments; and (3) the estimated number of newly affected EAP workers. The Department again estimated that the average wage with benefits for human resources, training, and labor relations specialists is $36.22 per hour (as explained above). No applicable data were identified from which to estimate the amount of time required to make these adjustments.
Adjustment costs may be partially offset by a reduction in the cost to employers of determining employees' exempt status. Currently, to determine whether an employee is exempt firms must apply the duties test to salaried workers who earn at least $455 per week. Following this rulemaking, firms will no longer be required to apply the potentially time-consuming duties test to employees earning less than the updated salary level. This will be a clear cost savings to employers for employees who do not pass the duties test and earn at least $455 per week but less than the updated salary level. The Department did not estimate the potential size of this cost savings.
The Chamber commented that a more appropriate wage rate would be $200 per hour, based on a manager's wage of around $60 per hour, multiplied by a mark-up (or loaded) rate of 3.3 to cover indirect overhead and support. The Department believes its use of the occupation of “human resources, training, and labor relations specialists” and corresponding wage rate appropriately reflects the occupational classification and wage rate on average for the individuals who will re-determine the exemption status of employees, update and adapt overtime policies, notify employees of policy changes, and adjust their payroll systems. The Department recognizes that in some businesses, more senior staff will conduct at least portions of this work, while in other businesses, more junior staff may perform at least a portion of this work. Therefore, the Department continues to rely on its use of the “human resources, training, and labor relations specialists” and corresponding wage rate to reflect the average costs to businesses impacted by this Final Rule. The Department also disagrees with the mark-up rate suggested by the Chamber, because an additional 75 minutes of time will have little-to-no effect on the cost of overhead and support services. No other commenters provided alternative wage rates.
To estimate adjustment costs, the Department assumed in the NPRM that each establishment will, on average, spend one hour of time per affected worker to make adjustments required because of this rulemaking. 80 FR 38566. The Department requested that commenters provide any applicable data concerning this issue, but no applicable data were identified from which to estimate the amount of time required to make these adjustments. The Department believes that commenters that did address adjustment costs significantly overestimated the time necessary for making appropriate workplace adjustments. However, the Department agrees that some increase is warranted, and thus increased the estimated average adjustment time to 75 minutes per affected worker.
Based on feedback from their members, AH&LA and Island Hospitality Management estimated that employers will need approximately four to seven hours per affected employee. The National Council of Chain Restaurants (NCCR) stated that “[e]mployers have told NCCR that the approximate time needed to make such adjustments will be 3-4 hours per employee,” and NRF reported that its members “estimate it would take at least three to four hours per affected employee to make applicable adjustments.” The American Insurance Association and the Property Casualty Insurers Association of America (AIA-PCI) asserted that adjustments will require more time than the Department estimated because employers will not make adjustments in response to the rule “in a vacuum; legal, HR, and operations all will need to be involved to assess risk, determine value, and ultimately decide whether a position, or classification, or part of a classification should be reclassified to non-exempt as a result of the Department's salary level increase.” New Castle Hotels & Resorts similarly stated that a “hotel's GM and HR as well as the Department Head and the effected manager would all need to be involved together with payroll.” AIA-PCI also asserted that in many cases, information technology systems “cannot be configured to accommodate exempt and non-exempt employees in the same job classification,” and thus additional time will be required to reconfigure these systems.
A report by Oxford Economics, submitted by NRF and referenced by other commenters, estimated the “transitional costs” associated with this rule.
Oxford Economics assumed that adjustment costs for Type 1 workers (those who do not work overtime) are zero, and that each worker who receives a pay increase to the new salary level in order to remain exempt (Oxford Economics' equivalent to Type 4 workers) requires 1/1000th of a human resource employee full time equivalent; this equates to approximately 2.1 hours of time per affected worker (
The Department believes Oxford Economics' estimates of the time requirement for adjusting Type 2 and 3 (Oxford Economics' “group 2” and “group 3”) workers are too high. It is unreasonable to expect, for example, that it will take a human resource worker 34.7 hours (almost an entire workweek) to reclassify each Type 2 worker as nonexempt, and possibly adjust his or her implicit hourly wage rate so the total compensation remains unchanged. As we stated above, in this Final Rule, the Department estimates an average of 75 minutes of adjustment time per affected worker. However, employers will need to exert minimal effort to determine the change in status of perhaps 60 percent of affected workers (
With respect to the concern raised by AIA-PCI about reconfiguring information technology systems to include both exempt and overtime-protected workers, the Department notes that most organizations affected by the rule already employ overtime-eligible workers and have in place payroll systems and personnel practices (
The Chamber also expressed concern the Department underestimated projected adjustment costs associated with automatic updating, stating that employers would incur significant adjustment costs in years the salary is automatically updated, even if subsequent salary level changes affect fewer workers than the initial increase (to $913). Similarly, PPWO stated that the Department's cost projections did not account for the fact that “compliance review activities that take place in Year 1 will be repeated on an annual basis, for different groups of employees that fall below the new salary minimum.”
If employers reclassify employees as overtime eligible due to the changes in the salary levels, then firms may incur ongoing managerial costs associated with this Final Rule because the employer may schedule and more closely monitor an employee's hours to minimize or avoid working overtime-eligible employees more than 40 hours in a week. For example, the manager of a reclassified worker may have to assess whether the marginal benefit of scheduling the worker for more than 40 hours exceeds the marginal cost of paying the overtime premium. Additionally, the manager may have to spend more time monitoring the employee's work and productivity since the marginal cost of employing the worker per hour has increased. Unlike regulatory familiarization and adjustment costs, which occur primarily in Year 1 and to a much lesser extent in years when the salary is automatically updated, managerial costs are incurred more uniformly every year.
Because there was little precedent or data to aid in evaluating these costs, the Department examined several sources to estimate costs. First, prior part 541 rulemakings were reviewed to determine whether managerial costs were estimated. No estimates were found. This cost was not quantified for the 2004 rulemaking. Second, a literature review was conducted in an effort to identify information to help guide the cost estimates; again, no estimates were found. The Department also requested data from the public applicable to this cost estimate; however, as discussed below, the Department received no time estimates that seemed more appropriate than the estimates used in the NPRM.
Based on commenters' concerns, discussed below, that managerial costs are applicable to more workers than were included in the NPRM, the Department expanded the number of workers for whom employers experience additional managerial costs (section VI.D.iv.) As in the NPRM, managerial costs are applied to workers who are reclassified as overtime-protected and who either regularly work overtime or occasionally work overtime but on a regular basis. For the Final Rule, however, the Department expanded its count of the number of workers who occasionally work regular overtime (defined later as half of Type 2 workers) by assuming that some Type 1 workers (who report that they do not work overtime) will actually work overtime during some week of the year. Therefore, the number of workers for whom we apply managerial costs increased from 808,000 using the NPRM methodology to 1.2 million using the Final Rule methodology.
To provide a sense of the potential magnitude of these costs, the Department estimated these costs assuming that management spends an additional five minutes per week scheduling and monitoring each affected worker expected to be reclassified as overtime eligible as a result of this rule, and whose hours are adjusted (1.2 million affected EAP workers as calculated in section VI.D.iv.). As will be discussed in detail below, most affected workers do not currently work overtime, and there is no reason to expect their hours worked to change when their status changes from exempt to nonexempt. Similarly, employers are likely to find that it is less costly to give some workers a raise in order to maintain their exempt status. For both these groups of workers, management will have little or no need to increase their monitoring of hours worked. Under these assumptions, the additional managerial hours worked per week were estimated to be 97,300 hours ((5 minutes/60 minutes) × 1.2 million workers).
The median hourly wage in FY2017 for a manager is estimated to be $29.04 and benefits are estimated to be paid at a rate of 46 percent of the base wage, which totals $42.31 per hour.
Some commenters, such as the National Grocers Association and the National Association of Area Agencies on Aging asserted that managerial costs will be higher than the Department estimated because some employers may need to purchase new systems or hire additional personnel to monitor hours. However, the Department believes that most companies already manage a mix of exempt and nonexempt employees, and already have policies and recordkeeping systems in place for nonexempt employees. Thus, they are unlikely to need to purchase systems or hire additional monitoring personnel as a result of this rulemaking. Moreover, no particular form or order of records is required and employers may choose whatever form of recordkeeping works best for their business and their employees. For example, where an employee works a fixed schedule that rarely varies, the employer may simply keep a record of the schedule and indicate the number of hours the worker actually worked only when the worker varies from the schedule (“exceptions reporting”). 29 CFR 516.2(c). Because simple recordkeeping systems, such as exceptions reporting systems for workers on a fixed schedule, are permissible, costs may be minimal.
Several commenters asserted that scheduling and monitoring newly overtime eligible workers will require more time than the Department assumes. One human resource manager commented that the time required will “be closer to 15 minutes than 5,” and AH&LA stated that its members believe these costs “will be closer to 25 minutes to an hour a week.” NCCR stated that it received feedback from employers in the restaurant industry who estimated that managerial costs will range from one to three hours per week. NRF similarly states that its members estimated that managerial costs would range from one to three hours per week.
The Department believes these commenters' estimates are excessive. For example, 75 percent of currently exempt employees who work overtime average less than 10 hours of overtime per week. Assuming a newly nonexempt employee averages 10 hours of overtime per week, then based on NCCR's estimate, a manager would spend from 6 minutes to 18 minutes monitoring for each hour of overtime worked by that employee. The Department believes this estimate is unrealistically high. We also note that commenters did not submit any data supporting their 15 minute and 25 minute estimates. Furthermore, we recognize that employers routinely apply efficiencies in their operations, and see no reason why they will not do so with regard to scheduling as well.
The Chamber recommended that the Department use the mean wage rather than the median to calculate hourly managerial costs, and also asserted that
The Chamber also asserted that managerial costs should apply to all affected workers whose status changes, not just those who regularly work overtime, because “even those who usually work only 40 hours will require additional management schedule monitoring to ensure that their hours do not go higher.” The Department believes that although some companies may closely monitor hours for workers who usually do not work overtime, many companies do not. Many companies simply prohibit overtime without express approval and/or assign workers to a set weekly schedule of hours; in such firms monitoring costs for these newly nonexempt workers who usually do not work overtime should be negligible. Furthermore, without additional information, it is impossible to determine the prevalence of the more strenuous form of managerial oversight described by the Chamber. However, we did increase the number of workers for whom managerial costs are estimated to include more occasional overtime workers, as discussed above.
In addition to the costs discussed above, there may be additional costs that have not been quantified. In the NPRM we identified these potential costs to include reduced profits and hiring costs.
Some commenters, such as the ASAE, Thombert, Inc., Applied Measurement Professionals; and Alaska USA Federal Credit Union, asserted that exempt workers enjoy more scheduling flexibility claiming that their hours generally are not monitored, and thus this rulemaking will impose costs on newly overtime-eligible workers by (for example) limiting their ability to adjust their schedule to meet personal and family obligations. Other commenters suggested that the rulemaking would impose costs on employers because they will lose flexibility to schedule employees. For example, TRANSITIONS for the Developmentally Disabled commented that “[h]aving managers that can work those urgencies and emergencies, then giving them time off later to make up for those extra hours, helps our managers manage the business
The Final Rule does not necessitate that employers reduce scheduling flexibility. Employers can continue to offer flexible schedules and require workers to monitor their own hours and to follow the employers' timekeeping rules. Additionally, some exempt workers already monitor their hours for billing purposes. For these reasons, and because there is little data or literature on these costs, the Department does not quantify potential costs regarding scheduling flexibility to either employees or employers. Moreover, the limited literature available suggests that if there is a reduction in flexibility for employees, it would not be as large as commenters suggested. A study by Lonnie Golden,
Some commenters asserted that the rulemaking will negatively affect the morale of employees reclassified as overtime eligible.
However, if the worker does prefer to be salaried rather than hourly, then this change may impact the worker. The likelihood of this impact occurring depends on the costs to employers and benefits to employees of being salaried. Research has shown that salaried workers (who are not synonymous with exempt workers, but whose status is correlated with exempt status) are more likely than hourly workers to receive benefits such as paid vacation time and health insurance,
Some evidence suggests that it is more costly for the employer to employ a salaried worker than an hourly worker. If true, employers may choose to accompany the change in exemption status with a change to the employee's method of pay, from salary to an hourly basis, since there is no longer as great an incentive to classify the worker as salaried.
Jackson Lewis asserted that the Department did not adequately consider other costs associated with reclassifying employees from exempt to nonexempt: “This is not just a mere matter of accounting for potential changes in direct wage costs. Exempt and non-exempt employees function very differently in the workplace. Reclassifying employees imposes costs with respect to re-engineering roles, determining new performance metrics, and devising compensation programs that drive the desired behaviors consistent with an obligation to pay a wage premium after forty hours in a workweek.” We believe these considerations are adequately accounted for in the Department's adjustment cost estimate, which we increased by 15 minutes from 60 to 75 minutes for each affected worker.
Some commenters asserted that employers will convert newly nonexempt employees to hourly pay and that these employees will lose the earnings predictability of a guaranteed salary.
Some commenters stated that the rulemaking will reduce training and promotional opportunities. For example, ASAE commented that employers would not permit newly overtime eligible employees to attend conferences and annual meetings. In response to these comments, the Department notes that if an employer believes that training opportunities are sufficiently important, it can ensure employees attend the trainings during their 40-hour workweek, or pay the overtime premium where training attendance causes the employee to work over 40 hours in a workweek. Given this, and because there is no data and literature to quantify any potential costs to workers, we decline to do so in this analysis.
Some commenters expressed concern that the automatic updating provisions of the rule may reduce productivity. For example, the Michael Best & Friedrich law firm commented that many employees will “assume they could perform at the same level, or do the bare minimum, and still receive an automatic pay increase,” and this “unmotivated workforce will lead to lesser productivity.” This rulemaking does not require any employer to provide an automatic pay raise when the standard salary level increases. As always, employers have the ability to determine which employees deserve raises, and the size of that raise, and to decide how to handle employees whose work is unsatisfactory. Additionally, the Final Rule has been modified so that updating will occur every three years, not annually, which should lessen commenters' concerns on this issue. Furthermore, as discussed in section VI.D.vii., the Department believes that in some instances employers may in fact experience increased worker productivity due to factors including efficiency wages, improved worker health, and a reduction in turnover.
Some commenters expressed concern that the rulemaking, by restricting work hours, will negatively impact the quality of public services provided by local governments,
The Department believes the impact of the rule on public services will be small. The Department acknowledges that some employees who work overtime providing public services may see a reduction in hours as an effect of the rulemaking. However, if the services are in demand the Department believes additional workers may be hired, as funding availability allows, to make up some of these hours, and productivity increases, as discussed in section VI.D.vii., may offset some reduction in services. Furthermore, the Department notes that school systems would largely be unaffected by the rulemaking: Teachers and academic administrative personnel are “named occupations” and thus do not have to pass the salary level test to remain exempt. In addition, the Department expects many employers will adjust base wages downward to some degree so that even after paying the overtime premium, overall pay and hours of work for many employees will be relatively minimally impacted, as indicated in the comments of many employers.
Some commenters expressed concern that increased labor costs will be passed along to consumers in the form of higher prices.
The Department does anticipate that, in some cases, part of the additional labor costs may be offset by higher prices of goods and services. However, because costs and transfers are on average small relative to payroll and revenues, the Department does not
Some commenters expressed concern that the rulemaking will hurt the United States' ability to compete in the international market.
Some commenters, such as the National Parking Association and the National Beer Wholesalers Association, asserted that, by increasing the marginal cost of labor, the rule will lead companies to automate their business operations and substitute capital for labor. The Department believes that it is unlikely that employees performing jobs that can be easily automated will satisfy the duties test, and that any such effect would be negligible due to the small ratio of employer costs and transfer payments to operating revenue.
Several commenters stated that employers may increase the wages of workers currently paid just above the new threshold to maintain a distribution of wages, and some asserted that the Department failed to account for this effort to avoid salary compression in our economic analysis.
Some commenters stated that firms will reduce the number of full-time positions and replace them with part-time positions to limit overtime payments.
As an initial matter, an employer will have an incentive to make these adjustments only if the cost of paying overtime is greater than the costs associated with hiring another worker. Further, although the Department acknowledges the possibility that firms may reduce the number of full-time positions and replace them with part-time positions, on net the Department believes the benefits of additional jobs (
Conversely, other commenters, such as the International Food Service Distributors Association, expressed concern that employers would eliminate part-time positions “where the employees value the flexibility.”
Finally, the Home Loan and Investment Company and other commenters also asserted that some workers who currently hold only one job will need to take a second job to supplement their now reduced hours. This would reduce workers' utility since juggling two jobs is more difficult than holding one job, even if the total hours are the same. To address this concern, the Department looked at the effect of the 2004 rulemaking on the probability of multiple job holding. The 2004 rulemaking increased the salary level required to be eligible for exemption from $250 per week (short test salary level) to $455 (standard test salary level).
Some commenters, including an HR consultant, a small business owner, and a commenter from the restaurant industry, expressed concern that establishments with small profit margins may lose money or go out of business. The increase in workers' earnings resulting from the revised salary level is a transfer of income from firms to workers, not a cost, and is thus neutral concerning its primary effect on welfare. However, there are potential secondary effects (both costs and benefits) of the transfer due to the potential difference in the marginal utility of income and the marginal propensity to consume or save between workers and business owners. Thus, the Department acknowledges that profits may be reduced due to increased employer costs and transfer payments as a result of this rule, although some of these costs and transfers may be offset by making payroll adjustments or the profit consequences of costs and transfers partially mitigated through increased prices.
One of Congress' goals in enacting the FLSA in 1938 was to spread employment to a greater number of workers by effectively raising the wages of employees working more than 40 hours per week. To the extent that firms respond to an update to the salary level test by reducing overtime, they may do so by spreading hours to other workers, including: Current workers employed for less than 40 hours per week by that employer, current workers who retain their exempt status, and newly hired workers. If new workers are hired to absorb these transferred hours, then the associated hiring costs are a cost of this Final Rule.
Transfer payments occur when income is redistributed from one party to another. The Department has quantified two possible transfers from employers to employees likely to result from this update to the salary level tests: (1) Transfers to ensure compliance with the FLSA minimum wage provision; and (2) transfers to ensure compliance with the FLSA overtime pay provision. Transfers in Year 1 to workers from employers due to the minimum wage provision were estimated to be $34.3 million. The increase in the HCE compensation level does not affect minimum wage transfers because workers eligible for the HCE exemption earn well above the minimum wage. Transfers to employees from employers due to the overtime pay provision were estimated to be $1,250.8 million, $1,152.3 million of which is from the increased standard salary level, while the remainder is attributable to the increased HCE compensation level.
Because the overtime premium depends on the base wage, the estimates of minimum wage transfers and overtime transfers are linked. This can be considered a two-step approach. The Department first identified affected EAP workers with an implicit regular hourly wage lower than the minimum wage, and then calculated the wage increase necessary to reach the minimum wage. The implicit regular rate of pay is calculated as usual weekly earnings divided by usual weekly hours worked. For those employees whose implicit regular rate of pay is below the minimum wage, the overtime premium was based on the minimum wage as the regular rate of pay.
Transfers from employers to workers to ensure compliance with the higher of the federal or applicable state minimum wage are small compared to the transfers attributed to overtime pay and are only associated with the change in the standard salary level. For purposes of this analysis, the hourly rate of pay is calculated as usual weekly earnings divided by usual weekly hours worked. In addition to earning below the federal or state minimum wage, this set of workers also works many hours per week. To demonstrate, in order to earn less than the federal minimum wage of $7.25 per hour, but at least $455 per week, these workers must regularly work significant amounts of overtime (since $455/$7.25 = 62.8 hours). The applicable minimum wage is the higher of the federal minimum wage and the state minimum wage as of January 2016. Most affected EAP workers already receive at least the minimum wage; an estimated 11,200 affected EAP workers (less than 0.3 percent of all affected EAP workers) currently earn an implicit hourly rate of pay less than the minimum wage. The Department estimated transfers due to payment of the minimum wage by calculating the change in earnings if wages rose to the minimum wage for workers who become nonexempt and thus would have to be paid at least the minimum wage.
In response to an increase in the regular rate of pay to the minimum wage, employers may reduce the workers' hours, which must be considered when estimating transfers attributed to payment of the minimum wage to newly overtime-eligible workers. In theory, because the quantity of labor hours demanded is inversely related to wages, a higher mandated wage could result in fewer hours of labor demanded. However, the weight of the empirical evidence finds that increases in the minimum wage have caused little or no significant job loss.
At the new standard salary level ($913 per week), the Department estimates that 11,200 affected EAP workers will on average see an hourly wage increase of $0.91, work 0.7 fewer hours per week, and receive an increase in weekly earnings of $59.10 as a result of coverage by the minimum wage provisions (Table 18). The total change in weekly earnings due to the payment of the minimum wage was estimated to be $660,300 per week ($59.10 × 11,200) or $34.3 million in Year 1.
Modeling employer adjustments for these workers is a two-step process. First, employers adjust wages and hours to meet the minimum wage requirement, as described here. Then, these workers' hours will be further adjusted in response to the requirement to pay the overtime premium, which is discussed in the following section. The transfers presented here only apply to the minimum wage provision. However, minimum wage transfers impact overtime transfers because the overtime premium is calculated based on the minimum wage, not the worker's original wage. Thus, the two are not entirely separable.
The Final Rule will also transfer income to affected workers who work in excess of 40 hours per week. Requiring an overtime premium increases the marginal cost of labor, which employers will likely try to offset by adjusting wages or hours. Thus, the size of the transfers due to the overtime pay provision will depend largely on how employers respond to the updated salary levels. How employers respond and the ensuing changes in employment conditions will depend on the demand for labor, current wages, employer and employee bargaining power, and other factors. Employers may respond by: (1) Paying the required overtime premium to affected workers for the same number of overtime hours at the same implicit regular rate of pay; (2) reducing overtime hours and potentially transferring some of these hours to other workers; (3) increasing workers' salaries to the updated salary or compensation level; (4) reducing the regular rate of pay for workers working overtime; or (5) using some combination of these responses. How employers will respond depends on many factors, including the relative costs of each of these alternatives; in turn, the relative costs of each of these alternatives are a function of workers' earnings and hours worked.
The simplest approach to estimating these transfer payments would be to multiply an employee's regular rate of pay (after compliance with the minimum wage) by 1.5 for all overtime hours; this is referred to as the “full overtime premium” model.
Two conceptual models are useful for thinking about how employers may respond to reclassifying certain employees as overtime eligible: The “full overtime premium” model and the “employment contract” model.
The full overtime premium model is based on what we will refer to as the “labor demand” model of determining wage and hour conditions. In the labor demand model, employers and employees negotiate fixed hourly wages and then subsequently negotiate hours worked, rather than determining both hours and pay simultaneously. This model assumes employees are aware of the hourly wage rate they negotiated and may be more reluctant to accept downward adjustments. The labor demand model would apply if employees had a contract to be paid at an hourly rate, meaning that employers could not reduce the regular rate of pay in response to the requirement to pay a 50 percent premium on hours worked beyond 40 in a week. However, the increase in the marginal cost of labor would lead to a reduction in the hours of labor demanded as long as labor demand is not completely inelastic. The full overtime premium model is a special case of the labor demand model in which the demand for labor is completely inelastic, that is employers will demand the same number of hours worked regardless of the cost.
In the employment contract model, employers and employees negotiate total pay and hours simultaneously, rather than negotiating a fixed hourly wage and then determining hours. Under this model, when employers are required to pay employees an overtime premium, they adjust the employees' implicit hourly rate of pay downward so that when the overtime premium is paid total employee earnings (and thus total employer cost) remain constant, along with the employees' hours. The employer does not experience a change in cost and the employee does not experience a change in earnings or hours. The employment contract model would hold if the workers who are reclassified as overtime protected had an employment agreement specifying set total earnings and hours of work.
The employment contract model tends to be more applicable when overtime hours are predictable, while the labor demand model is generally more applicable to situations where the need for overtime is unanticipated (for example, where there are unforeseen, short-term increases in demand). However, the employment contract model may not fully hold even for workers who work predictable overtime due to market imperfections, employer incentives, or workers' bargaining power. Four examples are provided.
• Employers are constrained because they cannot reduce an employee's implicit hourly rate of pay below the minimum wage. If the employee's implicit hourly rate of pay before the change is at or below the minimum wage, then employers will not be able to reduce the rate of pay to offset the cost of paying the overtime premium.
• Employees generally have some, albeit limited, bargaining power which may prevent employers from reducing the employee's implicit hourly rate of pay to fully offset increased costs.
• Employers may be hesitant to reduce the employee's implicit hourly rate of pay by the entire amount predicted by the employment contract model because it may hurt employee morale and consequently productivity.
• Employers are often limited in their ability to pay different regular rates of pay to different employees who perform the same work and have the same qualifications because of fairness concerns. In order to keep wages constant across employees and reduce wages for overtime workers, employers would need to reduce the implicit hourly rate of pay for employees who do not work overtime as well as those who do work overtime. This would reduce total earnings for these non-overtime employees (potentially causing retention problems, productivity losses, and morale concerns).
Therefore, the likely outcome will fall somewhere between the conditions predicted by the full overtime premium and employment contract models. For example, the implicit hourly rate of pay may fall, but not all the way to the wage predicted by the employment contract model, and overtime hours may fall but not be eliminated since the implicit hourly rate of pay has fallen. The Department conducted a literature review to evaluate how the market would adjust to a change in the requirement to pay overtime.
Barkume (2010) and Trejo (1991) empirically tested for evidence of these two competing models by measuring labor market responses to the application of FLSA overtime pay regulations.
The few commenters who tried to model employer responses generally used or cited the same literature the Department used (in particular, Barkume (2010) and Trejo (1991)). Susann Rohwedder and Jeffrey B. Wenger conducted an analysis for RAND on the impacts of the rulemaking and, like our analysis, found small effects on individual workers' earnings and hours.
Some organizations conducted surveys to evaluate how employers may respond. Although these surveys may be helpful as background information, they generally cannot be used in a quantitative analysis due to issues such as insufficient sample sizes, missing sampling methodology, and missing magnitudes. As an example of the last concern, the American Association of Orthopaedic Executives (AAOE) conducted a survey of their members and found “19% of respondents indicated that they would change the number of staff hours worked in order to avoid paying overtime.” The Department agrees firms will generally change staffing hours and has included this in the quantitative analysis. The modeling question is to what degree employers will adjust hours.
Despite the inability to incorporate these survey results into the analysis,
• The AAOE found “18% [of members] indicated that they would not change their current practice operations. 16% stated that they would increase salaries to the new threshold. 11% would change the affected employees to hourly employees, and 4% stated that they would eliminate positions within their practice.” This indicates employers will use a variety of mechanisms to reduce transfer payments, as discussed and modeled by the Department.
• The 2015 WorldatWork survey found “73% of respondents stated they would have more nonexempt employees.”
• Kansas Bankers Association compiled member banks' analyses of the rule that found “[o]verwhelmingly . . . the response was not to increase the newly non-exempt salaries to continue to keep the position as an exempt position. In fact, only 2 bank CEOs responded that they would choose to do so. Rather, the overwhelming majority of bank CEOs stated those employees would move to non-exempt status, and overtime would be restricted or prohibited.”
• The NAHB presented results from a member survey that found 33 percent of companies indicated a change in company policies, with respect to construction supervisors, would occur. Among those firms, “56% of respondents indicated that they would take steps to minimize overtime, such as cut workers hours.”
• ANCOR found “[l]ess than a third of providers would be able to increase the salary of full-time exempt workers to meet the projected threshold.”
• Society for Human Resource Management (SHRM) reported that, according to its survey “the most significant result identified was the implementation of restrictive overtime policies leading to potential reduction in employees working overtime, with 70 percent of respondents indicating that would be a likely outcome.”
• AGC reported its survey found “74% of AGC-surveyed construction contractors responded that they would likely reclassify some or all of the impacted exempt workers to a non-exempt hourly status at their current salaries. The survey results also show that: Over 60% of respondents expect the proposed rule to result in the institution of policies and practices to ensure that affected employees do not work over 40 hours a week.”
• International Public Management Association for Human Resources (IMPA-HR) and the International Municipal Lawyers Association reported from an IPMA-HR survey that “[a]bout 60% said they would convert currently exempt employees to non-exempt and pay them overtime while the same amount would prohibit them from working more than 40 hours per week without approval. Only 1/3 would raise salaries to at least $970 per week.”
• National Association of Professional Insurance Agents asked survey respondents with workers who would be converted to nonexempt status and who work overtime whether they would decrease overtime hours; 65 percent responded they would.
Some commenters stated that many employers will respond by reducing hours and base wages more than the Department estimated. The National Association of Manufacturers wrote:
While in the initial months following a reclassification, most employees tend to come out about the same in terms of total work and total compensation, the steady pressure of the overtime premium tends to result in a gradual reduction of the employee's schedule. The challenge for that employee is that the hourly rate does not normally increase to offset this loss in hours. Instead, the employer looks to give the work to other employees. The scaling back of the employee's weekly working hours can take a significant toll on the employee's earnings, especially given that the wages lost for each hour of overtime eliminated are at premium rates. The net economic effect of the Proposed Rule will be to take working hours and pay away from employees currently classified as exempt and redistribute those hours and pay to other employees.
Some commenters, including Jackson Lewis, the National RV Dealers Association, and the Sheppard Mullin law firm, asserted that many employers may follow the full employment contract model rather than the partial employment contract model used by the Department in the analysis. The Iowa Association of Community Providers wrote that “[i]n order to maintain current payroll budgets, the organizations will need to lower the hourly wages of non-exempt employees, such that their total annual compensation, including overtime payments, remains at the prior year's level.” The Construction Industry Round Table asserted that “empirical research generally supports the `fixed-job' model rather than the `fixed-wage' model.”
Other commenters stated that overtime will be reduced significantly more than the Department estimated in the NPRM. However, little data was provided to support these claims, making them difficult to incorporate into the analysis. For example, Audubon Area Community Services believes that “[b]ecause additional revenue is not an option, our agency would have to reclassify all but 10 of our positions to non-exempt with no overtime allowed by any staff.”
The Department's reading and analysis of the literature cited in the rulemaking is that a result between the fixed-job model and the fixed-wage model would occur and thus we modeled our results accordingly. Specifically, based upon Barkume's findings regarding employer responses and transfer payments, we believe the partial employment contract model is most appropriate and consistent with the literature. Therefore, we have not changed the analysis. Several commenters commented on the literature we used to support using the partial employment contract model. The Center for American Progress expressed support for our use of Barkume's analysis and stated that this would result in some transfer payments since employers cannot fully adjust base wages. The Washington Center for Equitable Growth noted the Department “should make clear that under certain conditions the fixed-wage model underlying [the Department's] analysis implies that some workers will see an increase in hours. If these workers are under-employed, the shift in the composition of those hours from over-worked to under-worked employees will be a welfare-improving consequence of the proposed rule.”
The Department identified four types of workers whose work characteristics impact how employers were modeled to respond to the changes in both the standard and HCE salary levels:
• Type 1: Workers who do not work overtime.
• Type 2: Workers who do not regularly work overtime but occasionally work overtime.
• Type 3: Workers who regularly work overtime.
• Type 4: Workers who regularly work overtime. These workers differ from the Type 3 workers because it is less expensive for the employer to pay the updated salary level than pay overtime and incur managerial costs for these workers.
The Department began by identifying the number of workers in each type. After modeling employer adjustments, transfer payments were then estimated. Type 3 and 4 workers are identified as
Identifying Type 2 workers involves two steps. First, using CPS MORG data, the Department identified those who do not usually work overtime but did work overtime in the survey week (the week referred to in the CPS questionnaire, variable PEHRACT1 greater than 40). These workers represent those who occasionally work overtime and happened to work overtime in that specific week. The survey (or reference) week is always the pay period that includes the 12th day of the month and contains responses for all twelve months. In a different week the identity of workers who work overtime might differ, but the number working overtime and the hours of overtime worked are similar because the survey week is representative of occasional overtime patterns.
The second step for identifying Type 2 workers in the Final Rule differs from the methodology used in the NPRM. In the NPRM, we used only the first step described above to identify Type 2 workers. Those who did not regularly work overtime and did not work overtime in the survey week were classified as Type 1 workers. As previously discussed, commenters expressed concerns that the Department underestimated the number of workers who will experience changes in their wages or hours, and therefore that we underestimated costs, because managerial costs are a function of the number of workers who work overtime.
Therefore, for this Final Rule, the Department supplemented the CPS data with data from the Survey of Income and Program Participation (SIPP) in order to look at likelihood of working some overtime during the year. Based on 2012 data, the most recent available, the Department found that 39.4 percent of nonhourly workers worked overtime at some point in a year. Workers already identified as Types 2, 3, and 4, using the methodology in the NPRM, compose 24 percent of affected workers. Therefore, as a second step, the Department classified a share of workers who reported they do not usually work overtime, and did not work overtime in the reference week (previously identified as Type 1 workers), as Type 2 workers such that a total of 39.4 percent of affected workers were Type 2, 3, or 4. Therefore, the Department estimates fewer Type 1 workers and more Type 2 workers than in the NPRM.
In practice, employers do not seem to adjust wages of regular overtime workers to the full extent indicated by the employment contract model, and thus employees appear to get a small but significant increase in weekly earnings due to overtime pay coverage. Barkume and Trejo found evidence partially supporting both the employment contract model and the full overtime premium model in response to a 50 percent overtime premium requirement: A decrease in the regular rate of pay for workers with overtime (but not the full decrease to the employment contract model level) and a decrease in the amount of overtime worked. Therefore, when modeling employer responses with respect to the adjustment to the regular rate of pay, the Department used a method that falls somewhere between the employment contract model and the full overtime premium model (
Barkume reported two methods to estimate this partial employment contract wage, depending on the amount of overtime pay assumed to be paid in the absence of regulation. As noted above, the Department believes both the model assuming a voluntary 28 percent overtime premium and the model assuming no voluntary overtime premium are unrealistic for the affected population. Therefore, lacking more information, the Department determined that an appropriate estimate of the impact on the implicit hourly rate of pay for regular overtime workers after the Final Rule should be determined using the average of Barkume's two estimates of partial employment contract model adjustments: A wage change that is 40 percent of the adjustment toward the amount predicted by the employment contract model, assuming an initial zero overtime pay premium, and a wage change that is 80 percent of the adjustment assuming an initial 28 percent overtime pay premium.
Modeling changes in wages, hours, and earnings for Type 1 and Type 4 workers is relatively straightforward. Type 1 affected EAP workers will become overtime eligible, but since they do not work overtime, they will see no change in their weekly earnings. Type 4 workers will remain exempt because their earnings will be raised to the updated EAP salary level (either the standard salary level or HCE compensation level depending on which test the worker passed). These workers' earnings will increase by the difference between their current earnings and the amount necessary to satisfy the new standard salary requirement or comply with the new total annual compensation level. It is possible employers will increase these workers' hours in response to paying them a higher salary, but the Department has not modeled this potential change.
Modeling changes in wages, hours, and earnings for Type 2 and Type 3 workers is more complex and uses findings from Barkume discussed above. The Department distinguishes those who regularly work overtime (Type 3 workers) from those who occasionally, or irregularly, work overtime (Type 2 workers) because employer adjustment to the Final Rule may differ accordingly. The Department believes that employers are more likely to adjust hours worked and wages for regular overtime workers because their hours are predictable. Conversely, it may be more difficult to adjust hours and wages for occasional overtime workers because employers may be responding to a transient, perhaps unpredicted, shift in market demand for the good or service they provide. In this case, it is likely advantageous for the employer to pay for this occasional overtime rather than to adjust permanent staffing. Additionally, the transient and possibly unpredicted nature of the change may make it difficult to adjust wages for these workers.
The Department treats Type 2 affected workers in two ways due to the uncertainty of the nature of these occasional overtime hours worked. If these workers work extra hours on an unforeseen, short-term, as-needed basis (
Our estimate for how Type 2 workers are affected is based on the assumption that 50 percent of these workers who worked occasional overtime worked
Since Type 2 and Type 3 EAP workers work more than 40 hours per week, whether routinely or occasionally, they will receive an overtime premium based on their implicit hourly wage adjusted as described above. Because employers must now pay more for the same number of labor hours, they will seek to reduce those hours; in economics, this is described as a decrease in the quantity of labor hours demanded (a movement to the left along the labor demand curve). It is the net effect of these two changes that will determine the final weekly earnings for affected EAP workers. The reduction in hours is calculated using the elasticity of labor demand with respect to wages. The Department used a short-run demand elasticity of −0.20 to estimate the percentage decrease in hours worked resulting from the increase in average hourly wages in Year 1, calculated using the adjusted base wage and the overtime wage premium.
For Type 3 affected workers, and the 50 percent of Type 2 affected workers who worked
Figure 4 is a flow chart summarizing the four types of affected EAP workers. Also shown are the impacts on exempt status, weekly earnings, and hours worked for each type of affected worker.
The Department projects 4.2 million workers will be affected by either (1) an increase in the standard salary level to the 40th percentile of weekly earnings of full-time salaried workers in the South because they earn salaries of at least $455 per week and less than $913 per week, or (2) an increase in the HCE compensation level to the 90th percentile of earnings of full-time salaried workers nationwide because they only pass the HCE duties test and earn at least $100,000 and less than $134,004 annually. These workers are categorized into the four “types” identified previously. There are 2.6 million Type 1 workers (60.4 percent of all affected EAP workers), those who work 40 hours per week or less and thus will not be paid an overtime premium despite their expected change in status to overtime protected (Table 19). The number of Type 1 workers decreased from the NPRM because some of these workers are now classified as Type 2 workers (as explained above). Type 2 workers, those who are expected to become overtime eligible and do not usually work overtime but do occasionally work overtime and will be paid the overtime premium, total 817,000 (19.3 percent of all affected EAP workers). Type 3 workers, those who regularly work overtime and are expected to become overtime eligible and be paid the overtime premium, are composed of an estimated 759,000 workers (17.9 percent of all affected EAP workers). The number of affected Type 4 workers was estimated to be 96,000 workers (2.3 percent of all affected workers); these are workers who the Department believes will remain exempt because firms will have a financial incentive to increase their weekly salaries to the updated salary and compensation levels, rather than pay a premium for overtime hours.
The Final Rule will likely impact some affected workers' hourly wages, hours, and weekly earnings. Predicted changes in implicit wage rates are outlined in Table 20; changes in hours in Table 21; and changes in weekly earnings in Table 22. How these will change depends on the type of worker, but on average weekly earnings are unchanged or increase while hours worked are unchanged or decrease.
Type 1 workers will have no change in wages, hours, or earnings.
Type 3 workers will also receive decreases in their regular hourly wage as predicted by the partial employment contract model. Type 3 affected workers paid below the new standard salary level would have their regular hourly rate of pay decrease on average from $14.51 to $13.74 per hour, a decrease of 5.3 percent. Type 3 workers paid between $100,000 and the new HCE compensation level would have their regular rate of pay decrease on average from $41.43 to $38.80 per hour, a decrease of 6.3 percent. Again, although regular hourly rates decline, weekly earnings will increase on average because these workers are now eligible for the overtime premium.
Type 4 workers' implicit hourly rates of pay would increase in order for their earnings to meet the updated standard salary level ($913 per week) or the updated HCE annual compensation level ($134,004 annually). The implicit hourly rate for Type 4 affected EAP workers who had earned at least $455 and below $913 per week would
Type 1 and Type 4 workers would have no change in hours. Type 1 workers' hours would not change because they do not work overtime and thus the requirement to pay an overtime premium does not affect them. Type 4 workers' hours may increase, but due to lack of data, the Department assumed hours would not change. Half of Type 2 and all Type 3 workers would see a small decrease in their hours of overtime worked. This reduction in hours is relatively small and is due to the effect on labor demand from the increase in the average hourly base wage as predicted by the employment contract model.
Type 2 workers who work occasional overtime hours would be newly overtime eligible and would see a negligible decrease in average weekly hours in weeks where occasional overtime is worked (0.1 percent decrease) (Table 21).
Because Type 1 workers do not experience a change in their regular rate of pay or hours, they would have no change in earnings due to the Final Rule (Table 22). While their hours are not expected to change, Type 4 workers' salaries would increase to the new standard salary level or HCE compensation level (depending on which test they pass). Thus, Type 4 workers' average weekly earnings would increase by $12.70 (1.4 percent) for those affected by the change in the standard salary level and by $41.58 per week (1.6 percent) for those affected by the HCE compensation level.
Although both Type 2 and Type 3 workers on average experience a decrease in both their regular rate of pay and hours worked, their weekly earnings are expected to increase as a result of the overtime premium. Based on a standard salary level of $913 per week, Type 2 workers' average weekly earnings increase from $751.47 to $760.11, a 1.1 percent increase. The average weekly earnings of Type 2 workers affected by the change in the HCE compensation level were estimated to increase from $2,778.65 to $2,836.63, a 2.1 percent increase. For Type 3 workers affected by the standard salary level, average weekly earnings would increase from $723.86 to $743.83, an increase of 2.8 percent. Type 3 workers affected by the change in the HCE compensation level have an increase in average weekly earnings from $2,136.91 to $2,196.10, an increase of 2.8 percent. Weekly earnings after the standard salary level increased were estimated using the new wage (
At the new standard salary level, the average weekly earnings of all affected workers is expected to increase from $733.65 to $739.13, a change of $5.48 (0.7 percent). However, these figures mask the impact on workers whose hours and earnings will change because Type 1 workers, who do not work overtime, make up more than 60 percent of the pool of affected workers. If Type 1 workers are excluded, the average increase in weekly earnings is $13.91 (1.9 percent). Multiplying the average change of $5.48 by the 4.2 million affected standard EAP workers equals an increase in earnings of $22.8 million per week or $1,187 million in the first year (Table 23). Of the weekly total, $660,000 is due to the minimum wage provision and $22.2 million stems from the overtime pay provision.
For workers affected by the change in the HCE compensation level, average weekly earnings increase by $29.19 ($57.57 if Type 1 workers, who do not work overtime, are excluded). When multiplied by 65,000 affected workers, the national increase in weekly earnings is $1.9 million per week, or $98.5 million in the first year. Thus, total Year 1 transfer payments attributable to this Final Rule total $1,285.2 million.
There may be additional transfers attributable to this Final Rule; however, the magnitude of these other transfers could not be quantified.
Holding regular rate of pay and work hours constant, payment of an overtime premium will increase weekly earnings for workers who work overtime. However, as discussed previously, employers may try to mitigate cost increases by reducing the number of overtime hours worked, either by transferring these hours to other workers or monitoring hours more closely. Depending on how hours are adjusted, a specific worker may earn less pay after this Final Rule. For example, assume an exempt worker is paid for overtime hours at his regular rate of pay (not paid the overtime premium but still acquires a benefit from each additional hour worked over 40 in a week). If the employer does not raise the worker's salary to the new level, requiring the overtime premium may cause the employer to reduce the worker's hours to 40 per week. If the worker's regular rate of pay does not increase, the worker will earn less due to the lost hours of work.
Affected workers who remain exempt will see an increase in pay but may also see an increase in workload as Emerge Center and other commenters noted. The Department estimated the net changes in hours, but as noted in section VI.D.iv.3, subpart Modeling Changes in Wages and Hours, did not estimate changes in hours for affected workers whose earnings increase (perhaps most notably those whose salary is increased to the new threshold so they remain overtime exempt).
Some commenters stated that employers may offset increased labor costs by reducing bonuses or benefits.
Commenters did not provide any data from which to estimate the potential magnitude of changes to benefits or bonuses. Therefore, the Department has not incorporated these impacts into the cost and transfer estimates. Furthermore, the Department believes if employers reduce benefits or bonuses, those reductions will occur instead of the full employer adjustments included in the model; that is, an employer who reduces benefits or bonuses is likely to reduce base wages by a smaller amount. The labor market will constrain to some extent employers' ability to reduce labor costs, regardless of the types of compensation they use to achieve those reductions.
This section includes estimated costs and transfers using either different assumptions or segments of the population. First, the Department presents bounds on transfer payments estimated using alternative assumptions. Second, in response to commenter concerns that the rulemaking would have a disproportionate impact on low-wage regions and industries, the Department considers costs and transfers by region and by industry.
Because the Department cannot predict employers' precise reaction to the Final Rule, the Department calculated bounds on the size of the estimated transfers from employers to workers using a variety of assumptions. Since transfer payments are the largest component of this Final Rule, the scenarios considered here are bounds around the transfer estimate. Based on the assumptions made, these bounds do not generate bounded estimates for costs or DWL.
The potential upper limit for transfers occurs with the assumption that the demand for labor is completely inelastic, and therefore neither the implicit regular hourly rate of pay nor hours worked adjust in response to the changes in the EAP standard salary level and HCE annual compensation level. Under this assumption, employers pay workers one and a half times their current implicit hourly rate of pay for all overtime hours currently worked (
For a more realistic upper bound on transfer payments, the Department assumed that all occasional overtime workers and half of regular overtime workers would receive the full overtime premium (
The plausible lower transfer bound also depends on whether employees work regular overtime or occasional overtime. For those who regularly work overtime hours and half of those who work occasional overtime, the Department assumes the employees' wages will fully adjust as predicted by the employment contract model (in the preferred method their wages adjust based on the partial employment contract model).
The cost and transfer payment estimates associated with the bounds are presented in Table 25. Regulatory familiarization costs and adjustment costs do not vary across the scenarios. These employer costs are a function of the number of affected firms or affected workers, human resource personnel hourly wages, and time estimates. None of these vary based on the assumptions made above. Conversely, managerial costs are lower under these alternative
In response to commenter concerns that the proposed standard salary level would disproportionately impact low-wage regions and low-wage industries, and requests for additional information on impacts by region and/or industry, this section presents estimates of the impacts of this Final Rule by region and by industry (
PPWO asserted that the Department's probability codes demonstrate that the proposed salary level will disproportionately impact low-wage regions and industries. Specifically, PPWO cited a study that found 100 percent of first-line supervisors of food preparation and serving workers in Mississippi would fall below the new threshold, even though the Department's probability codes state that 10 to 50 percent of employees in this occupation should pass the duties test. The Department estimated based on CPS data for FY2013-FY2015 that about 20 percent of first-line supervisors of food preparation and serving workers in Mississippi in this industry will exceed the Final Rule salary threshold, while only 10 to 50 percent will pass the duties test, which shows the change in the Final Rule mitigates the impact on low-wage regions and industries. Similarly, the National Association of Home Builders (NAHB) analyzed state-level data and found that 50 percent or more of first line construction supervisors in Arkansas, Mississippi, New Mexico, and Tennessee would be affected by the Department's proposal. However, 55 percent of first line supervisors of construction trades and extraction workers in the South earn above the Final Rule's salary threshold, even though only 0 to 10 percent of such workers nationwide are likely to pass the standard duties test. Finally, the National Restaurant Association (NRA) noted, based on a 2014 study, that the median base salary paid to restaurant managers is $47,000 and to crew and shift supervisors is $38,000. As revised, the standard salary level in this Final Rule is approximately equivalent to the 2014 median base salary paid to restaurant managers cited by NRA.
The Department analyzed impacts to low wage regions by comparing the number of affected workers, costs, and transfers across the four Census Regions. The region with the most affected workers is the South (1.7 million). However, as a share of potentially affected workers in the region, the South is not unduly affected relative to other regions (22 percent are affected compared with 16 to 19 percent in other regions); as a share of all workers in the region, the South is also not unduly affected relative to other regions (3.6 percent are affected compared with 2.7 to 3.2 percent in other regions).
Total transfers in the first year were estimated to be $1.3 billion (Table 27). As expected, the transfers in the South are the largest portion because the largest number of affected workers is employed in the South. Transfers in the South were estimated to be about 36.5 percent of all transfers, while the South composes 41.1 percent of all affected workers (
Direct employer costs are composed of regulatory familiarization costs, adjustment costs, and management costs. Total first year direct employer costs were estimated to be $677.9 million (Table 28). Total direct employer costs were estimated to be the highest in the South ($259.6 million) and lowest in the Northeast ($123.0 million). While the three components of direct employer costs vary as a percent of these total costs by region, the percentage of total direct costs in each region is fairly consistent with the share of all workers in a region. Direct employer costs in each region as a percentage of the total direct costs were estimated to be 18.1 percent in the Northeast, 22.7 percent in the Midwest, 38.3 percent in the South, and 20.9 percent in the West. Once again, these proportions are almost the same as the proportions of the total workforce in each region: 18.5 percent in the Northeast, 22.0 percent in the Midwest, 36.7 percent in the South, and 22.8 percent in the West.
Another way to compare the relative impacts of this Final Rule by region is to consider the transfers and costs as a proportion of current payroll and current revenues (Table 29). Nationally, direct employer costs are 0.010 percent of payroll. By region, direct employer costs as a percent of payroll are also approximately the same (between 0.009 and 0.012 percent of payroll). Direct employer costs as a percent of revenue are 0.002 percent nationally and in each region.
Transfers as a percent of payroll show greater variation among the regions than costs, but the levels are still very low. Transfers as a percent of payroll range from 0.013 percent in the Northeast to 0.023 percent in the Midwest. As a percent of revenue, transfers range from 0.003 to 0.004 percent. Thus, although there are some slight differences among regions, costs and transfers relative to either current payroll or revenue are less than a tenth of one percent. It is unlikely that a difference of 0.012 percent in costs and transfers as a percentage of payroll between the Northeast (0.022 percent—the lowest percentage) and the Midwest (0.034 percent—the highest percentage) would create any significant regional competitive advantage.
Several commenters expressed concern that this rulemaking will be more costly in low-wage regions due to lower revenue; for example, an individual commenter wrote “a restaurant in NYC taking in a million or more per year may not have any problem paying their manager or managers this proposed minimum salary. However a restaurant in a mid-west town that does say half that or 500,000 in sales, simply cannot afford such a salary.” Similarly, the National Funeral Directors Association asserted the rule will “be much more disruptive for funeral homes in smaller rural communities where many of those
However, regional comparisons must incorporate more than a comparison of a single occupation: while revenues of a typical restaurant in NYC are higher than a typical restaurant in Milwaukee, so are costs including managers' salaries, other employees' wages, food costs and overhead, thus the relative ability of the NYC restaurant to increase managers' salaries might be more apparent than real. In addition, the Department has noted in our analysis that employers will adjust employees' earnings and hours to reduce the impact of the rule beyond the simple calculation of multiplying the overtime premium by the number of overtime hours worked. For example, in Table 22, the Department indicates that on average Type 3 workers will receive a less than three percent increase in weekly earnings. In the restaurant scenario described, this small increase in earnings applies to a fraction of the restaurant's labor force, which in itself is a fraction of total costs and revenues. Therefore, based on the above analysis, the Department does not believe low-wage regions will be unduly affected.
In order to gauge the impact of the final rule on industries, the Department compared estimates of combined direct costs and transfers as a percent of payroll, profits, and revenue, for the 13 major industry groups (Table 30).
The Department also estimates transfers and costs as a percent of profits.
Finally, the Department's estimates of transfers and costs as a percent of revenue by industry also indicate very small impacts (Table 30). The industries with the largest costs and transfers as a percent of revenue are leisure and hospitality and other services. However, the difference between the leisure and hospitality industry, the industry with the highest costs and transfers as a percent of revenue, and the industry with the lowest costs and transfers as a percent of revenue (public administration) is 0.02 percentage points. Table 30 illustrates that the actual differences in costs relative to revenues are quite small across industry groupings.
Although labor market conditions vary by Census Region and industry, the impacts from updating the standard salary level and the HCE compensation level do not unduly affect any of the regions or industries. The proportion of total costs and transfers in each region is fairly consistent with the proportion of total workers in each region. Additionally, the estimated costs and transfers from this Final Rule are very small relative to current payroll or current revenue—less than a tenth of a percent of payroll and less than three-hundredths of a percent of revenue in each region and in each industry.
Deadweight loss (DWL) occurs when a market operates at less than optimal equilibrium output. This typically results from an intervention that sets, in the case of a labor market, wages above their equilibrium level. While the higher wage results in transfers from employers to workers, it also often causes a decrease in the total number of labor hours that are being purchased on the market. DWL is a function of the difference between the wage employers were willing to pay for the hours lost and the wage workers were willing to take for those hours. In other words, DWL represents the total loss in economic surplus resulting from a “wedge” between the employer's willingness to pay and the worker's willingness to accept. DWL may vary in magnitude depending on market parameters, but is typically small when wage changes are small or when labor supply and labor demand are relatively price (wage) inelastic. The estimate of DWL assumes the market meets the theoretical conditions for an efficient market in the absence of this intervention (
The DWL resulting from this Final Rule was estimated based on the average decrease in hours worked and increase in hourly wages calculated in section VI.D.iv. As the cost of labor rises due to the requirement to pay the overtime premium, the demand for overtime hours decreases, which results in fewer hours of overtime worked. To calculate the DWL, the following values must be estimated:
• The increase in average hourly wages for affected EAP workers (holding hours constant),
• the decrease in average hours per worker, and
• the number of affected EAP workers.
For workers affected by the revised standard salary level, and who experience a change in hours, average wages (including overtime) will increase by $0.69 per hour prior to employer hour adjustments (Table 31). This represents the size of the wedge between labor supply and labor demand. Average hours will fall by 0.40 per week. These changes result in an average DWL of $0.14 per week per Type 2 (the 50 percent of CPS occasional overtime workers who work foreseeable overtime) and Type 3 worker. An estimated 803,500 workers will be eligible for the overtime premium on some of their hours worked each week after employer adjustments are taken into account. Multiplying the $0.14 per worker per week estimate by the number of affected workers results in a total DWL of $5.8 million in the first year of this Final Rule attributable to the revised standard salary level (803,500 workers in DWL analysis × $0.14 per worker per week × 52 weeks).
For workers affected by the revised HCE compensation level and who experience a change in hours, the average hourly wage will increase by $2.01 and average hours worked will fall by 0.37 per week. This results in an
Some commenters expressed concern that the rulemaking will lead to a reduction in employment or an increase in unemployment. For example, the National Newspaper Association stated that 41 percent of surveyed members said the proposal would “lead to an overall loss of jobs in the community,” and AGC reported 33 percent of surveyed members “expect some positions to be eliminated.”
If firms increase workers' pay to meet the new salary level, rather than paying overtime, however, then we may see these particular workers working longer hours to justify their increase in pay. This could consequently limit the spread of employment that is traditionally recognized as a goal of overtime laws. The Department acknowledges this may occur in some instances, however, we do not attempt to estimate transfers between workers due to uncertainty concerning the prevalence and magnitude of such transfers.
In general, benefits of the rulemaking were not quantified due to data limitations. However, these benefits are discussed qualitatively.
Market inefficiencies may be reflected in employees' choices concerning earnings and hours worked. These inefficiencies may result from the presence of information asymmetries,
In addition to the 4.2 million affected EAP workers who will be newly eligible for overtime protection (absent employer response to increase the salary level to retain the exemption), overtime protection will be strengthened for an additional 8.9 million salaried workers who earn between the current salary level of $455 per week and the updated salary level of $913 per week. These workers, who were previously vulnerable to misclassification through misapplication of the duties test, will now be automatically overtime protected because their salaries fall below the new salary level and therefore they will not be subject to the duties test. These 8.9 million workers include:
• 5.7 million salaried white collar workers who are at particular risk of being misclassified because they currently pass the salary level test but do not satisfy the duties test; and
• 3.2 million salaried workers in blue collar occupations whose overtime protection will be strengthened because their salary will fall below the new salary threshold.
Although these workers are currently entitled to minimum wage and overtime protection, their protection is better assured with the updated salary level. The salary level test is considered a bright-line test because it is immediately clear to employers and employees alike whether or not a worker passes the salary threshold. The duties test (which is the reason employers cannot currently claim the EAP exemption for the above workers) is more subjective and therefore harder to apply. An outdated salary level reduces the effectiveness of this bright-line test. At the new salary level, the number of overtime-eligible white collar salaried workers earning at or above the salary level will decrease by 5.7 million, and if we use our estimate of misclassification of 12.8 percent, then an estimated 732,000 of these workers are currently entitled to overtime protection but their employers do not recognize them as such. Therefore, increasing the salary level is expected to result in less worker misclassification. These reductions will have the greatest impact on workers concentrated in certain occupations and industries as shown in Table 10. Employers will be able to more readily determine their legal obligations and comply with the law. The resulting effects, although unquantified, would be categorized into costs (
Reducing the number of white collar employees for whom a duties analysis must be performed in order to determine entitlement to overtime will also reduce some types of litigation related to the EAP exemption. As previously discussed, employer uncertainty about which workers should be classified as EAP exempt has contributed to a sharp increase in FLSA lawsuits over the past decade. Much of this litigation has involved whether employees who satisfy the salary level test also meet the duties test for exemption.
Setting an appropriate salary level for the standard duties test, and maintaining the salary level with automatic updates, will restore the test's effectiveness as a bright-line method for separating overtime-protected workers from those who may be bona fide EAP workers, and in turn decrease the litigation risk created when employers must apply the duties test to employees who generally are not performing bona fide EAP work. This will vastly reduce legal challenges regarding the duties test for employees earning between the current salary level ($455) and the updated level ($913).
The International Association of Fire Fighters (IAFF) concurred, stating that “reducing the number of employees for whom the duties test must be applied will significantly reduce litigation related to the EAP exemption.” Other commenters agreed that the proposed rule would make the exemption easier to apply, resulting in savings as a result of reduced litigation.
The size of the potential social benefits from reducing litigation can be illuminated with the following estimation method. The Department estimated the share of FLSA cases that could potentially be avoided due to the revised salary levels. The Department used data from the U.S. Court's Public Access to Court Electronic Records (PACER) system and the CPS to estimate the percent of FLSA cases that concern EAP exemptions and are likely to be affected by the final rule and data from a published study of the cost of civil litigation to determine the potential benefits of reduced litigation arising from the final rule.
In order to determine the potential number of cases that would be affected by the Final Rule, the Department obtained a list of all FLSA cases closed in 2014 from PACER (8,256 cases). From this list the Department selected a random sample of 500 cases. For each case in this sample, relevant information was reviewed and the Department identified the cases that were associated with the EAP exemption. The Department found that 12.0 percent of FLSA cases (60 of 500) were related to the EAP exemptions.
The Department estimated the share of EAP cases that may be avoided due to the Final Rule by using data on the salaried earnings distribution from the CPS to determine the share of potentially avoidable EAP cases where workers earn at least $455 but less than $913 per week or at least $100,000 but less than $134,004 annually. From CPS, the Department selected white collar, nonhourly workers as the appropriate reference group for defining the earnings distribution instead of exempt workers because of the simple fact that if a worker is litigating his or her exempt status, then we do not know if that worker is exempt or not. Based on this analysis, the Department determined that 35.8 percent of white collar nonhourly workers had earnings within these ranges. Applying these findings to the 12 percent of cases associated with the EAP exemption yields an estimated 4.3 percent of FLSA cases may be avoidable.
After estimating the share of cases that might be avoidable, the Department quantified the associated benefit regarding the cost of litigation. The Department drew on a recent study conducted by the Court Statistics Project.
This Final Rule may have an impact on newly overtime-protected employees who are not currently working much or any overtime, but who will now be entitled to minimum wage and overtime pay protections. These workers may face a lower risk of being asked to work overtime in the future, because they are now entitled to an overtime premium, which could reduce their uncertainty and improve their welfare if they do not desire to work overtime. Additionally, if they are asked to work overtime, they will be compensated for the inconvenience with an overtime premium.
Economic theory suggests that workers tend to assign monetary values to risk or undesirable job characteristics, as evidenced by the presence of compensating wage differentials for undesirable jobs, relative to other jobs the worker can perform in the marketplace.
4. Work-Life Balance
Due to the increase in marginal cost for overtime hours for newly overtime-eligible workers, employers will demand fewer hours from some of the workers affected by this rule.
However, employers may respond to the rule by increasing hours of work for some other employees—especially those who pass the duties test and whose salaries are either already over the proposed threshold or will be adjusted to be so. For these employees, work-life balance may be harmed by the rule, in some cases without increased pay. For EAP employees whose work hours and pay are both reduced, they may seek second jobs in order to restore pay to its original level, thus similarly impacting work-life balance. The impact of this possible effect is unquantified.
Several commenters stated that by reducing excessive overtime the rule will improve work-life balance for employees. The Coalition on Human Needs asserted that one outcome of the proposed rule would be that “[e]mployers . . . will have to acknowledge the value of the 40-hour workweek by . . . limiting workers['] [hours], thus giving them more time with their families.”
Empirical evidence shows that workers in the United States typically work more than workers in other comparatively wealthy countries.
Well-Being after an Hours Reduction. IZA DP No. 8077.
Golden, L., & Gebreselassie, T. (2007). Overemployment Mismatches: The Preference for Fewer Work Hours.
Hamermesh, D.S. (2014). Not Enough Time?
Furthermore, not all workers would prefer to work fewer hours and thus some of these workers might experience an adverse impact. In addition, the estimated work loss represents an average over all affected workers, and some workers may experience a larger reduction in hours.
Working long hours is correlated with an increased risk of injury or health problems.
This Final Rule is expected to increase the marginal cost of some workers' labor, predominately due to the overtime pay requirement since almost all affected EAP workers already earn the federal minimum wage. In light of the increased marginal cost of labor for newly overtime-eligible workers, employers may organize workers' time more efficiently, thus increasing productivity. Other channels that may increase marginal productivity include: Worker health (which was addressed above), reduced turnover, and other effects described by efficiency wage theory. Any such net gains would benefit both employers and workers.
Some commenters discussed increased productivity as a benefit of the rulemaking, including the AFL-CIO, the American Federation of Teachers, and the IAFF. Individual comments submitted by the National Women's Law Center asserted that paying workers well “will lead to increased productivity, employee loyalty and less worker turn-over” and stated that “the better you treat employees the better the quality of the work they produced.”
Conversely, there are channels through which increasing overtime pay may reduce productivity. For example, some overtime hours may be spread to other workers. If the work requires significant project-specific knowledge or
It is difficult to estimate the impact of reduced turnover on worker productivity and firm hiring costs. The potential reduction in turnover is a function of several variables: the current wage, hours worked, turnover rate, industry, and occupation. Additionally, estimates of the cost of replacing a worker who quits vary significantly. Therefore, the Department does not quantify the potential benefit associated with a decrease in turnover attributed to this Final Rule.
The transfer of income resulting from this Final Rule may result in reduced need for social assistance (and by extension reduced social assistance expenditures by the government). A worker earning the current salary level of $455 per week earns $23,660 annually. If this worker resides in a family of four and is the sole earner, then the family will be considered impoverished. This makes the family eligible for many social assistance programs. Thus, transferring income to these workers may reduce eligibility for government social assistance programs and government expenditures. Several commenters, including Court Appointed Special Advocates and some individual commenters, agreed that the rulemaking would reduce unemployment insurance and social welfare costs.
Benefits for which currently exempt EAP workers may qualify include Medicaid, the Supplemental Nutrition Assistance Program (SNAP), the Temporary Assistance for Needy Families (TANF) program, the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), and school breakfasts and lunches.
Because employers will have an incentive to reallocate excessive overtime hours in some cases (for instance, amongst employees who work so many hours that any increase would lead to minimum wage violations), the Final Rule may result in expanded employment opportunities. Several commenters predicted such an expansion. The Society of St. Vincent de Paul stated that that there will be positive spillover effects that will result in “opportunities for new employment for others to fill the hours previously treated as non-compensable but mandatory managerial duties.” The Washington Center for Equitable Growth commented that the Department understated the benefits of the rulemaking “by failing to account for employers' tendency to hire additional workers and to schedule non-overtime work in response to the rule change.”
Two estimates of job creation were referenced by commenters. The Washington Center for Equitable Growth referenced an analysis by Goldman Sachs estimating the impact of the proposed change in the standard salary level on employment.
Several commenters asserted that the regulations will benefit the economy as a whole. United Steel Workers stated that “[w]hen the workers have more money to spend, businesses have more customers and more incentive to hire and invest.” Democracy for America commented the proposed rule “would go a long way in addressing [wage] disparity, strengthening our economy by providing more income to households that they can turn around and spend at businesses, creating new jobs and growing our GDP.” There are potential
The Department has chosen to update the standard salary level to the 40th percentile of weekly earnings of all full-time salaried workers in the South. As previously discussed, the Department considered a range of alternatives before selecting this methodology and data set. Table 32 presents the alternative salary and compensation levels, the number of affected workers, and the associated costs and transfers. Regulatory familiarization costs are not included because they do not vary over the alternatives.
Alternative 1 inflates the 2004 standard salary level ($455) to FY2015 dollars using the CPI-U. This is $570 per week. At this salary level 538,000 workers would be affected in Year 1, imposing direct adjustment and managerial costs of $47.9 million, transferring $111.4 million in earnings from employers to employees, and resulting in DWL of $0.4 million. Alternative 2 sets the salary level using the 2004 Final Rule method (the 20th percentile of weekly earnings of full-time salaried workers in the South and retail), resulting in a salary level of $596 per week. At this salary level 683,000 workers would be affected in Year 1, imposing direct adjustment and managerial costs of $61.3 million, transferring $145.4 million in earnings from employers to employees, and resulting in DWL of $0.5 million. Alternative 3 uses the salary level based on the Kantor method for the long duties test, resulting in a level of $684 per week. At this salary level 1.4 million workers would be affected in Year 1, imposing direct adjustment and managerial costs of $133.7 million, transferring $318.1 million in earnings from employers to employees, and resulting in DWL of $1.6 million.
Alternative 4 uses the methodology proposed in the NPRM, setting the standard salary level at the 40th percentile of weekly earnings of full-time salaried workers nationally. For the fourth quarter of 2015 this yields a salary level of $972 per week. At this salary level 4.8 million workers would be affected; Year 1 adjustment and managerial costs would equal $470.1 million, with transfers of $1.5 billion, while DWL would equal $7.3 million. Alternative 5 sets the salary level using the Kantor long test method but generates a level more appropriate to the short duties test by multiplying the result times the average historical ratio between the short and long test salary levels (as explained in section VI.C.iii.). This results in a salary level of $1,019 per week. At this salary level, 5.6 million workers are affected, Year 1 adjustment and managerial costs are $541.2 million; Year 1 transfers are $1.8 billion; and Year 1 DWL is $8.4 million. Alternative 6 inflates the 1975 short duties test salary level using the CPI-U to $1,100 per week in FY2015 dollars. At this salary level, 6.7 million workers are affected; Year 1 adjustment and managerial costs are $665.4 million; Year 1 transfers are $2.4 billion; and Year 1 DWL is $11.7 million.
The Department also examined alternatives to the HCE compensation level. HCE alternative 1 left the current $100,000 annual compensation level unchanged. Therefore, no employer costs, transfers, or DWL are associated with this alternative. HCE alternative 2 inflates the 2004 level using the CPI-U and sets the HCE annual compensation level at $125,320 per year. This compensation level would affect 56,000 workers in Year 1 (compared to 65,000 at the chosen compensation level), impose adjustment and managerial costs on employers of $6.7 million, transfer $72.2 million in earnings from employers to employees, and generate $400,000 in DWL. HCE alternative 3 sets the HCE annual compensation level at $149,894 per year, based upon using the same percentile of full-time salaried workers as in the 2004 Final Rule. This compensation level would affect 72,000 workers in Year 1, impose adjustment and managerial costs on employers of $9.4 million, transfer $123.0 million in earnings from employers to employees, and generate $800,000 in DWL.
Between periodic updates to the salary level, nominal wages typically increase, resulting in an increase in the number of workers qualifying for the EAP exemption, even if there has been no change in their duties or real earnings. Thus, workers whom Congress intended to be covered by the minimum wage and overtime pay provisions of the FLSA may lose those protections. Automatically updating the standard salary level allows this threshold to keep pace with changes in earnings, allowing it to continue to serve as an effective dividing line between potentially exempt and nonexempt workers. Furthermore, automatically updating the standard salary level and the HCE compensation level will provide employers more certainty in knowing that these levels will change by a small amount on a regular basis, rather than the more disruptive increases caused by much larger changes after longer, uncertain increments of time. This will allow firms to better predict short- and long-term costs and employment needs.
In this Final Rule, the Department is including in the regulations a mechanism for automatically updating the salary levels every three years. The Department will reset the standard salary level to keep it at the 40th percentile of weekly wages of full-time salaried workers in the lowest-wage Census Region (currently the South). The HCE annual compensation level will be updated to keep it at the 90th percentile of weekly wages of full-time salaried workers nationally.
In the NPRM the Department sought comments on whether to automatically update the standard salary level and HCE total compensation level using the Consumer Price Index for All Urban Consumers (CPI-U), or using a fixed percentile of earnings. The CPI-U is the most commonly used price index in the U.S. and is calculated monthly by BLS. The CPI-U is the primary index used by the government to index benefit payments, program eligibility levels, and tax payments. The CPI-U holds quantities constant at base levels while allowing prices to change. The quantities are fixed to represent a “basket of goods and services” bought by the average consumer.
Updating the salary levels based upon the growth rate of earnings at a specified percentile of the weekly earnings distribution is consistent with the Department's historical practice of using salary level as a key criterion for the exemption. The growth rate of earnings reflecting labor market conditions is an appropriate measure of the relative status, responsibility, and independence that characterize exempt workers. While earnings and prices generally mirror one another over time, they do not change in tandem.
As previously discussed,
While the Department has decided not to automatically update the salary level using the CPI-U, we note that in recent years the CPI-U has grown at a rate closely aligned with the 40th percentile of earnings of full-time salaried workers in the South. Between FY2006 and FY2015 the average annual growth rates for the 40th percentile in the South and the CPI-U have been 2.1 percent and 1.8 percent, respectively. The average growth rate at the 90th percentile of full-time salaried earnings nationwide during the same period was 3.0 percent.
The Department compared the standard salary levels that would have resulted from 1995 to 2015 if (1) the standard salary level was set each year to the 40th percentile of weekly earnings of full-time salaried workers in the South, and (2) the standard salary level was set using the growth in the CPI-U (and setting the level in 2014 to match the 40th percentile earnings level in the South,
As discussed in detail in section IV.E.iii., some commenters expressed concern that automatically updating the salary level using a fixed percentile of earnings would result in the salary levels growing at too quick a rate.
Claims that automatic updating using the fixed percentile approach will lead to the rapid escalation of the salary level are based primarily on the assumption that employers will respond to this rulemaking by converting newly nonexempt workers to hourly pay status. However, the Department believes these concerns are overstated because many affected EAP workers who are reclassified as nonexempt are likely to remain salaried as: (1) An analysis of the 2004 salary level updates did not indicate significant numbers of workers were converted to hourly pay; and (2) an analysis of updates in California's higher salary level did not indicate significant numbers of workers were reclassified as hourly. In any event, the Department's modeling of the impact of automatic updating shows that any potential “ratcheting” effect that may occur would be small, largely because newly nonexempt workers compose a small percentage of the pool of full-time nonhourly workers in the dataset used to establish the salary level.
The analyses below are based on CPS MORG data. As acknowledged in the NPRM, salary status for CPS respondents cannot definitively be determined because workers who indicate they are paid on a salary basis or on some basis other than hourly are all classified as “nonhourly.” To consider the possibility this biases our results, we looked at the Panel Study of Income Dynamics (PSID). The PSID provides additional information concerning salaried versus other nonhourly workers. In the PSID, respondents are asked how they are paid on their main job and are asked for more detail if their response is some way other than salaried or hourly.
The Department disagrees with commenters that suggested that employers will likely (or automatically) convert large numbers of newly nonexempt employees to hourly pay status. In some instances such conversation may occur, for example, if an employee regularly works overtime and the employer is able to adjust his or her regular rate. However, for the majority of affected employees, there will be no incentive for employers to convert them to hourly pay because they do not work overtime. Also, employers may have other incentives to maintain workers' salary status; for example, they
The Department analyzed employer responses to the 2004 Final Rule and to a series of revisions to California's salary level test for exemption under state law in order to better estimate whether workers who are reclassified as nonexempt are more likely to be paid on an hourly basis. These analyses allow the identification of any potential regulatory impact while controlling for time trends and a broad range of other relevant factors (education, occupation, industry, geographic location, etc.). The Department found no evidence that changes in the salary level for exemption resulted in a statistically significant increase in the percent of full-time white collar workers paid on an hourly basis following either the 2004 Final Rule or the California salary level updates.
Using this DD analysis, the Department found no evidence that changes in the salary level for exemption resulted in a statistically significant increase in the percent of full-time white collar workers paid on an hourly basis following the 2004 Final Rule.
The Department modeled three types of differences to include in the analyses:
2007-2008: January-March 2006 versus January-March 2008, and 2014: January-March 2014 versus January-March 2015.
2007-2008: Workers earning between $540 and $640 versus those earning at least $640 but less than $740, and
2014: Workers earning between $640 and $720 versus workers earning at least $720 but less than $800.
Using this DDD analysis, the Department found no evidence that changes in the salary level for exemption resulted in a statistically significant increase in the percent of full-time white collar workers paid on an hourly basis.
where
In a study submitted by the PPWO, Edgeworth Economics estimated the impact that automatic updating using the fixed percentile approach would have on the salary level. They found that “[i]f just one quarter of the full-time non-hourly workers earning less than $49,400 per year ($950 per week) were reclassified as hourly workers, the pay distribution among the remaining non-hourly workers would shift so that the 40th percentile of the 2016 pay distribution would be $54,184 ($1,042 per week), about 9.6 percent higher than it was in 2015.” Their estimate was based on the key assumption that one quarter of all full-time nonhourly employees would be converted to hourly pay each year. Accordingly, based on the Department's reading of the Edgeworth Economics' analysis, it appears they converted one quarter of all full-time nonhourly employees earning below the salary level to hourly status. This modeling is inappropriate because it fails to account for whether the employees perform white collar work and are subject to the EAP exemption, and ignores that, at most, employers will only have an incentive to convert affected workers (a small share of all full-time nonhourly employees).
Oxford Economics also considered how converting salaried workers to hourly status could influence automatically updated salary levels. In one analysis, they assumed that employers will convert the lowest 40 percent of full-time salaried workers to hourly status in 2016, and that by Year 2 the 40th percentile of the new distribution of salaried workers would be equivalent to the 64th percentile of the original distribution. The Department believes this model is clearly unrealistic. Like Edgeworth Economics, Oxford Economics erroneously assumes that workers who are not affected by the new salary would nonetheless be converted to hourly status.
In another analysis, Oxford Economics estimated employer response to updating the threshold to $970 in 2016. According to their analysis, approximately 695,000, or nearly one third, of the 2,189,000 affected workers will be converted from “salaried exempt” to “hourly nonexempt.” Oxford Economics concluded that about two-thirds of these converted employees will have their hourly rates decreased to leave their earnings unchanged, and one third will have their hours reduced to 38 per week. However, neither analysis appears to account for the possibility that employers may continue to pay some newly nonexempt employees on a salary basis, and thus both predictions likely overestimate the number of workers converted to hourly status.
The Department conducted a similar analysis, using what the Department believes are more realistic assumptions, and found a significantly smaller potential impact. The Department considered which affected workers are most likely to be converted from salaried to hourly pay as a result of this rulemaking. Type 4 workers, those whose salaries are increased to the new standard salary level, remain exempt and their method of pay will not change. Type 3 workers, who regularly work overtime and become nonexempt, and Type 2 workers, those who occasionally work overtime and become nonexempt, are the most likely to have their pay status changed. Type 1 workers (who make up more than 60 percent of the affected workers) are assumed to not work overtime, and employers thus have little incentive to convert them to hourly pay. For this analysis, the Department assumed all Type 2 and Type 3 workers are converted to hourly status to generate a realistic upper bound of the magnitude of any possible ratcheting effect. The Department estimated that the salary level in 2026, after three updates, the salary level as set in the Final Rule (based on weekly earnings of full-time salaried workers in the South) could be approximately 2.5 percent higher than expected due to this effect. This figure is significantly smaller than the estimates provided by the commenters. Furthermore, we believe our estimate is an overestimate because it assumes employers convert all Type 2 and Type 3 workers to hourly status, which, for the reasons discussed above and in section IV.E.iii. of the preamble, the Department believes is a highly unlikely outcome.
The Department projected affected workers, costs, and transfers forward for ten years. This involved several steps. First, past growth in the earnings distribution was used to estimate future salary levels. Second, workers' earnings, absent a change in the salary levels, were predicted. Third, predicted salary levels and earnings were used to estimate affected workers. Fourth, employment adjustments were estimated and adjusted earnings were calculated. Lastly, costs and transfers were calculated.
First, in years when the salary level is updated, the predicted salary levels are estimated using the historic geometric growth rate between FY2005 and FY2015 in (1) the 40th earnings percentile of full-time salaried workers in the South for the standard salary level and (2) the 90th earnings percentile of full-time salaried workers nationally for the HCE compensation level, projected to the second quarter of the respective years before the updated levels go into effect. Second, the Department calculated workers' projected earnings in future years by applying the annual projected wage growth rate in the workers' industry-occupation to current earnings, as described in section VI.B.ii. Third, we compared workers' counter-factual earnings (
Adjusted hours for workers affected in Year 1 were re-estimated in Year 2 using a long-run elasticity of labor demand of −0.4.
Very few commenters discussed the Department's projections for Year 2 through Year 10 in the NPRM's analysis. Dan Goldbeck
The Department estimated that in Year 1, 4.2 million EAP workers will be affected, with about 65,000 of these attributable to the revised HCE compensation level. In Year 10, the number of affected EAP workers was estimated to equal 5.3 million with 217,000 attributed to the HCE exemption. The projected number of affected EAP workers accounts for anticipated employment growth by increasing the number of workers represented by the affected EAP workers (
The projected number of affected workers includes workers who were not EAP exempt in the base year but would have become exempt in the absence of this Final Rule in Years 2 through 10. For example, a worker may earn less than $455 in FY2017 but between $455 and $913 in subsequent years; such a worker would be counted as an affected worker. In the absence of this Final Rule he or she would likely have become exempt at some point during the 9 projected years; however, as a result of the Final Rule, this worker remains nonexempt, and is thus affected by the Final Rule. In the NPRM the Department considered these workers separately from affected workers and did not estimate costs and transfers associated with these workers.
The Department quantified three types of direct employer costs in the ten-year projections: (1) Regulatory familiarization costs; (2) adjustment costs; and (3) managerial costs. Regulatory familiarization costs only occur in Year 1 and years when the salary levels are automatically updated. Thus, in addition to Year 1, some regulatory familiarization costs are expected to occur in Year 4 (FY2020), Year 7 (FY2023), and Year 10 (FY2026).
Although start-up firms must still become familiar with the FLSA following Year 1, the difference between the time necessary for familiarization with the current part 541 exemptions and those exemptions as modified by the Final Rule is essentially zero. Therefore, projected regulatory familiarization costs for new entrants over the next nine years are zero (although these new entrants will incur regulatory familiarization costs in years when the salary and compensation levels are updated).
Adjustment costs and managerial costs are a function of the number of affected EAP workers and thus will be higher with automatic updating. Adjustment costs will occur in any year in which workers are newly affected. After Year 1, these costs are estimated to be relatively small since the majority of workers affected by this rulemaking are affected in Year 1, and the costs occur almost exclusively in years when the salary is automatically updated. Management costs recur each year for all affected EAP workers whose hours are adjusted. Therefore, managerial costs increase modestly over time as the number of affected EAP workers increases. The Department estimated that Year 1 managerial costs would be $214.0 million (section VI.D.iii.); by Year 10 these costs would grow slightly to $255.1 million. In years without automatic updates managerial costs fall slightly since earnings growth will cause some workers to no longer be affected in those years. In all years between 94 and 98 percent of costs are attributable to the revised standard salary level (Table 33).
The Department projected two types of transfers from employers to employees associated with workers affected by the regulation: (1) Transfers due to the minimum wage provision and (2) transfers due to the overtime pay provision. Transfers to workers from employers due to the minimum wage provision, estimated to be $34.3 million in Year 1, are projected to decline to $17.8 million in Year 10 as increased earnings over time move workers' regular rate of pay above the minimum wage.
Table 33 also summarizes average annualized costs and transfers over the ten-year projection period, using 3 percent and 7 percent real discount rates. The Department estimated that total direct employer costs have an average annualized value of $295.1 million per year over ten years when using a 7 percent real discount rate. Of this total, average annualized regulatory familiarization costs were estimated to be $42.4 million. Average annualized adjustment costs were estimated to be $29.0 million. The remaining $223.6 million in average annualized direct costs were accounted for by managerial costs. The average annualized value of total transfers was estimated to equal $1,189.1 million. The largest component of this was the transfer from employers to workers due to overtime pay, which was $1,165.3 million per year, while average annualized transfers due to the minimum wage totaled $23.8 million per year.
The cost to society of fewer hours of labor demanded, expressed as DWL, was estimated to be $6.4 million in Year 1. DWL increases over time and in Year 10 it is projected to equal $11.1 million. DWL increases sharply between Year 1 and Year 2 because the Department assumes the market has had time to fully adjust to the revised standard salary and HCE annual compensation levels by Year 2. In Year 1 employers may not be able to fully adjust wages and hours in response to the rulemaking, so the Department used a short run wage elasticity of labor demand to reflect this constrained response; in Year 2 employers have sufficient time to fully adjust, and a long-run wage elasticity is used. Therefore, the decrease in hours worked is larger in Year 2 than Year 1, and the DWL is also larger. Finally, the Department estimated that average annualized DWL was $9.2 million per year.
A summary of the estimates used in calculating DWL for years 1, 2 and 10 is presented in Table 34. The size of the DWL depends on the change in average hourly wages, the change in average hours, and the number of affected EAP workers with changes in their hours worked. While the change in average hourly wages generally tends to be fairly similar over time, the number of affected EAP workers increases in years with updated salary levels and falls in other years; together these lead to a slight increase in annual DWL over time.
This section presents estimated projected impacts without automatic updating and using the CPI-U to automatically update salary levels. Projections without automatic updating are shown so impacts of the initial increase and subsequent increases can be disaggregated. Projections using the CPI-U are included because this alternative was proposed as a potential method in the NPRM.
For the CPI-U method, the Department used the predicted change in annual CPI-U values for FY2017 through FY2026 from the Congressional Budget Office.
Table 35 shows projected numbers of affected workers, costs, and transfers with these alternative methods. With triennial automatic updating as adopted in this Final Rule, the number of affected EAP workers would increase from 4.2 million to 5.3 million over 10 years. With triennial automatic updating using the CPI-U, the number of affected EAP workers would increase from 4.2 million to 5.4 million over 10 years. Conversely, in the absence of automatic updating, the number of affected EAP workers is projected to decline from 4.2 to 3.0 million.
The three costs to employers previously considered are (1) regulatory familiarization costs, (2) adjustment costs, and (3) managerial costs. Regulatory familiarization costs do not vary depending on whether the fixed percentile method or the CPI-U method is used for automatic updating, and are only slightly lower without automatic updating. Adjustment costs and managerial costs are a function of the number of affected EAP workers and so will be higher with automatic updating. Average annualized direct costs were projected to be very similar with the fixed percentile method and the CPI-U method: $295.1 million and $294.7 million, respectively. Average annualized direct costs are lower without automatic updating because fewer workers will be affected ($249.8 million).
Average annualized transfers and DWL follow a similar pattern: estimates are very similar for the fixed percentile method and the CPI-U method, but are lower without automatic updating. Average annualized transfers are $1,189.1 million with the fixed earnings percentile, $1,172.6 million with the CPI-U method, and $873.5 million without automatic updating. Average annualized DWL is $9.2 million with the fixed earnings percentile, $9.2 million with the CPI-U method, and $7.7 million without automatic updating.
The number of workers exempt under the FLSA's part 541 regulations is unknown. It is neither reported by employers to any central agency nor asked in either an employee or establishment survey.
The CPS MORG data do not include information about job duties. To determine whether a worker meets the duties test the Department employs the methodology it used in the 2004 Final Rule. Each occupation is assigned a probability representing the odds that a worker in that occupation would pass the duties test. For the EAP duties test, the five probability intervals are:
• Category 0: Occupations not likely to include any workers eligible for the EAP exemptions.
• Category 1: Occupations with probabilities between 90 and 100 percent.
• Category 2: Occupations with probabilities between 50 and 90 percent.
• Category 3: Occupations with probabilities between 10 and 50 percent.
• Category 4: Occupations with probabilities between 0 and 10 percent.
The occupations identified in this classification system represent an earlier occupational classification scheme (the 1990 Census Codes). Therefore, an occupational crosswalk was used to map the previous occupational codes to the 2002 Census occupational codes which are used in the CPS MORG 2002 through 2010 data.
Next, the Department must determine which workers to classify as exempt. For example, the probability codes indicate that out of every ten public relation managers between five and nine are exempt; however, the Department does not know which five to nine workers are exempt. Exemption status could be randomly assigned but this would bias the earnings of exempt workers downward, since higher paid workers are more likely to perform the required duties. Therefore, the probability of being classified as exempt should increase with earnings. First, the Department assigned the upper bound of the probability range in each exemption category to workers with top-coded weekly earnings. For all other white collar salaried workers earning at least $455 per week in each exemption category,
The 2004 Final Rule assigned probabilities for whether workers in each occupation would pass the HCE abbreviated duties test if they earned $100,000 or more in total annual compensation; these probabilities are:
• Category 0: Occupations not likely to include any workers eligible for the HCE exemption.
• Category 1: Occupations with a probability of 100 percent.
• Category 2: Occupations with probabilities between 94 and 96 percent.
• Category 3: Occupations with probabilities between 58.4 and 60 percent.
• Category 4: Occupations with a probability of 15 percent.
Like under the standard test, there is a positive relationship between earnings and exemption status; however, unlike the standard test, the relationship for the HCE analysis can be represented well with a linear earnings function. Once individual probabilities are determined, workers are randomly assigned to exemption status.
There are many other exemptions to the minimum wage and overtime pay provisions of the FLSA. Accordingly, in the 2004 Final Rule, the Department excluded workers in agriculture and certain transportation occupations from
Outside sales workers are a subset of the section 13(a)(1) exemptions, but since they are not affected by the salary regulations they are not discussed in detail in the preamble. Outside sales workers are included in occupational category “door-to-door sales workers, news and street vendors, and related workers” (Census code 4950). This category is composed of workers who both would and would not qualify for the outside sales worker exemption; for example, street vendors would not qualify. Therefore, the percentage of these workers that qualify for the exemption was estimated. The Department believes that, under the 1990 Census Codes system, outside sales workers were more or less uniquely identified with occupational category “street & door-to-door sales workers” (277). Therefore, the Department exempts the share of workers in category 4950 who would have been classified as code 277 (43 percent) under the old classification system.
Similar to the 2004 analysis, the Department excluded agricultural workers from the universe of affected employees. In the 2004 Final Rule all workers in agricultural industries were excluded; however, here only workers also in select occupations were excluded since not all workers in agricultural industries qualify for the agricultural overtime pay exemptions. This method better approximates the true number of exempt agricultural workers and provides a more conservative estimate of the number of affected workers. Industry categories include: “crop production” (0170), “animal production” (0180), and “support activities for agriculture and forestry” (0290). Occupational categories include all blue collar occupations (identified with the probability codes), “farm, ranch, and other agricultural managers” (0200), “general and operations managers” (0020), and “first-line supervisors/managers of farming, fishing, and forestry workers” (6000).
The following methodology relies mainly on CPS MORG data but also incorporates alternative data sources when necessary.
Any employee of an amusement or recreational establishment may be exempt from minimum wage and overtime pay if the establishment meets either of the following tests: (a) It operates for seven months or less during any calendar year, or (b) its revenue for the six lowest months of the year is less than one-third of the other six months of such year. Amusement and recreational establishments are defined as “establishments frequented by the public for its amusement or recreation,” and “typical examples of such are the concessionaires at amusement parks and beaches.”
• “independent artists, performing arts, spectator sports, and related industries” (8560),
• “museums, art galleries, historical sites, and similar institutions” (8570),
• “bowling centers” (8580),
• “other amusement, gambling, and recreation industries” (8590), and
• “recreational vehicle parks and camps, and rooming and boarding houses” (8670).
The CPS MORG data does not provide information on employers' operating information or revenue. Using Business Employment Dynamics (BED) data, the Department estimated the share of leisure and hospitality employees working for establishments that are closed for at least one quarter a year.
The 1998 section 4(d) report estimated the number of exempt workers by applying an estimate determined in 1987 by a detailed report from the Employment Standards Administration. The Department chose not to use this estimate because it is outdated.
Section 13(a)(3) also exempts employees of seasonal religious or non-profit educational centers, but many of these workers have already been excluded from the analysis either as religious workers (not covered by the FLSA) or as teachers (professional exemption) and so are not estimated.
Any employee, such as a fisherman, employed in the catching, harvesting, or farming of fish or other aquatic life forms, is exempt from minimum wage and overtime pay. Fishermen are identified in occupational categories “fishers and related fishing workers” (6100) and “ship and boat captains and operators” (9310) and the industry category “fishing, hunting, and trapping” (0280). Workers identified in both these occupational and industry categories are considered exempt.
This exemption from minimum wage and overtime pay applies to any employee employed by a newspaper with circulation of less than 4,000 and circulated mainly within the county where published. Newspaper employees are identified in the following occupational categories:
• “news analysts, reporters and correspondents” (2810),
• “editors” (2830),
• “technical writers” (2840),
• “writers and authors” (2850), and
• “miscellaneous media and communication workers” (2860).
The exemption is limited to the industry category “newspaper publishers” (6470). To limit the exemption to small, local papers, the Department limits the exemption to employees in rural areas. Although employment in a rural area is not synonymous with employment at a small newspaper, this is the best approach currently available. Alternatively, the Department could use data from Dun and Bradstreet (D&B) as was done in the 1998 section 4(d) report. This data would provide information on which establishments are in rural areas; from this the Department could estimate the share of employment in rural areas. This approach would be much more time intensive but would not necessarily provide a better result.
An independently owned public telephone company that has not more than 750 stations may claim the minimum wage and overtime pay exemption for its switchboard operators. “Switchboard operators, including answering service”, are exempt under occupation code 5010 and industry classifications “wired telecommunications carriers” (6680) and “other telecommunications carriers” (6690). Using the 2012 Economic Census, the Department estimated that 1.6 percent of employees in the telecommunication industry (NAICS 517) are employed by firms with fewer than ten employees (the estimated level of employment necessary to service seven hundred and fifty stations). According to the 1998 section 4(d) report, fewer than 10,000 workers were exempt in 1987 and so at that time the Department did not develop a methodology for estimating the number exempt.
Any employee employed as a seaman on a vessel other than an American vessel is exempt from minimum wage and overtime pay. Seamen are identified by occupational categories:
• “sailors and marine oilers” (9300),
• “ship and boat captains and operators” (9310), and
• “ship engineers” (9570).
The CPS MORG data do not identify whether the vessel is foreign or domestic. The best approach the Department has devised is to assume that the number of workers in the occupation “deep sea foreign transportation of freight” (SIC 441) in 2000 is roughly equivalent to the number of workers on foreign vessels.
Domestic service workers employed to provide “companionship services” for an elderly person or a person with an illness, injury, or disability are not required to be paid the minimum wage or overtime pay. Companions are classified under occupational categories:
• “nursing, psychiatric, and home health aides” (3600) and
• “personal and home care aides” (4610).
• “home health care services” (8170),
• “individual and family services” (8370), and
• “private households” (9290).
The criminal investigator must be employed by the federal government and paid “availability pay.”
• “detectives and criminal investigators” (3820),
• “fish and game wardens” (3830), and
• “private detectives and investigators” (3910).
This exemption was not mentioned in the 1998 section 4(d) report. The Department exempts all workers in the occupations identified above and employed by the federal government (PEIO1COW value equal to one).
Computer workers who meet the duties test are exempt under two sections of the FLSA. Salaried computer workers who earn a weekly salary of not less than $455 are exempt under section 13(a)(1) and computer workers who are paid hourly are exempt under section 13(a)(17) if they earn at least $27.63 an hour. Occupations that may be considered exempt include: “Computer and information systems managers” (110), “computer scientists and systems analysts” (1000), “computer programmers” (1010), “computer software engineers” (1020), “computer support specialists” (1040), “database administrators” (1060), “network and computer systems administrators” (1100), “network systems and data communications analysts” (1110), “computer operators” (5800), and “computer control programmers and operators” (7900).
To identify computer workers exempt under section 13(a)(17), the Department restricts the population to workers who are paid on an hourly basis and who earn at least $27.63 per hour. To determine which of these workers pass the computer duties test, we use the probabilities of exemption assigned to these occupations by the Department and assume a linear relationship between earnings and exemption status. Note that none of these workers are impacted by the rulemaking because they are paid on an hourly basis.
This exemption eliminated overtime pay for “any employee with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service pursuant to the provisions of Section 31502 of Title 49.”
To be exempt, these workers must engage in “safety affecting activities.” Examples of exempt occupations include: “driver, driver's helper, loader, or mechanic.”
• “electronic equipment installers and repairers, motor vehicles” (7110),
• “automotive service technicians and mechanics” (7200),
• “bus and truck mechanics and diesel engine specialists” (7210),
• “heavy vehicle and mobile equipment service technicians and mechanics” (7220), and
• “driver/sales workers and truck drivers” (9130).
Section 13(b)(2) exempts “any employee of an employer engaged in the operation of a rail carrier subject to part A of subtitle IV of Title 49.”
• “locomotive engineers and operators” (9200),
• “railroad brake, signal, and switch operators” (9230),
• “railroad conductors and yardmasters” (9240), and
• “subway, streetcar, and other rail transportation workers” (9260).
This section exempts employees subject to the “provisions of title II of the Railway Labor Act.”
Occupational categories include “sailors and marine oilers” (9300), “ship and boat captains and operators” (9310), and “ship engineers” (9570).
The Department limited this exemption to workers employed in a “nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers.” Industry classifications include: “automobile dealers” (4670) and “other motor vehicle dealers” (4680). In the 2004 Final Rule, the industry was limited to 1990 Census code 612 which became Census code “automobile dealers” (4670). Category 4680 (“other motor vehicle dealers”) is also included here in keeping with the 1998 section 4(d) report methodology.
The 1998 methodology did not include an occupational restriction; however, the 2004 methodology limited the exemption to automobiles, trucks, or farm implement sales workers and mechanics.
• “parts salespersons” (4750), and
• “retail salespersons” (4760).
• “electronic equipment installers and repairers, motor vehicles” (7110),
• “automotive body and related repairers” (7150),
• “automotive glass installers and repairers” (7160),
• “automotive service technicians and mechanics” (7200),
• “bus and truck mechanics and diesel engine specialists” (7210),
• “heavy vehicle and mobile equipment service technicians and mechanics” (7220),
• “small engine mechanics” (7240), and
• “miscellaneous vehicle and mobile equipment mechanics, installers, and repairers” (7260).
The Regulatory Flexibility Act of 1980 (RFA) as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), hereafter jointly referred to as the RFA, requires that an agency prepare an initial regulatory flexibility analysis (IRFA) when proposing and a final regulatory flexibility analysis (FRFA) when issuing regulations that will have a significant economic impact on a substantial number of small entities. The agency is also required to respond to public comment on the NPRM.
Based on commenters' concerns that the IRFA did not clearly explain the Department's analysis of costs and payroll increases for small businesses, the Department reorganized and expanded on our analysis from that included in the NPRM. Commenters also requested that the Department include more detailed industry-specific information. In response, the Department has expanded the industry breakdown to the Census's 51 industries categorization. The Department was not able to provide more granular data due to small sample sizes causing imprecise estimates.
The Fair Labor Standards Act (FLSA) requires covered employers to: (1) Pay employees who are covered and not exempt from the Act's requirements not less than the Federal minimum wage for all hours worked and overtime premium pay at a rate of not less than one and one-half times the employee's regular rate of pay for all hours worked over 40 in a workweek, and (2) make, keep, and preserve records of the persons employed by the employer and of the wages, hours, and other conditions and practices of employment. It is widely recognized that the general requirement that employers pay a premium rate of pay for all hours worked over 40 in a workweek is a cornerstone of the Act, grounded in two policy objectives. The first is to spread employment (or in other words, reduce involuntary unemployment) by incentivizing employers to hire more employees rather than requiring existing employees to work longer hours. The second policy objective is to reduce overwork and its detrimental effect on the health and well-being of workers.
The FLSA provides a number of exemptions from the Act's minimum wage and overtime pay provisions, including one for bona fide executive, administrative, and professional (EAP) employees. Such employees typically receive more monetary and non-monetary benefits than most blue collar and lower-level office workers. The exemption applies to employees employed in a bona fide executive, administrative, or professional capacity and for outside sales employees, as those terms are “defined and delimited” by the Department. 29 U.S.C. 213(a)(1). The Department's regulations implementing these “white collar” exemptions are codified at 29 CFR part 541.
For an employer to exclude an employee from minimum wage and overtime protection pursuant to the EAP exemption, the employee generally must meet three criteria: (1) The employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the “salary basis test”); (2) the amount of salary paid must meet a minimum specified amount (the “salary level test”); and (3) the employee's job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (the “duties test”). The salary level requirement was created to identify the dividing line distinguishing workers who may be performing exempt duties from the
The Department has periodically updated the regulations governing these tests since the FLSA's enactment in 1938, most recently in 2004 when, among other revisions, the Department created the standard duties test and paired it with a salary level test of $455 per week. As a result of inflation, the real value of the salary threshold has fallen significantly since its last update, making it inconsistent with Congress' intent to exempt only “bona fide” EAP workers.
The standard salary level and the total compensation level required for highly compensated employees (HCE) have not been updated since 2004. As a result, the standard salary level has declined considerably in real terms relative to both its 2004 and 1975 values (
The Department's primary objective in this rulemaking is to ensure that the revised salary levels will continue to provide a useful and effective test for exemption. The salary levels were designed to operate as a ready guide to assist employers in deciding which employees were more likely to meet the duties tests for the exemptions. If left unchanged, however, the effectiveness of the salary level test as a means of determining exempt status diminishes as employees' wages increase over time.
In order to restore the ability of the standard salary level and the HCE compensation requirements to serve as appropriate bright-line tests between overtime protected employees and those who may be bona fide EAP employees, this rulemaking increases the minimum salary level to come within the exemption from the FLSA minimum wage and overtime requirements as an EAP employee from $455 to the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region (currently the South, $913 a week) for the standard test, and from $100,000 to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers nationally ($134,004 per year) for the HCE test. The Department reached the final standard salary and HCE total compensation levels after considering available data on actual salary levels currently being paid in the economy, publishing a proposed rule, reviewing more than 270,000 timely comments, and considering a range of alternatives. In order to ensure that these levels continue to function appropriately in the future, the rule also includes a provision to automatically update these salary levels every three years.
Many of the issues raised by small businesses in the public comments received on the proposed rule are described in the preamble and RIA above, which we incorporate herein. Nevertheless, the significant issues raised by representatives of small businesses and the U.S. Small Business Administration's Office of Advocacy (Advocacy) are repeated here.
Most of the comments received concerning small businesses centered on the burden that the proposed salary level would impose on small entities. Some commenters expressed concern that the expected cost increase from the rule would disproportionately affect small entities. For example, the Wisconsin Agri-Business Association stated that the proposed rule's increased labor costs “will be felt most by small businesses” because they do not have the ability to adjust to increased costs “without detriment to their business or the people they employ.” Similarly, the Small Business Legislative Council (SBLC) explained that small businesses (and especially new business) tend to operate on very narrow margins, and so such businesses would be disproportionately affected by this rule. Other comments stated more generally that the proposed salary level would impose significant burdens on small businesses.
Accordingly, many commenters suggested the Department adopt some forms of differential treatment for small entities. The Greater Philadelphia Chamber of Commerce urged that “a lower compensation threshold be extended to small businesses and nonprofits, which can be expected to bear the greatest burden of complying with the proposed rule as presently written.” The American Society of Association Executives and the International Association of Lighting Designers stated that the Department “should either set a lower salary level applicable to all employers or set the minimum salary level at a lower percentile of the national average for nonprofit and/or small employers.”
Consistent with the history of the part 541 regulations, the Department declines to create a lower salary level requirement for employees employed at small entities, or to exclude such employees from the salary level test entirely. As we noted in 2004, while “the FLSA itself does provide special treatment for small entities under some of its exemptions . . . the FLSA's statutory exemption for white-collar employees in section 13(a)(1) contains no special provision based on size of business,” 69 FR 22238. In the 78-year history of the part 541 regulations defining the EAP exemption, the salary level requirements have never varied according to the size or revenue of the employer.
Congress established the threshold for enterprise coverage under the FLSA (not less than $500,000 in annual gross volume of sales made or business done).
Several small business commenters raised concerns about the impact that the proposed salary level would have on small entities in low-wage regions and industries.
The Department recognizes that many small employers operate in low-paying regions or industries, and we have historically accounted for small employers when setting the salary level.
The National Small Business Association and several other small business commenters asserted that “[m]any small businesses have no, or very few, non-exempt employees with most workers being salaried professionals or administrative employees. They do not have timekeeping and payroll systems in place that can accommodate the addition of many more non-exempt employees. Thus, the burden of these changes will fall much more heavily on small businesses than on their larger competitors.” Similarly, NFIB stated that “small companies typically lack specialized compliance personnel” to adjust to new regulations, forcing business owners to oversee compliance efforts themselves or pay for outside consultation. The Louisiana Small Business Advisory Council similarly stated: “The cost of compliance for small businesses will be much greater than estimated by the DOL. Lots of small businesses have a minimal number of non-exempt employees, with most workers being salaried professionals or administrative employees.” Identical or nearly identical “campaign” comments from small businesses also stated that “[s]mall businesses are often not equipped to monitor the activities of their employees in order to regulate their time. Companies with fewer than 20 employees rarely have a dedicated HR department, so the creation of new hourly reporting and tracking requirements are likely to be a much greater burden on these companies that do not currently face them. The result will be confusion and excess cost for individual business owners.”
The Department believes that most, if not all, small businesses, like larger businesses, employ a mix of exempt and overtime-protected workers. As such, employers already have policies and systems in place for scheduling workers and monitoring overtime hours worked and the corresponding overtime premium pay. The Department recognizes that the Final Rule will result in the reclassification of some workers of small businesses from exempt to nonexempt, and expects that employers will modify their existing policies and systems to accommodate this change.
NFIB asserted that “the IRFA underestimates compliance costs because it does not take into account business size when estimating the time it takes to read, comprehend and implement the proposed changes.” The Louisiana Small Business Advisory Council similarly commented that the Department underestimated adjustment costs, stating that small businesses “do not have timekeeping and payroll systems in place that can accommodate the addition of new, non-exempt employees.”
In the Final Rule, the Department has clarified the explanation of our method for estimating the number of affected workers employed by small firms, and the number of small firms affected. The Department also reconsidered its estimate of the number of affected workers who work some overtime and increased in this Final Rule its estimate of affected workers who work overtime to 40 percent, up from 24 percent in the IRFA. Additionally, in response to comments, the Department has increased estimated regulatory familiarization and adjustment costs in the Final Rule.
Because there was insufficient data to estimate the number of affected workers employed by a typical small entity, the Department presented in the IRFA a range of results based on the assumption that only one employee per small firm was affected (the lower bound), and, alternatively, based on the assumption that all employees in a small firm were affected (the upper bound estimate of impacts per small establishment). Assuming the upper bound scenario, that all employees in a firm were affected, the IRFA showed that on average, costs and payroll increases for small affected firms were less than 0.9 percent of payroll and less than 0.2 percent of revenues. The largest impacts were found in the food services and drinking places industry, where costs and payroll increases composed 0.84 percent of revenues. Due to the mix of exempt and overtime-protected workers employed by small businesses, the actual impact in this industry would almost certainly be smaller than shown in this upper bound scenario analysis.
The Department's adjustment cost estimate in the IRFA of one hour per newly affected worker was meant to be an average across all establishments. The Department acknowledges that some small businesses may face higher costs because of this rulemaking; however, since there is no data indicating the magnitude of this cost
The Department received many comments in response to our proposal in the NPRM to automatically update the standard salary and HCE total annual compensation requirements. As discussed in section IV.E.i., some commenters asserted that the automatic updating mechanism introduced in this rulemaking may violate the RFA. For example, Seyfarth Shaw urged the Department to not proceed with automatic updating in part because this mechanism would “effectively bypass” this authority. The Partnership to Protect Workplace Opportunity (PPWO) raised similar RFA concerns and characterized the Department's rulemaking as a “`super-proposal,' deciding once and for all what (in the Department's belief) is best without consideration of its impact now or in the future.” PPWO further stated that “it would not be possible for the Department to accurately estimate the impact of the automatic increases in future years as the workforce and the economy are always changing.”
The RFA requires a regulatory flexibility analysis to accompany any agency final rule promulgated under 5 U.S.C. 553.
Several commenters addressed the potential effects that an annual automatic updating mechanism could have on small entities. Advocacy commented that the Department should analyze the impact of updates on small businesses. The NFIB and the Small Business Legislative Council asserted that annual automatic updates to the standard salary level would create perpetual budgeting uncertainty for small entities, and objected that, under our proposal, small employers would only know the updated salary level 60 days before it takes effect. The Maine Department of Labor asserted that small businesses “lack the budget flexibility to provide annual raises to all exempt workers,” while the National Grocers Association and Pizza Properties commented that annual automatic updates might reduce the prevalence or effectiveness of performance-based incentive pay. Several small business commenters, including Alpha Graphics and many individual employers who did not name their organizations, worried that automatic updating would likely “escalate the salary threshold level to an inappropriately high level in a matter of a few years.”
Some small business commenters supported the idea of automatic updating, provided the Department make other salary level changes.
As explained earlier, this Final Rule introduces a mechanism to automatically update the standard salary and HCE total annual compensation thresholds, but with a number of important adjustments from the options considered in the NPRM. First, the Department will update the standard salary level by using regional data—specifically, the 40th percentile of weekly earnings of full-time salaried workers in the lowest wage Census Region—rather than national data. Second, future automatic updates to the standard salary and HCE compensation thresholds will take place every three years, rather than annually. Finally, the Department will publish the updated standard salary and HCE compensation thresholds at least 150 days before they take effect, instead of just 60 days. We believe that these three significant changes appropriately address the concerns raised by small business commenters, while ensuring that the earnings thresholds for the EAP exemption will remain effective and up to date over time. The triennial automatic updating mechanism introduced in this Final Rule should benefit employers of all sizes going forward by avoiding the uncertainty and disruptiveness of larger increases that would likely occur as a result of irregular updates.
SBA's Office of Advocacy (Advocacy) expressed similar concerns as those expressed by other small business commenters, based upon its listening sessions and roundtables regarding the NPRM. Advocacy stated that it was concerned that the IRFA did not properly analyze the numbers of small businesses affected by this regulation and underestimated their compliance costs, and stated that the Department should publish a supplemental IRFA to reanalyze small business impacts. The comment stated that the IRFA “analyzes small entities very broadly, not fully considering how the economic impact affects various categories of small entities differently.” The comment emphasized that the Department should not have analyzed industries by general 2- or 3-digit NAICS codes when “more specific data are readily available,” and should have evaluated the impact on small non-profits and small governmental jurisdictions. As presented below, the Department revised its analysis in this FRFA to display the impact on industries using 6-digit NAICS codes, rather than the 2- and 3-digit codes, in order to present a more detailed assessment of specific impacts.
Advocacy also stated that the Department should have analyzed and considered the impact of the proposed standard salary level in light of regional and industry differences. As explained in the preamble and in the economic impact analysis, the Final Rule differs from the proposed rule in that it bases the standard salary level on earnings in the lowest-wage Census Region, which is currently the South. This change will provide relief not only to small businesses and others in low-wage industries and regions, but also to small non-profit entities and small governmental jurisdictions. As previously explained, the Department believes that the standard salary level set in this Final Rule effectively distinguishes between employees who are overtime eligible and those who may be bona fide executive, administrative, or professional employees, without necessitating a return to a duties test that sets specific limits on the performance of nonexempt work, like the more detailed “long” duties test that existed before 2004. The new salary level not only accounts for the growth in salaries that has taken place since the salary level was updated in 2004, but also addresses the Department's conclusion that the 2004 salary threshold was set too low in light of that rulemaking's switch to a single duties test that no longer set any specific limits on the performance of nonexempt work. Setting a salary level in this Final Rule significantly below the level proposed by the Department would have required a more rigorous duties test than the current standard duties test in order to effectively distinguish between white collar employees who are overtime protected and those who may be bona fide EAP employees. Commenters representing employers overwhelmingly opposed DOL making changes to the duties test and stated that changes to the duties test are more burdensome for businesses. Further, by adjusting the Final Rule salary level to focus on the lowest-wage Census Region instead of a national level, we have removed the effect of the three higher earnings Census Regions on the salary level, ensuring the salary level is not driven by earnings in high- or even middle-wage regions of the country. We note that the South Census Region—the same region on which the Department relied in setting the salary level in 2004—is comprised of the three lowest-wage Census divisions. The Department believes that the lower standard salary level set in the Final Rule is appropriate for small businesses.
Advocacy also stated that the IRFA underestimated the regulatory familiarization, adjustment, managerial costs, and payroll costs, of the proposed rule on small entities, especially because small entities often have limited or no human resources personnel on staff. As discussed elsewhere in the preamble and the economic impact analysis, the FRFA increases the number of affected workers who work overtime, accounts for additional regulatory familiarization time each year that salary levels are adjusted and accounts for additional adjustment costs by increasing the adjustment time to 75 minutes per affected worker.
As shown in Table 41, the Department estimates that there will be a range of costs for small entities from this rule, ranging from $847 to $75,059. Advocacy commented that small businesses were concerned that the Department's estimates of compliance costs were neither transparent nor accurate; and that small businesses have told Advocacy that their payroll costs would be significantly more costly than estimated by the Department. The Department does not believe there was sufficient information from small business commenters to determine the accuracy of those higher estimates.
Advocacy also suggested that the Department consider non-financial impacts that it asserted would accrue to small entities, such as the potential for lower employee morale or the loss of scheduling flexibility if employees are converted from salaried to hourly. The Department addresses these and other possible impacts that cannot be quantified in the preamble and economic impact analysis. As explained above, even if an employee is reclassified as nonexempt, there is no requirement that the employer convert the employee's pay status from salaried to hourly. Employers may choose to continue to pay these formerly exempt workers a salary (with the overtime premium for hours in excess of 40 in those weeks when the employee works overtime). In addition, as we noted in the preamble, based on the available research the Department does not believe that workers will experience the significant change in flexibility that some employers envisioned if the employer reclassifies them as nonexempt.
Advocacy also expressed concern “that the proposed rule does not count worker bonuses or commissions as part of the salary computation.” The Department notes that the Final Rule, for the first time, does modify the salary basis rule to permit employers to count nondiscretionary bonuses and other nondiscretionary incentive payments such as commissions toward up to ten percent of the standard salary level requirement (
Finally, Advocacy suggested that the Department gradually phase in any changes to the salary level, and provide longer than the four months provided in 2004 for the implementation of the rule, suggesting we provide small businesses up to 12-18 months. As discussed in the preamble, the Department does not believe a phase-in is necessary given that this Final Rule adopts a methodology resulting in a lower salary level than the proposed methodology, and the Department will automatically update the salary level every three years rather than annually as proposed. Further, even though this Final Rule changes only salary-related requirements, unlike the 2004 rule which completely updated part 541 including the duties requirements, the Department is providing more than 180 days of notice to all employers before the Final Rule's effective date of December 1, 2016, and we will provide at least 150 days of notice of future automatic updates to the salary requirement.
The RFA defines a “small entity” as a (1) small not-for-profit organization, (2) small governmental jurisdiction, or (3) small business. The Department used the entity size standards defined by SBA to classify entities as small in effect as of February 26, 2016 for the purpose of this analysis. SBA establishes separate standards for individual 6-digit NAICS industry codes, and standard cutoffs are typically based on either the average number of employees, or the average annual receipts. For example, small businesses are generally defined as having fewer than 500, 1,000, or 1,250 employees in manufacturing industries and less than $7.5 million in average annual receipts for many nonmanufacturing industries. However, some exceptions do exist, the most notable being that depository institutions (including credit unions, commercial banks, and non-commercial banks) are classified by total assets. Small governmental jurisdictions are another noteworthy exception. They are defined as the governments of cities, counties, towns, townships, villages, school districts, or special districts with populations of less than 50,000 people.
The Department obtained data from several different sources to determine the number of small entities and employment in these entities for each industry. However, the Statistics of U.S. Businesses (SUSB, 2012) was used for most industries. Industries for which the Department used data from alternative sources include credit unions,
In the SUSB data, for each industry, the total number of small establishments and employees is organized into categories defined using employment, annual revenue, and assets. The Department combined these categories with the corresponding SBA standards to estimate the proportion of establishments and workers in each industry who are considered small or employed by a small entity. The general methodological approach was to classify all establishments or employees in categories below the SBA cutoff as in “small entity” employment.
The Department also estimated the number of small establishments by employer type (non-profit, for profit, government). The calculation of number of establishments by employer type is similar to the calculation of number of establishments by industry. However, instead of using SUSB data by industry, the Department used SUSB data by Legal Form of Organization for non-profit and for profits establishments and data from the 2012 Census of Governments for small governments. The 2012 Census of Governments report includes a breakdown of state and local governments by population of their underlying jurisdiction, allowing us to estimate the number of governments that are small. The Department calculated the number of affected small employees from CPS data by tabulating observations where the respondent is both employed by a non-profit/for profit/government entity and is flagged as being employed in a small establishment. However, it should be noted that CPS respondents are flagged as employed in a small business based on their industry and the industry distribution of employment in small firms. Therefore, this methodology assumes the propensity of a business to be small is not correlated with employer type.
Table 37 presents the estimated number of establishments and small establishments in the U.S. (Hereafter, the terms “establishment” and “entity” are used interchangeably and are considered equivalent for the purposes of this FRFA.)
For this Final Rule analysis, to estimate the probability that an exempt EAP worker is employed by a small establishment, the Department assumed this probability is equal to the proportion of all workers employed by small establishments in the corresponding industry. That is, if 50 percent of workers in an industry are employed in small entities, then on average 1 out of every 2 exempt EAP workers in this industry is expected to be employed by a small establishment.
The Department estimated that 1.6 million of the 4.2 million affected workers (37.1 percent) are employed by small entities (Table 38). This composes about 3.1 percent of the 49.8 million workers employed by small entities. The sectors with the highest total number of affected workers employed by small establishments are: professional and technical services (256,800); health care services, except hospitals (148,900); and retail trade (147,000). The sectors with the largest percent of small business workers who are affected include: management of companies and enterprises (8.9 percent); motion picture and sound recording (7.6 percent); and insurance (7.2 percent).
The Department estimated a range of impacts for small entities. To estimate the number of small establishments that will be affected because they employ affected workers the Department assumed that each small establishment employs no more than one affected worker, meaning that at most 1.6 million of the 6.0 million small establishments will employ an affected worker.
The impacts experienced by an establishment, measured by regulatory costs and payroll increases incurred relative to its financial resources (
For the purposes of estimating this lower-range number of affected small establishments, the Department used the average size of a small establishment as the typical size of an affected small establishment.
Table 38 summarizes the estimated number of affected workers employed by small establishments and the expected range for the number of affected small establishments by industry. The Department estimated that the rule will affect 1.6 million workers who are employed by somewhere between 210,800 and 1.6 million small establishments; this composes from 3.5 percent to 25.9 percent of all small establishments. It also means that from 4.5 million to 5.9 million small establishments incur no more than minimal regulatory familiarization costs (
For small entities, the Department projected annual per-entity costs and payroll increases, including: Regulatory familiarization costs, adjustment costs, managerial costs, and payroll increases to employees. The Department estimates a range for the number of small affected establishments and the impacts they incur. However, few establishments are likely to incur the costs, payroll increases, and impacts at the upper end of this range because it seems unlikely that all employees at a small firm are workers affected by this Final Rule. While the upper and lower bounds are likely over- and under-estimates, respectively, of regulatory costs and increased payroll per small establishment, the Department believes that this range of costs and payroll increases provides the most accurate characterization of the impacts of the rule on small employers.
As a result of this rule, the Department expects total direct employer costs will range from $157.9 million to $206.8 million for affected small establishments (Table 40) in the first year after the promulgation of the Final Rule. An additional $162.3 million to $211.5 million in regulatory familiarization costs will be incurred by small establishments that do not employ affected workers. The three industries with the highest total number of affected workers in small establishments (professional and technical services; healthcare services, except hospitals; and retail trade) account for about 35 percent of the costs. The largest cost per establishment is expected to be incurred in the hospitals industry ($20,629 using the method where all employees are affected), although the costs are not expected to exceed 0.17 percent of payroll. The largest impact as a share of payroll is projected to be incurred in the food services and drinking places industry, where estimated direct costs compose 0.45 percent of average entity payroll.
Average weekly earnings for affected EAP workers in small establishments are expected to increase by about $6.51 per week per affected worker, using the partial employment contract model
Table 42 presents estimated first year direct costs and payroll increases combined per establishment and those costs and payroll increases as a percent of average establishment payroll. The Department presents only the results for the upper bound scenario where all workers employed by the establishment are affected. Under this scenario, an affected small establishment is expected to incur between $200 and $20,629 in direct costs (Table 40) and between $647 and $54,430 in additional payroll to employees (Table 41) in the first year after the promulgation of the Final Rule. Combined costs and payroll increases per establishment range from $847 in management of companies and enterprises to $75,059 in the hospitals sector (Table 41).
However, comparing costs and payroll increases to payrolls overstates the impact to establishments because payroll represents only a fraction of the financial resources available to an establishment. The Department approximated revenue per small affected establishment by calculating the ratio of small business revenues to payroll by industry from the 2012 SUSB data then multiplying that ratio by average small entity payroll.
The Department also considered costs and payroll increases relative to profits (Table 43). The denominator is all profits in an industry, rather than profits per affected establishment. In Table 42 we compared costs and payroll increases to payroll and revenue per establishment; therefore, the numbers in Table 42 and Table 43 are not directly comparable. The broader denominator was used for the profit analysis to be consistent with the profit analysis conducted for the 2004 Final Rule. Due to the broader denominator, total costs and payroll increases in this table include regulatory familiarization costs to non-affected small establishments. Additionally, this table differs from Table 42 because it is conducted at the more aggregated 13 major industry level. This is due to data limitations in the profit data.
Benchmarking against profit is potentially helpful in the sense that it provides a measure of the Final Rule's effect against returns to investment and possible adjustments arising from changes in that outcome. However, this metric must be interpreted carefully as it does not account for differences across industries in terms of risk-adjusted rates of return, nor does it reflect differences in the firm-level adjustment to profit impacts reflecting cross-industry variation in market structure. Costs and payroll increases as a percent of profits are highest in leisure and hospitality industry (although the information industry may be more affected because profits are negative). However, the magnitude of the relative shares is small, representing less than 0.8 percent of profits in each industry and 0.14 percent in aggregate. Similarly, costs and payroll increases as a percent of either payroll or revenue are highest in the leisure and hospitality industry.
To determine how small businesses will be affected in future years, the Department projected costs to small business for nine years after Year 1 of the rule. Projected employment and earnings were calculated using the same methodology described in Section VI.B.ii. Affected employees in small firms follow a similar pattern to affected workers in all establishments. The number decreases gradually in years without automatic updates, but the increases in years with automatic updates offset this fall and result in a net growth over time. There are 1.6 million affected workers in small establishments in Year 1 and 2.0 million in Year 10. Table 44 reports affected workers only in years when the salary level increases.
Costs to small establishments decrease in the years following Year 1 because regulatory familiarization costs are zero in years without automatic updates, and adjustment costs are significantly smaller in years without automatic updating. However, both direct costs and payroll increase over time as more workers become affected, leading to higher managerial costs and earnings for affected workers. Therefore, by Year 10 additional costs and payroll to small businesses have increased from $688.3 in Year 1 to $901.8 in Year 10 (Table 45). Despite this increase over the 10-year period, even in Year 10 costs and payroll increases are a relatively negligible 0.04 percent and 0.01 percent share of payroll and revenue respectively, assuming no growth in real firm payroll or revenues. The Department notes that due to relatively small sample sizes the estimates by detailed industry are not precise. This can cause some numbers in the data to vary across years by a greater amount than they will in the future.
The Department projected costs and payroll increases per affected small establishment using the range for the estimated number of affected small establishments. Table 46 shows projected costs and payroll increases in Years 1, 4, 7, and 10 for the ten industries with the highest costs and payroll increases in Year 1. Affected small establishments in the hospitals industry have the largest costs and payroll increases per establishment using the scenario where all workers employed by the establishment are affected. Using the scenario where one worker per establishment is affected, the costs and payroll increases per establishment are highest in Year 1 in the food services and drinking places industry.
The FLSA sets minimum wage, overtime pay, and recordkeeping requirements for employment subject to its provisions. Unless exempt, covered employees must be paid at least the minimum wage for all hours worked and not less than one and one-half times their regular rates of pay for overtime hours worked. Every employer with covered employees must keep certain records for each nonexempt worker. The regulations at part 516 require employers to maintain records for employees subject to the minimum wage and overtime pay provisions of the FLSA. Thus, the recordkeeping requirements are not new requirements; however, employers would need to keep some additional records for additional affected employees (
This section discusses the description of the steps the agency has taken to minimize the significant economic impact on small entities, consistent with the stated objectives of the FLSA. It includes a statement of the factual, policy, and legal reasons for selecting the alternative adopted in the Final Rule and why other alternatives were rejected.
After considering the comments, the Department has made several changes from the proposed rule to the Final Rule. In particular, the Department has modified the standard salary level to more fully account for the salaries paid in low wage regions. In this Final Rule, the Department sets the standard salary level equal to the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region (currently the South). This results in a salary level of $913 per week, or $47,476 annually for a full-year worker, based on data from the fourth quarter of 2015.
In order to prevent the salary and compensation levels from becoming outdated, the Department is including in the regulations a mechanism to automatically update the salary and compensation thresholds by maintaining the fixed percentiles of weekly earnings set in this Final Rule. In response to comments, however, the Final Rule provides for updates every three years rather than for annual updates as proposed. The first update will take effect on January 1, 2020. The Department believes that regularly updating the salary and compensation levels is the best method to ensure that these tests continue to provide an effective means of distinguishing between overtime-eligible white collar employees and those who may be bona fide EAP employees. Based on historical wage growth in the South, at the time of the first update on January 1, 2020, the standard salary level is likely to be approximately $984 per week ($51,168 annually for a full-year worker) and the HCE total annual compensation requirement is likely to be approximately $147,524.
The Department also revises the regulations to permit employers for the first time to count nondiscretionary bonuses, incentives, and commissions toward up to 10 percent of the required salary level for the standard exemption,
In setting the effective date of the rule, the Department responded to concerns raised about the amount of time required to evaluate and adjust to the new salary level. While the 2004 rule provided for 120 days, the final rule provides 180 days prior to the effective date.
Finally, the Department sought comments on modifications to the duties test in the proposed rule as a means to modernize overtime protections. In reviewing those comments including numerous responses from small entities, the Department decided to not make any changes to the duties tests in this Final Rule.
This Final Rule provides no differing compliance requirements and reporting requirements for small entities. The Final Rule imposes no new reporting or recordkeeping requirements, although employers will be required to record and maintain records, as required by part 516, for additional workers if employees are reclassified from exempt to overtime-protected status. The Department has strived to minimize respondent recordkeeping burden by requiring no specific form or order of records under the FLSA and its corresponding regulations. Moreover, employers would normally maintain the records under usual or customary business practices.
The Department believes it has chosen the most effective option that updates and clarifies the rule and which results in the least burden. Among the options considered by the Department, the least restrictive option was inflating the 2004 standard salary level to FY2015 dollars using CPI-U (which would result in a standard salary level of $570 per week) and the most restrictive was updating the 1975 short test salary level for inflation based upon the CPI-U (which would result in a standard salary level of $1,100 per week). A lower salary level—or a degraded stagnant level over time—would result in a less effective bright-line test for separating potentially exempt workers from those nonexempt workers intended to be within the Act's protection. A low salary level will also increase the role of the duties test in determining whether an employee is exempt, which would increase the likelihood of misclassification and, in turn, increase the risk that employees who should receive overtime and minimum wage protections under the FLSA are denied those protections. The Department found the most restrictive option to be overly burdensome on business in general, and specifically on small businesses. It was also inappropriately high given the fact that the long duties test (which was associated with a lower salary level) no longer exists.
Pursuant to section 603(c) of the RFA, the following alternatives are to be addressed:
• Differing compliance or reporting requirements that take into account the resources available to small entities. The FLSA creates a level playing field for businesses by setting a floor below which employers may not pay their employees. To establish differing compliance or reporting requirements for small businesses would undermine this important purpose of the FLSA, and appears to be unnecessary given the small annualized cost of the rule. The Year 1 cost of the Final Rule was estimated to be around $3,265 for a typical employer that qualifies as small, which is 0.87 percent of average annual payroll and 0.17 percent of average annual revenues. The Department makes available a variety of resources to employers for understanding their obligations and achieving compliance. Therefore the Final Rule does not provide differing compliance or reporting requirements for small businesses.
• The use of performance rather than design standards. Under the Final Rule, the employer may achieve compliance through a variety of means. The employer may elect to continue to claim the EAP exemption for affected employees by adjusting their salary level, hire additional workers or spread overtime hours to other employees, or compensate employees for overtime hours worked. The Department makes available to employers a variety of resources for understanding their obligations and achieving compliance.
• An exemption from coverage of the rule, or any part thereof, for such small entities. Creating an exemption from coverage of this rule for businesses with as many as 1,500 employees (those defined as small businesses under SBA's size standards) is inconsistent with Congressional intent in the enactment of the FLSA, which applies to all employers that satisfy the enterprise coverage threshold or employ individually covered employees.
The Department is not aware of any federal rules that duplicate, overlap, or conflict with this Final Rule.
The Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1501, requires agencies to prepare a written statement for rules for which a general notice of proposed rulemaking was published and that include any federal mandate that may result in increased expenditures by state, local, and tribal governments, in the aggregate, or by the private sector, of $156 million ($100 million in 1995 dollars adjusted for inflation) or more in at least one year. This statement must: (1) Identify the authorizing legislation; (2) present the estimated costs and benefits of the rule and, to the extent that such estimates are feasible and relevant, its estimated effects on the national economy; (3) summarize and evaluate state, local, and tribal government input; and (4) identify reasonable alternatives and select, or explain the non-selection, of the least costly, most cost-effective, or least burdensome alternative.
This Final Rule is issued pursuant to section 13(a)(1) of the Fair Labor Standards Act (FLSA), 29 U.S.C. 213(a)(1). The section exempts from the FLSA's minimum wage and overtime pay requirements “any employee employed in a bona fide executive, administrative, or professional capacity (including any employee employed in the capacity of academic administrative personnel or teacher in elementary or secondary schools), or in the capacity of outside salesman (as such terms are defined and delimited from time to time by regulations of the Secretary, subject to the provisions of [the Administrative Procedure Act] . . . ).” 29 U.S.C. 213(a)(1). The requirements of the exemption provided by this section of the Act are contained in part 541 of the Department's regulations. Section 3(e) of the FLSA, 29 U.S.C. 203(e), defines “employee” to include most individuals employed by a state, political subdivision of a state, or interstate governmental agency. Section 3(x) of the FLSA, 29 U.S.C. 203(x), also defines public agencies to include the government of a state or political subdivision thereof, or any interstate governmental agency.
For purposes of UMRA, this rule includes a federal mandate that is expected to result in increased expenditures by the private sector of more than $156 million in at least one year, but the rule will not result in increased expenditures by state, local and tribal governments, in the aggregate, of $156 million or more in any one year.
Costs to state and local governments: Based on the economic impact analysis of this Final Rule, the Department determined that the Final Rule will result in Year 1 costs for state and local governments totaling $115.1 million, of which $38.8 million are direct employer costs and $76.3 million are payroll increases (5). Additionally, the Final Rule will lead to $0.3 million in dead weight loss (DWL). In subsequent years, the Department estimated that state and local governments may experience payroll increases of as much as $85.4 million in a year when the salary level is automatically updated.
Costs to the private sector: The Department determined that the Final Rule will result in Year 1 costs to the private sector of approximately $1.8 billion, of which $637.7 million are direct employer costs and $1.2 billion are payroll increases. Additionally, the Final Rule will result in $6.0 million in DWL. In subsequent years, the Department estimated that the private sector may experience a payroll increase of as much as $1.5 billion per year.
The largest estimated impact to workers is likely the transfer of income to workers from some combination of employers, end consumers, and other workers); but, to the extent that the utility derived by workers outweighs the disutility experienced by employers and other entities experiencing the negative side of transfers, there may be a societal welfare increase due to this transfer. The channels through which societal welfare may change, and other secondary benefits, transfers and costs may occur, include: Decreased litigation costs due to fewer workers subject to the duties test, the multiplier effect of the transfer, changes in productivity, potentially reduced dependence on social assistance, and a potential increase in time off and its associated benefits to the social welfare of some workers (for instance, those who work so many hours that the overtime requirement renders their current combination of pay and hours worked non-compliant with the minimum wage). Additionally, because of the increased salary level, overtime protection will be strengthened for 5.7 million salaried white collar workers and 3.2 million salaried blue collar workers who do not meet the duties requirements for the EAP exemption, but who earn between the current minimum salary level of $455 per week and the updated salary level, because their right to minimum wage and overtime protection will be clear rather than depend upon an analysis of their duties.
UMRA requires agencies to estimate the effect of a regulation on the national economy if, at its discretion, such estimates are reasonably feasible and the effect is relevant and material. 5 U.S.C. 1532(a)(4). However, OMB guidance on this requirement notes that such macro-economic effects tend to be measurable in nationwide econometric models only if the economic impact of the regulation reaches 0.25 percent to 0.5 percent of GDP, or in the range of $44.9 billion to $89.7 billion (using 2015 GDP). A regulation with smaller aggregate effect is not likely to have a measurable impact in macro-economic terms unless it is highly focused on a particular geographic region or economic sector, which is not the case with this Final Rule.
The Department's RIA estimates that the total first-year costs (direct employer costs, payroll increases from employers to workers, and deadweight loss) of the Final Rule will be approximately $1.8 billion for private employers and $115.1 million for state and local governments. Given OMB's guidance, the Department has determined that a full macro-economic analysis is not likely to show any measurable impact on the economy. Therefore, these costs are compared to payroll costs and revenue to demonstrate the feasibility of adapting to these new rules.
Total first-year private sector costs compose 0.03 percent of private sector
Total first-year state and local government costs compose approximately 0.01 percent of state and local government payrolls.
Prior to issuing the NPRM, the Department embarked on an extensive outreach program, conducting listening sessions in Washington, DC, and several other locations, as well as by conference call. As part of this outreach program, the Department conducted stakeholder listening sessions with representatives of state, local, and tribal governments. In these sessions the Department asked stakeholders to address, among other issues, three questions: (1) What is the appropriate salary level for exemption; (2) what, if any, changes should be made to the duties tests; and (3) how can the regulations be simplified. The discussions in the listening sessions informed the development of the NPRM.
In the NPRM, the Department specifically sought comments from state, local, and tribal governments concerning the ability of these entities to absorb the costs related to the proposed revisions. The Department received multiple comments on this and other issues from state, local, and tribal governments. Many of these commenters raised concerns about the Department's proposal to increase the salary level. Several commenters writing on behalf of state or local governments asserted that public employers would respond to the proposed salary level increase by cutting vital services or increasing taxes.
As discussed in this Final Rule, the Department has modified the proposed rule by setting the salary level equal to the 40th percentile weekly earnings of full-time salaried workers in the lowest-wage Census Region (currently the South). We believe that this adjustment will provide relief for state, local, and tribal government employers, as it does for employers in low-wage areas and industries. Furthermore, the Department has decided to automatically update the salary level every three years rather than annually, and the Final Rule does not make any changes to the duties test. The Department notes that we expect employers to respond in a variety of ways to changes in salary level, and the manner in which an employer responds will affect how the employer (and its employees) is impacted. In response to comments suggesting the implementation of a special salary threshold or an exemption for state, local, or tribal government employers, the Department did not propose any different treatment for employees of state, local, or tribal government employers or ask any questions in the NPRM about such a change; therefore, we believe the special provisions sought are beyond the scope of this rulemaking.
Some state, local, and tribal governments expressed concern with our automatic updating proposal. Several commenters stressed the burdens this change would impose on public sector employers. For example, the California State Association of Counties stated that the “volatility of the [salary level] changes” resulting from annual automatic updating would “make planning and budgeting very challenging,” while the Charlotte County Board of County Commissioners asked the Department to “strongly consider the increased administrative and financial burdens” that annual updating “would place on county governments.”
Some state and local government commenters specifically addressed the automatic updating alternatives discussed in the Department's proposal. The New Mexico State Personnel Board opposed both updating methods, stating that “the CPI-U measures purchasing power . . . [and not] the supply and demand of labor,” and that the fixed percentile approach would “result in an accelerated upward movement of the [salary] threshold, as previously salaried workers are reclassified to hourly, or as they have their incomes increased to be over the new” threshold.
Other commenters appeared more receptive to automatic updating, provided the Department make certain changes from our proposal. The Georgia Department of Administrative Services and the Mississippi State Personnel Board stated that a wage index (rather than a price index) provided a more appropriate basis for automatic updates, although both commenters favored other changes including updating only every five years and, rather than a nationwide effective date, permitting employers to determine when updated salary levels would apply to their organizations. The Commonwealth of Virginia's Department of Human Resource Management (which supported a lower salary level) favored updating using “a measure such as the Employment Cost Index,” while some state, local, and tribal governments that opposed aspects of the Department's rulemaking did not specifically address our automatic updating proposal.
The Department concludes that the concerns raised by state, local, and tribal governments do not provide a basis for declining to institute automatic updating. We recognize that in some instances public sector employers may face different employment environments than their private sector counterparts. However, the Department believes that any unique burdens that automatic updating may pose for government employers are adequately mitigated by the Department's decision to automatically update the salary level every three years (instead of annually) and to increase from 60 to 150 days the notice before automatically updated salary levels take effect. Additionally, between updates all employers can access BLS data to estimate the likely size of the next updated salary level. These changes should provide government employers sufficient time and predictability to allow adaptation to, and compliance with, new salary levels. We also reiterate, as discussed in sections IV.E.ii.-iii, that nothing in this rulemaking requires employers to convert newly nonexempt employees to hourly status or reward underperforming employees with a raise. As to what method the Department should use to automatically update the salary level, commenters from State, local, and tribal governments generally raised the same points as non-government commenters. For the reasons already discussed at length, we conclude that automatic updating using the fixed percentile method will best ensure that the salary level continues to serve, in tandem with the duties test, as an effective dividing line between potentially exempt and nonexempt workers.
Some of commenters suggested that the Department failed to adequately consult with state, local, and tribal governments in developing the rule. For example, the State of Maine Department of Labor asserted that “USDOL did not reach out to all states to discuss the impacts this proposed rule change would have on the states.” The Elk Valley Rancheria Indian Tribe asserted that “there has been no tribal consultation on this rule-making,” and the Ute Mountain Ute Tribe stated that “the proposed rule will have a substantial and direct effect on the Tribe and is subject to consultation under Executive Order 13175.”
The Department's consideration of various options has been described throughout the preamble and economic impact analysis (section VI). The Department believes that it has chosen the least burdensome but still cost-effective mechanism to update the salary level and index future levels that is also consistent with the Department's statutory obligation. Although some alternative options considered, such as inflating the 2004 standard salary level to FY2015 dollars resulting in a salary level of $570 per week, would have set the standard salary level at a rate lower than the updated salary level, which might impose lower direct payroll costs on employers, that outcome would not necessarily be the most cost-effective or least burdensome alternative for employers. A lower salary level—or a degraded stagnant level over time—would result in a less effective bright-line test for separating workers who may be exempt from those nonexempt workers intended to be within the Act's protection. A low salary level will also increase the role of the duties test in determining whether an employee is exempt, which would increase the likelihood of misclassification and, in turn, increase the risk that employees who should receive overtime and minimum wage protections under the FLSA are denied those protections.
Selecting a standard salary level inevitably impacts both the risk and cost of misclassification of overtime-eligible employees earning above the salary level as well as the risk and cost of providing overtime protection to employees performing bona fide EAP duties who are paid below the salary level. An unduly low level risks
The Department has reviewed this Final Rule in accordance with Executive Order 13132 regarding federalism, and determined that it does not have federalism implications. The Final Rule 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.
The Department has reviewed this Final Rule under the terms of Executive Order 13175 and determined that it does not have “tribal implications.” The Final Rule does not 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.” As a result, no tribal summary impact statement has been prepared.
The undersigned hereby certifies that this Final Rule will not adversely affect the well-being of families, as discussed under section 654 of the Treasury and General Government Appropriations Act, 1999.
Executive Order 13045 applies to any rule that (1) is determined to be “economically significant” as defined in Executive Order 12866, and (2) concerns an environmental health or safety risk that the promulgating agency has reason to believe may have a disproportionate effect on children. This Final Rule is not subject to Executive Order 13045 because it has no environmental health or safety risks that may disproportionately affect children.
A review of this Final Rule in accordance with the requirements of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321
This Final Rule is not subject to Executive Order 13211. It will not have a significant adverse effect on the supply, distribution, or use of energy.
This Final Rule is not subject to Executive Order 12630, because it does not involve implementation of a policy “that has takings implications” or that could impose limitations on private property use.
This Final Rule was drafted and reviewed in accordance with Executive Order 12988 and will not unduly burden the federal court system. The Final Rule was: (1) Reviewed to eliminate drafting errors and ambiguities; (2) written to minimize litigation; and (3) written to provide a clear legal standard for affected conduct and to promote burden reduction.
Labor, Minimum wages, Overtime pay, Salaries, Teachers, Wages.
29 U.S.C. 213; Pub. L. 101-583, 104 Stat. 2871; Reorganization Plan No. 6 of 1950 (3 CFR, 1945-53 Comp., p. 1004); Secretary's Order 01-2014 (Dec. 19, 2014), 79 FR 77527 (Dec. 24, 2014).
(a) * * *
(1) Compensated on a salary basis pursuant to § 541.600 at a rate per week of not less than the 40th percentile of weekly earnings of full-time nonhourly workers in the lowest-wage Census Region (or 84 percent of that amount per week, if employed in American Samoa by employers other than the Federal government), exclusive of board, lodging or other facilities. Beginning January 1, 2020, and every three years thereafter, the Secretary shall update the required salary amount pursuant to § 541.607;
(a) * * *
(1) Compensated on a salary or fee basis pursuant to § 541.600 at a rate per week of not less than the 40th percentile of weekly earnings of full-time nonhourly workers in the lowest-wage Census Region (or 84 percent of that amount per week, if employed in American Samoa by employers other than the Federal government), exclusive of board, lodging or other facilities. Beginning January 1, 2020, and every three years thereafter, the Secretary shall update the required salary amount pursuant to § 541.607;
(a) * * *
(1) Compensated on a salary or fee basis pursuant to § 541.600 at a rate per week of not less than the 40th percentile of weekly earnings of full-time nonhourly workers in the lowest-wage Census Region (or 84 percent of that amount per week, if employed in American Samoa by employers other than the Federal government), exclusive of board, lodging or other facilities; or on a salary basis which is at least equal to the entrance salary for teachers in the educational establishment by which employed. Beginning January 1, 2020, and every three years thereafter, the Secretary shall update the required salary amount pursuant to § 541.607; and
(a) * * *
(1) Compensated on a salary or fee basis pursuant to § 541.600 at a rate per week of not less than the 40th percentile of weekly earnings of full-time nonhourly workers in the lowest-wage Census Region (or 84 percent of that amount per week, if employed in American Samoa by employers other than the Federal government), exclusive of board, lodging or other facilities. Beginning January 1, 2020, and every three years thereafter, the Secretary shall update the required salary amount pursuant to § 541.607; and
The additions read as follows:
(b) The section 13(a)(1) exemption applies to any computer employee who is compensated on a salary or fee basis pursuant to § 541.600 at a rate per week of not less than the 40th percentile of weekly earnings of full-time nonhourly workers in the lowest-wage Census Region (or 84 percent of that amount per week, if employed in American Samoa by employers other than the Federal government), exclusive of board, lodging or other facilities. Beginning January 1, 2020, and every three years thereafter, the Secretary shall update the required salary amount pursuant to § 541.607. The section 13(a)(17) exemption applies to any computer employee compensated on an hourly basis at a rate of not less than $27.63 an hour. * * *
The revisions and additions read as follows:
(a) To qualify as an exempt executive, administrative or professional employee under section 13(a)(1) of the Act, an employee must be compensated on a salary basis at a rate per week of not less than the 40th percentile of weekly earnings of full-time nonhourly workers in the lowest-wage Census Region. As of December 1, 2016, and until a new rate is published in the
(b) The required amount of compensation per week may be translated into equivalent amounts for periods longer than one week. The requirement will be met if the employee is compensated biweekly on a salary basis of $1,826, semimonthly on a salary basis of $1,978, or monthly on a salary basis of $3,956. However, the shortest period of payment that will meet this compensation requirement is one week. Beginning January 1, 2020, and every three years thereafter, the Secretary shall update the required salary amount pursuant to § 541.607 and the updated salary amount may be paid weekly, biweekly, semimonthly, or monthly on a salaried basis.
The revisions and additions read as follows:
(a) An employee shall be exempt under section 13(a)(1) of the Act if:
(1) The employee receives total annual compensation of at least the annualized earnings amount of the 90th percentile of full-time nonhourly workers nationally; and
(2) The employee customarily and regularly performs any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee identified in subpart B, C, or D of this part.
(b) As of December 1, 2016, and until a new amount is published in the
(1) “Total annual compensation” must include at least a weekly amount equal to the required salary amount required by § 541.600(a) paid on a salary or fee basis as set forth in §§ 541.602 and 541.605, except that § 541.602(a)(3) shall not apply to highly compensated employees. * * *
(2) If an employee's total annual compensation does not total at least the minimum amount established in paragraph (a) of this section by the last pay period of the 52-week period, the employer may, during the last pay period or within one month after the end of the 52-week period, make one final payment sufficient to achieve the required level. For example, if the current annual salary level for a highly compensated employee is $134,004, an employee may earn $100,000 in base salary, and the employer may anticipate based upon past sales that the employee also will earn $35,000 in commissions. However, due to poor sales in the final quarter of the year, the employee actually only earns $10,000 in commissions. In this situation, the employer may within one month after the end of the year make a payment of at least $24,004 to the employee. Any such final payment made after the end of the 52-week period may count only toward the prior year's total annual compensation and not toward the total annual compensation in the year it was paid. If the employer fails to make such a payment, the employee does not qualify as a highly compensated employee, but may still qualify as exempt under subparts B, C, or D of this part.
(a)
(1) Subject to the exceptions provided in paragraph (b) of this section, an exempt employee must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked. Exempt employees need not be paid for any workweek in which they perform no work.
(2) An employee is not paid on a salary basis if deductions from the employee's predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business. If the employee is ready, willing and able to work, deductions may not be made for time when work is not available.
(3) Up to ten percent of the salary amount required by § 541.600(a) may be satisfied by the payment of nondiscretionary bonuses, incentives, and commissions, that are paid quarterly or more frequently. If by the last pay period of the quarter the sum of the employee's weekly salary plus nondiscretionary bonus, incentive, and commission payments received does not equal 13 times the weekly salary amount required by § 541.600(a), the employer may make one final payment sufficient to achieve the required level no later than the next pay period after the end of the quarter. Any such final payment made after the end of the 13-week period may count only toward the prior quarter's salary amount and not toward the salary amount in the quarter it was paid. This provision does not apply to highly compensated employees under § 541.601.
(a) An employer may provide an exempt employee with additional compensation without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly-required amount paid on a salary basis. Thus, for example, if the current weekly salary level is $913, an exempt employee guaranteed at least $913 each week paid on a salary basis may also receive additional compensation of a one percent commission on sales. An exempt employee also may receive a percentage of the sales or profits of the employer if the employment arrangement also includes a guarantee of at least $913 each week paid on a salary basis. Similarly, the exemption is not lost if an exempt employee who is guaranteed at least $913 each week paid on a salary basis also receives additional compensation based on hours worked for work beyond the normal workweek. Such additional compensation may be paid on any basis (
(b) An exempt employee's earnings may be computed on an hourly, a daily or a shift basis, without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly required amount paid on a salary basis regardless of the number of hours, days or shifts worked, and a reasonable relationship exists between the guaranteed amount and the amount actually earned. The reasonable relationship test will be met if the weekly guarantee is roughly equivalent to the employee's usual earnings at the assigned hourly, daily or shift rate for the employee's normal scheduled workweek. Thus, for example, if the weekly salary level is $913, an exempt employee guaranteed compensation of at least $1,000 for any week in which the employee performs any work, and who normally works four or five shifts each week, may be paid $300 per shift without violating the salary basis requirement. The reasonable relationship requirement applies only if the employee's pay is computed on an hourly, daily or shift basis. It does not apply, for example, to an exempt store manager paid a guaranteed salary per week that exceeds the current salary level who also receives a commission of one-half percent of all sales in the store or five percent of the store's profits, which in some weeks may total as much as, or even more than, the guaranteed salary.
(b) To determine whether the fee payment meets the minimum amount of salary required for exemption under these regulations, the amount paid to the employee will be tested by determining the time worked on the job and whether the fee payment is at a rate that would amount to at least the minimum salary per week, as required by §§ 541.600(a) and 541.602(a), if the employee worked 40 hours. Thus, if the salary level were $913, an artist paid $500 for a picture that took 20 hours to complete meets the minimum salary requirement for exemption since earnings at this rate would yield the artist $1000 if 40 hours were worked.
(a)
(1) $913 per week as of December 1, 2016; and
(2) Beginning on January 1, 2020, and every three years thereafter, updated to equal the 40th percentile of weekly earnings of full-time nonhourly workers in the lowest-wage Census Region in the second quarter of the year preceding the update as published by the Bureau of Labor Statistics.
(b)
(1) $767 per week as of December 1, 2016; and
(2) Beginning on January 1, 2020, and every three years thereafter:
(i) Updated to correspond to 84 percent of the updated salary set in paragraph (a)(2) of this section; and
(ii) Rounded to the nearest multiple of $1.00;
(3) Provided that when the highest industry minimum wage for American Samoa equals the minimum wage under 29 U.S.C. 206(a)(1), exempt employees employed in all industries in American Samoa shall be paid the rate specified in paragraph (a) of this section.
(c)
(1) $1,397 per week as of December 1, 2016; and
(2) Beginning on January 1, 2020, and every three years thereafter:
(i) Updated from the previously applicable base rate, adjusted by the same percentage as the updated salary set in paragraph (a)(2) of this section; and
(ii) Rounded to the nearest multiple of $1.00.
(d) The amount required in total annual compensation for an exempt highly compensated employee pursuant to § 541.601, is:
(1) $134,004 per year as of December 1, 2016; and
(2) Beginning on January 1, 2020, and every three years thereafter, updated to correspond to the annualized earnings amount of the 90th percentile of full-time nonhourly workers nationally in the second quarter of the year preceding the update as published by the Bureau of Labor Statistics.
(e) The Secretary will determine the lowest-wage Census Region for paragraphs (a) and (b) of this section using the 40th percentile of weekly earnings of full-time nonhourly workers in the Census Regions based on data from the Current Population Survey as published by the Bureau of Labor Statistics.
(f) The Secretary will use the 90th percentile of weekly earnings data of full-time nonhourly workers nationally based on data from the Current Population Survey as published by the
(g) Not less than 150 days before the January 1st effective date of the updated earnings requirements for this section, the Secretary will publish a notice in the
(h) The Wage and Hour Division will publish and maintain on its Web site the applicable earnings requirements for employees paid pursuant to this part.
The requirement that the employee be paid “on a salary basis” does not apply to an employee in the motion picture producing industry who is compensated, as of December 1, 2016, at a base rate of at least $1,397 per week (exclusive of board, lodging, or other facilities); and beginning on January 1, 2020, and every three years thereafter, is compensated at a base rate of at least the previously applicable base rate adjusted by the same ratio as the preceding standard salary level is increased (exclusive of board, lodging, or other facilities). Thus, an employee in this industry who is otherwise exempt under subparts B, C, or D of this part, and who is employed at a base rate of at least the applicable current minimum amount a week is exempt if paid a proportionate amount (based on a week of not more than 6 days) for any week in which the employee does not work a full workweek for any reason. Moreover, an otherwise exempt employee in this industry qualifies for exemption if the employee is employed at a daily rate under the following circumstances:
(a) The employee is in a job category for which a weekly base rate is not provided and the daily base rate would yield at least the minimum weekly amount if 6 days were worked; or
(b) The employee is in a job category having the minimum weekly base rate and the daily base rate is at least one-sixth of such weekly base rate.
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Interim final rule; request for comments.
This action establishes revised uniform procedures implementing State highway safety grant programs, as a result of enactment of the Fixing America's Surface Transportation (FAST) Act. It also reorganizes, streamlines and updates some grant requirements. This document is being issued as an interim final rule to provide timely guidance to States about the application procedures for highway safety grants starting in year 2017. The agency requests comments on the rule. The agency will publish a notice responding to any comments received and, if appropriate, will amend provisions of the regulation.
This interim final rule is effective on May 23, 2016. Comments concerning this interim final rule are due October 31, 2016. In compliance with the Paperwork Reduction Act, NHTSA is also seeking comment on a revised information collection. See the Paperwork Reduction Act section under Regulatory Analyses and Notices below. Comments concerning the revised information collection requirements are due October 31, 2016 to NHTSA and to the Office of Management and Budget (OMB) at the address listed in the
You may submit number identified in the heading of this document by any of the following methods:
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Regardless of how you submit your comments, please mention the docket number of this document.
You may also call the Docket at 202-366-9324.
Comments regarding the revised information collection should be submitted to NHTSA through one of the preceding methods and a copy should also be sent to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725-17th Street NW., Washington, DC 20503, Attention: NHTSA Desk Officer.
On July 6, 2012, the President signed into law the “Moving Ahead for Progress in the 21st Century Act” (MAP-21), Public Law 112-141, which restructured and made various substantive changes to the highway safety grant programs administered by the National Highway Traffic Safety Administration (NHTSA). NHTSA issued an interim final rule (IFR) implementing the MAP-21 provisions and sought public comment. 78 FR 4986 (Jan. 23, 2013). Because MAP-21 was a two-year authorization with short extensions, the agency did not have an opportunity to address the comments received in response to the MAP-21 IFR.
On December 4, 2015, the President signed into law the Fixing America's Surface Transportation Act (FAST Act), Public Law 114-94, the first authorization enacted in over ten years that provides long-term funding certainty for surface transportation. The FAST Act amended NHTSA's highway safety grant program (23 U.S.C. 402 or Section 402) and the National Priority Safety Program grants (23 U.S.C. 405 or Section 405), and it restored a small grant from a previous authorization. The FAST Act requires NHTSA to award grants pursuant to rulemaking. Today's action implements the FAST Act provisions, taking into account comments received in response to the MAP-21 IFR.
Unlike MAP-21, the FAST Act did not significantly change the structure of the grant programs. The FAST Act primarily made targeted amendments to the existing grant programs, providing more flexibility for States to qualify for some of the grants. Specifically, the FAST Act made limited administrative changes to the Section 402 grant program and made no changes to the contents of the Highway Safety Plan. However, the FAST Act made the following changes to the Section 405 grant program:
The FAST Act requires NHTSA to award highway safety grants pursuant to rulemaking. In order to provide States with as much advance time as practicable to prepare grant applications and to ensure the timely award of all grants, the agency is proceeding with an expedited rulemaking. Accordingly, NHTSA is publishing this rulemaking as an IFR, with immediate effectiveness, to implement the application and administrative requirements of the highway safety grant programs.
This IFR sets forth the application, approval, and administrative requirements for all 23 U.S.C. Chapter 4 grants and the Section 1906 grants. Section 402, as amended by the FAST Act, continues to require each State to have an approved highway safety program designed to reduce traffic crashes and the resulting deaths, injuries, and property damage. Section 402 sets forth minimum requirements with which each State's highway safety program must comply. Under existing procedures, each State must submit for NHTSA approval an annual Highway Safety Plan (HSP) that identifies highway safety problems, establishes performance measures and targets, and describes the State's countermeasure strategies and projects to achieve its performance targets. (23 U.S.C. 402(k)) The agency is making several specific amendments to the HSP contents to foster consistency across all States and to facilitate the electronic submission of HSPs required under the FAST Act. (23 U.S.C. 402(k)(3))
As noted above, the FAST Act made no substantive changes to many of the National Priority Safety Program grants, provided additional qualification flexibility for others, and established new grants. For grants without substantive changes (Occupant Protection Grants, State Traffic Safety Information System Improvements Grants, Impaired Driving Countermeasures Grants and Motorcyclist Safety Grants), the agency is simply aligning the application requirements with the HSP requirements under Section 402 to streamline and ease State burdens in applying for Section 402 and 405 grants. For Section 405 grants with additional flexibility (Alcohol-Ignition Interlock Law Grants, Distracted Driving Grants and Stated Graduated Driver Licensing Incentive Grants) and for the new grants (24-7 Sobriety Program Grants, Nonmotorized Grants and Racial Profiling Data Collection Grants), where the FAST Act identified specific qualification requirements, today's action adopts the statutory language with limited changes. The agency is also aligning the application requirements for these grants with the HSP requirements.
While many procedures and requirements continue unchanged by today's action, this IFR makes limited changes to administrative provisions to address changes in the HSP and changes made by the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR part 200.
Finally, this IFR recodifies 23 CFR part 1200 at 23 CFR part 1300, the part associated with NHTSA programs. The section numbers remain largely the same as before except for the change from 1200 to 1300. (For example, Sec. 1200.3 Definitions becomes Sec. 1300.3 Definitions, Sec. 1200.11 Contents (Highway Safety Plan) becomes Sec. 1300.11 Contents (Highway Safety Plan), etc.) In this preamble, all references are to part 1300 instead of the corresponding part 1200.
The FAST Act retained the MAP-21 requirement for a consolidated single application due by July 1 of the fiscal year preceding the fiscal year of the grant. (23 U.S.C. 402(k)(2) and 402(k)(3)) Therefore, for fiscal year 2017 and subsequent fiscal years, the application deadline remains July 1 prior to the fiscal year of the grant. Because of the short timeframe between today's action and the July 1 application deadline, the agency is taking the following approach to ease the application burden on States. For those programs without substantive changes (Occupant Protection, State Traffic Safety Information System Improvements, Impaired Driving Countermeasures, and Motorcyclist Safety), we are delaying the requirement for States to follow the new regulatory process until fiscal year 2018 grant applications. For these grants, States may follow the application requirements in 23 CFR part 1200, switching to the part 1300 requirements for fiscal year 2018 grants and thereafter. (To provide maximum advance notice, the agency informed States of this option in a March 31, 2016 letter.) However, for grants with substantive changes (Alcohol-Ignition Interlock Laws, Distracted Driving, and State Graduated Driver Licensing) and for new grants (24-7 Sobriety Program, Nonmotorized Safety, and Racial Profiling Data Collection), States must follow the application requirements in today's IFR at 23 CFR part 1300, commencing with fiscal year 2017 grant applications. For additional flexibility, States may elect to follow the new, more streamlined procedures (
In this IFR, the agency also responds to comments from the MAP-21 IFR. Because MAP-21 was a two-year authorization with multiple short extensions, the agency did not have the opportunity to address comments. Those comments are now addressed within the relevant sections below and in Section VII below.
For ease of reference, the preamble identifies in parentheses within each subheading and at appropriate places in the explanatory paragraphs the new CFR citation for the corresponding regulatory text.
This IFR adds definitions for the following terms: Annual report file, countermeasure strategy, data-driven, evidence-based, fatality rate, Fatality Analysis Reporting System, final FARS, five-year rolling average, number of fatalities, number of serious injuries, performance measure, performance target, Section 1906, and serious injuries. Most of these terms and definitions are generally understood by States. Today's action also amends a few definitions, such as those for program area and project, to clarify and distinguish terms that often have been used interchangeably. These amended definitions will help provide consistency across all State HSPs. Finally, this IFR deletes the term “Approving Official” and replaces it with “Regional Administrator,” used throughout this part.
Today's action updates the authorities and functions of the State Highway Safety Agency, also referred to as the State Highway Safety Office. While the IFR explicitly adds the duty to manage Federal grant funds in accordance with all Federal and State requirements, this is not a new obligation of State Highway Safety Offices, but rather one that has always been required. Consistent with the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, 2 CFR part 200, the agency is adding the requirement that State Highway Safety Offices must conduct a risk assessment
MAP-21 made significant changes to highway safety programs under 23 U.S.C. Chapter 4. It required a performance-based Highway Safety Plan with performance measures and targets. (23 U.S.C. 402(k)) Prior to MAP-21, there was a clear separation between the “Highway Safety Performance Plan,” where States included performance measures and targets, and the “Highway Safety Plan,” where States developed projects and activities to implement the highway safety program. MAP-21 consolidated these requirements under the Highway Safety Plan, where the performance plan was an element of the development of the State highway safety program.
In addition to establishing a performance-based HSP, MAP-21 established the HSP as the single, consolidated application for all highway safety grants under 23 U.S.C. Chapter 4. While the MAP-21 IFR established the beginnings of a single, consolidated application, today's action more fully integrates the Section 402 and Section 405 programs, establishing the HSP as the State's single planning document accounting for all behavioral highway safety activities.
This IFR clarifies the HSP content (highway safety planning process, performance measures and targets, and countermeasure strategies and projects), so that these elements may also serve as a means to fulfill some of the application requirements for certain Section 405 grants. By creating a link between the HSP content requirements provided in Section 402 and the Section 405 grant application requirements, this IFR streamlines the NHTSA grant application process and relieves some of the burdens associated with the previous process.
The FAST Act amended Section 402 to require NHTSA to develop procedures to allow States to submit highway safety plans, including any attachments to the plans, in electronic form. (23 U.S.C. 402(k)(3)) NHTSA intends to implement this provision of the FAST Act with the Grants Management Solutions Suite (GMSS) beginning with fiscal year 2018 grants, as discussed in more detail below. GMSS is the improved and enhanced electronic system that States will use to submit the HSP to apply for grants, receive grant funds, make amendments to the HSP throughout the fiscal year, manage grant funds and invoice expenses. This electronic system will replace the Grants Tracking System that States currently use to receive grant funds and invoice expenses.
The Highway Safety Act of 1966 (23 U.S.C. 401
Section 402(b), which sets forth the minimum requirements with which each State highway safety program must comply, requires the HSP to provide for a data-driven traffic safety enforcement program to prevent traffic violations, crashes, and crash fatalities and injuries in areas most at risk for such incidents. Section 402(b) continues to require each State to coordinate its HSP, data collection, and information systems with the State strategic highway safety plan as defined in 23 U.S.C. 148(a). This requirement to coordinate these elements into a unified State approach to highway safety promotes comprehensive transportation and safety planning and program efficiency in the States. Coordinating the HSP planning process with the programs of other DOT agencies, where possible, will ensure alignment of State performance targets where common measures exist, such as for fatalities and serious injuries. States are encouraged to use data to identify performance measures beyond these consensus performance measures (
The FAST Act retained the significant changes in MAP-21 for States to develop performance-based highway safety programs. Beginning with fiscal year 2014 HSPs, States provided additional information in the HSP to meet the performance-based, evidence-based requirements of MAP-21. This IFR reorganizes and further refines the information provided in the MAP-21 IFR to help streamline the HSP content requirements and align them with the Section 405 grant requirements.
In response to the MAP-21 IFR, one commenter asked why two separate plans were required, and recommended a single highway safety performance plan, the first part describing processes used to develop the plan and the second part describing a detailed spending plan. The change required under MAP-21 did not create two plans. Rather, under MAP-21, the HSP is the only plan that the State submits as its application for highway safety grants. The required content of the HSP includes a description of the highway safety planning process, a performance plan identifying performance measures and targets, and countermeasure strategies and projects. These content requirements encourage the linkage of each step of the planning process: Problem identification linked to data driven performance measures and targets, followed by countermeasure strategies and projects to achieve those targets. The “performance plan” is an integral part of the HSP. The agency believes that MAP-21 made it clear that problem identification and performance measures drive the specific projects and activities in the HSP.
Today's action reorganizes and clarifies the section of the HSP that describes the State's highway safety planning process. As in the MAP-21 IFR, the State must describe data sources and processes used to develop its highway safety program, including problem identification, description of performance measures, establishment of performance targets, and selection of countermeasure strategies and projects. This section continues to require identification of participants in the planning process, the data sources consulted, and the results of coordination of the HSP with the State HSIP. This IFR clarifies that this section of the HSP must also include a description of the State's problems and methods for project selection. These elements are a typical part of the State highway safety planning process.
This requirement is unchanged from the one codified at 23 CFR 1200.11(d). States should review and analyze the previous year's HSP as part of the development of a data-driven HSP. As required in the MAP-21 IFR, States
MAP-21 specified that HSPs must contain the performance measures identified in “Traffic Safety Performance Measures for States and Federal Agencies” (DOT HS 811 025), jointly developed by NHTSA and the Governors Highway Safety Association (GHSA). NHTSA and GHSA agreed on a minimum set of performance measures to be used by States and federal agencies in the development and implementation of behavioral highway safety plans and programs. An expert panel from NHTSA, the Federal Highway Administration (FHWA), the Federal Motor Carrier Safety Administration, State highway safety offices, academic and research organizations, and other key groups assisted in developing these measures. Originally, 14 measures were established. In accordance with MAP-21, NHTSA and GHSA coordinated to identify a new performance measure—bicyclist fatalities. Currently, States report on 15 measures—11 core outcome measures,
MAP-21 provided additional linkages between NHTSA-administered programs and the programs of other DOT agencies coordinated through the State strategic highway safety plan (SHSP) administered by FHWA, as defined in 23 U.S.C. 148(a). NHTSA and FHWA collaborated to harmonize three common performance measures across the programs of the two agencies (fatalities, fatality rate, and serious injuries) to ensure that the highway safety community is provided uniform measures of progress. Today's action aligns the State performance measures and targets that are common to both NHTSA and FHWA. Consistent with FHWA's rulemaking on performance measures (81 FR 13882, Mar. 15, 2016), today's action requires that performance measures use 5-year rolling averages and that the performance targets for the three common performance measures be identical to the State DOT targets reported in the Highway Safety Improvement Program (HSIP) annual report, as coordinated through the SHSP.
The 5-year rolling average is calculated by adding the number of fatalities or the number of serious injuries, as they pertain to the performance measure, for the most recent 5 consecutive calendar years ending in the year for which the targets are established. The annual report file (ARF) for FARS may be used, but only if final FARS is not yet available. The sum of the fatalities or the serious injuries is divided by five and then rounded to the tenth decimal place for the fatality number and the serious injury number. The fatality rate is determined by calculating the number of fatalities per vehicle mile traveled for each of the five years, dividing by five, and then rounding to the thousandth decimal place.
States must report serious injuries using the Model Minimum Uniform Crash Criteria (MMUCC) Guideline, 4th Edition by April 15, 2019. States may use serious injuries coded as “A” on the KABCO
A number of commenters to the MAP-21 IFR recommended that the agency include performance measures for bicycle and pedestrian fatalities and injuries. Since fiscal year 2014, States have been required to report on a performance measure for the number of pedestrian fatalities, as provided in the “Traffic Safety Performance Measures for States and Federal Agencies.” As noted earlier, NHTSA and GHSA collaborated to identify a new performance measure—bicyclist fatalities—on which States must report beginning with fiscal year 2015 HSPs. (23 U.S.C. 402(k)) While this IFR does not require performance measures for bicycle and pedestrian serious injuries, the agency refers commenters to FHWA's new non-motorized performance measure for the number of combined non-motorized fatalities and non-motorized serious injuries in a State.
One commenter stated that the requirement for GHSA coordination acted as a limitation on the performance measures that could be required by NHTSA. The statute requires NHTSA to coordinate with GHSA in making revisions to the set of required performance measures (23 U.S.C.
The Federal statute requires the State to describe its strategies in developing its countermeasure programs and selecting the projects to allow it to meet the highway safety performance targets. The HSP must continue to include a description of the countermeasure strategies and projects the State plans to implement to reach the performance targets identified by the State in the HSP. Today's action reorganizes and clarifies these requirements.
For each Program Area, the HSP must describe the countermeasure strategies and the process (including data analysis) for selecting that countermeasure strategy and the corresponding projects. At a minimum, the HSP must describe the overall projected traffic safety impacts, just as the MAP-21 regulation required. The HSP must also link the countermeasure strategies to the problem identification data, performance targets and allocation of the funds to projects. One commenter to the MAP-21 IFR was concerned that this is beyond what was mandated by MAP-21. Section 402(k)(e)(B) required then and still requires the contents of the HSP to include “a strategy for programing funds apportioned to the State under this section on projects and activities that will allow the State to meet the performance targets . . . .” An overall assessment of the impact of chosen strategies provides the necessary evidence and justification to support the projects and activities selected by the State to achieve its performance targets. In order to develop a program to achieve its targets, the State needs to conduct such an assessment or analysis. Accordingly, today's action retains this requirement from the MAP-21 IFR.
For each countermeasure strategy, the HSP must also provide project level information, including identification of project name and description, subrecipient/contractor, funding sources, funding amounts, amount for match, indirect cost, local benefit and maintenance of effort (as applicable), project number, and funding code. Finally, for each countermeasure strategy, the HSP must include data analysis to support the effectiveness of the selected countermeasure strategy. A number of States already include much of this information, but today's action now requires this information to promote uniformity among HSPs and also to allow the agency to implement the GMSS for the electronic submission of HSPs. The agency anticipates that beginning in fiscal year 2018 States will be able to enter this information in the GMSS as part of the HSP.
NHTSA does not intend to discourage innovative countermeasures, especially where few established countermeasures currently exist, such as in distracted driving. Innovative countermeasures that may not be fully proven but that show promise based on limited practical application are encouraged when a clear data-driven safety need has been identified. As evidence of potential success, justification of new countermeasures can also be based on the prior success of specific elements from other effective countermeasures.
The FAST Act continues the requirement for States to include a description of their evidence-based traffic safety enforcement program to prevent traffic violations, crashes, crash fatalities, and injuries in areas most at risk for crashes. Today's action clarifies this requirement and allows States to cross-reference existing projects in the HSP to demonstrate an evidence-based traffic safety enforcement program. Allowing States to cross-reference projects identified under countermeasure strategies will alleviate the burden of duplicative entries.
The FAST Act continues the requirement that a State must provide assurances that it will implement activities in support of national high-visibility law enforcement mobilizations coordinated by the Secretary of Transportation. In addition to providing such assurances, the State must describe in its HSP the planned high-visibility enforcement strategies to support national mobilizations for the upcoming grant year and provide information on those activities. Based on requests to define the level of participation required, today's notice clarifies this requirement. For example, the FAST Act requires NHTSA to implement three high-visibility enforcement campaigns on impaired driving and occupant protection each year. (23 U.S.C. 404) States are required to support these three campaigns as a condition of a Section 402 grant. NHTSA intends to identify the specific dates of the national mobilizations and provide programmatic ideas and resources for the campaigns on
Under the MAP-21 IFR, States submitted as part of their HSP a program cost summary (HS Form 217) and a list of projects (including an estimated amount of Federal funds for each project) that the State proposed to conduct in the upcoming fiscal year to meet the performance targets identified in the HSP. States were required to keep the project list up-to-date and to include identifying project numbers for each project on the list. Today's action eliminates the HS Form 217 and the corresponding list of projects beginning with fiscal year 2018 grants, but not the reporting requirement. Instead, States will be required to provide project information electronically in the GMSS. This will allow States to rely on project information in the HSP to apply for some Section 405 grants without providing duplicative information. States will be able to cross reference the information in their Section 405 application.
The FAST Act continues the Teen Traffic Safety Program that provides for Statewide efforts to improve traffic safety for teen drivers. States may elect to incorporate such a Statewide program as an HSP program area. If a State chooses to do so, it must include project information related to the program in the HSP.
Finally, the FAST Act continues the “single application” requirement that State applications for Section 405 grants be included in the HSP submitted on July 1 of the fiscal year preceding the fiscal year of the grant. Today's action also requires the Section 1906 grant application to be submitted as part of the HSP. As under the MAP-21 IFR, States will continue to submit certifications and assurances for all 23 U.S.C. Chapter 4 and Section 1906 grants, signed by the Governor's Representative for Highway Safety, certifying the HSP application contents and providing assurances that they will comply with applicable laws and regulations, financial and programmatic requirements and any special funding conditions. Only the Governor's Representative for Highway Safety may sign the certifications and assurances required under this IFR. The Certifications and Assurances will now be included as appendices to this part.
Effective October 1, 2016, the FAST Act specifies that NHTSA must approve or disapprove the HSP within 45 days after receipt. This provision will be implemented with fiscal year 2018 grant applications. (See Section VI.) As in past practice, NHTSA may request
Within 45 days, the Regional Administrator will approve or disapprove the HSP, and specify any conditions to the approval. If the HSP is disapproved, the Regional Administrator will specify the reasons for disapproval. The State must resubmit the HSP with the necessary modifications to the Regional Administrator. The Regional Administrator will notify the State within 30 days of receipt of the revised HSP whether it is approved or disapproved.
NHTSA will also complete review of Section 405 grant applications within 45 days and notify States of grant award amounts early in the fiscal year. Because the calculation of Section 405 grant awards depends on the number of States meeting the qualification requirements, States must respond promptly to NHTSA's request for additional information or face disqualification from consideration for a Section 405 grant. The agency does not intend to delay grant awards to States that comply with grant submission procedures due to the inability of other States to meet submission deadlines.
The provisions in the MAP-21 IFR regarding the apportionment and obligation of grant funds remain largely unchanged. As discussed above, the agency will replace the HS Form 217 so that States can enter the information directly in the GMSS. States will be able to use the GMSS to obligate and voucher for expenses as well as to amend the HSP throughout the fiscal year. beginning with fiscal year 2018 grants.
Under this heading, we describe the requirements set forth in today's action for the grants under Section 405—Occupant Protection, State Traffic Safety Information System Improvements, Impaired Driving Countermeasures, Distracted Driving, Motorcyclist Safety, State Graduated Driver Licensing Incentive and Nonmotorized Safety— and the Section 1906 grant—Racial Profiling Data Collection. The subheadings and explanatory paragraphs contain references to the relevant sections of this IFR where a procedure or requirement is implemented, as appropriate.
Some common provisions apply to most or all of the grants authorized under Sections 405 and 1906. The agency is retaining most of these provisions without substantive change in this IFR—definitions (§ 1300.20(b)); qualification based on State statutes (§ 1300.20(d)); and matching (§ 1300.20(f)).
The eligibility provision in this IFR remains unchanged from the MAP-21 IFR. For all but the Motorcyclist Safety Grant program, eligibility under Section 405 and Section 1906 is controlled by the definition of “State” under 23 U.S.C. 401, which includes the 50 States, the District of Columbia, Puerto Rico, American Samoa, the Commonwealth of the Northern Mariana Islands, Guam and the U.S. Virgin Islands. For the Motorcyclist Safety grants, the 50 States, the District of Columbia and Puerto Rico are eligible to apply. This IFR, however, adds a provision related to general application requirements for Section 405 and Section 1906 grants. Specifically, in its application for Section 405 or Section 1906 grants, a State must identify specific page numbers in the HSP if it is relying on information in the HSP as part of its application for those programs. For example, if a State is relying on the occupant protection program area of the HSP to demonstrate problem identification, countermeasure strategies and specific projects required to meet the qualification requirements for an occupant protection plan (§ 1300.21(d)(1)), it must provide specific page numbers for the occupant protection program area in the HSP in its application for the Section 405 Occupant Protection Grant.
The FAST Act made changes conforming the grant allocations under Section 405. For all Section 405 grants except State Graduated Driver Licensing Incentive Grants, grant awards will be allocated in proportion to the State's apportionment under Section 402 for fiscal year 2009. For Section 1906, the FAST Act does not specify how the grant awards are to be allocated. For consistency with the other grants, and in accordance with past practice, NHTSA will allocate Section 1906 grant awards in the same manner. The FAST Act specifies a different treatment for State Graduated Driver Licensing Incentive Grant awards, which must be allocated in proportion to the State's apportionment under Section 402 for the particular fiscal year of the grant.
In determining grant awards, NHTSA will apply the apportionment formula under 23 U.S.C. 402(c) to all qualifying States, in proportion to the amount each such State receives under 23 U.S.C. 402(c), so that all available amounts are distributed to qualifying States to the maximum extent practicable. (§ 1300.20(e)(1)) However, the IFR provides that the amount of an award for each grant program may not exceed 10 percent of the total amount made available for that grant programs (except for the Motorcyclist Safety Grant and the Racial Profiling Data Collection Grant, which have a different limit imposed by statute). This limitation on grant amounts is necessary to prevent unintended large distributions to a small number of States in the event only a few States qualify for a grant award. (§ 1300.20(e)(2))
In the event that all funds authorized for Section 405 grants are not distributed, the FAST Act authorizes NHTSA to transfer the remaining amounts before the end of the fiscal year for expenditure under the Section 402 program. (23 U.S.C. 405(a)(8)) In accordance with this provision, NHTSA will transfer any unawarded Section 405 grant funds to the Section 402 program, using the apportionment formula. (§ 1300.20(e)(3)) In the event that all grant funds authorized for Section 1906 grants are not distributed, the FAST Act does not authorize NHTSA to reallocate unawarded Section 1906 funds to other State grant programs. Rather, any such funds will be returned for use under 23 U.S.C. 403, and do not fall within the scope of this IFR.
Under MAP-21, States were required to provide an assurance that they would maintain their aggregate expenditures from all sources within the State. The FAST Act amended this provision to focus only on State level expenditures, making compliance easier for States. The applicable provision now requires the lead State agency for occupant protection programs, impaired driving programs and traffic safety information system improvement programs to maintain its aggregate expenditures for those programs at or above the average level of such expenditures in fiscal
In response to the MAP-21 IFR, two commenters requested guidance on maintenance of effort, stating that it was difficult for States to assure that local resources were maintained. The requirement for maintenance of effort to include local resources was a feature of MAP-21. As noted above, the FAST Act amendment limits the level of effort determination to the lead State agency responsible for the applicable programs.
The FAST Act continues the MAP-21 Occupant Protection Grants with only one substantive amendment regarding the use of funds by high seat belt use rate States. Today's IFR makes changes to effect the amendment. High belt use rate States are now permitted to use up to 100 percent of their Occupant Protection funds for any project or activity eligible for funding under section 402.
This IFR also amends program requirements to streamline the application and review process. Commenters to the MAP-21 IFR have noted, and the agency recognizes, that some Occupant Protection application materials are already required as part of the State's annual Highway Safety Plan. Today's notice addresses this consideration, where feasible, by directing States in their Occupant Protection application to cite to page numbers in the HSP containing descriptions and lists of projects and activities, in lieu of providing separate submissions.
Under the Occupant Protection Grant program, an eligible State can qualify for grant funds as either a high seat belt use rate State or a lower seat belt use rate State. A high seat belt use rate State is a State that has an observed seat belt use rate of 90 percent or higher; a lower seat belt use rate State is a State that has an observed seat belt use rate lower than 90 percent. Today's IFR retains the eligibility determination in the MAP-21 IFR.
To qualify for an Occupant Protection Grant, all States must meet several requirements. The agency is updating and amending some of these requirements to streamline application requirements, in light of information already provided in the HSP.
The agency is amending this criterion to require States to submit an occupant protection plan each fiscal year, but the requirement may be satisfied by submissions typically included in the HSP.
The FAST Act continues the requirement that States participate in the
The FAST Act continues the requirement that States have “an active network of child restraint inspection stations.” The agency is amending this criterion to address considerations that the submission of comprehensive lists of inspection stations are burdensome and unnecessary. Today's IFR will require States to submit a table in their HSP documenting where the inspection stations are located and what populations they serve, including high risk groups. The State will also be required to certify that each location is staffed with certified technicians. The agency believes that this information will be sufficient for reviewers to evaluate whether there is an active network of stations.
The FAST Act continues the requirement that States have a plan to recruit, train and maintain a sufficient number of child passenger safety technicians. The agency is amending this criterion to allow States to document this information in a table and submit it as part of the annual HSP, in lieu of providing a separate submission.
In addition to meeting the above requirements, States with a seat belt use rate below 90 percent must meet at least three of six criteria to qualify for grant funds. The agency is making changes to some of these criteria in today's IFR. Many of these changes address comments to streamline application materials. This IFR allows States to reference page numbers in the HSP in cases where such information has already been provided, in lieu of providing a separate submission.
The FAST Act continues two law-based criteria—primary seat belt use law and occupant protection laws—for Lower Seat Belt Use Rate States. The agency has reviewed comments related to legal requirements and exemptions under the primary belt and occupant protection law criteria. Commenters requested that NHTSA amend criteria to allow States more flexibility regarding minimum fines, additional exemptions and primary seat belt requirements. Legal criteria for primary seat belt and child restraint laws have been included in several of NHTSA's predecessor occupant protection grant programs. The agency adopted the specific requirements under the MAP-21 IFR with this consideration in mind. Given the maturity of the criteria under these
This criterion requires a lower seat belt use rate State to “conduct sustained (on-going and periodic) seat belt enforcement at a defined level of participation during the year.” The agency is amending this criterion to clarify that sustained enforcement must include a program of recurring seat belt and child restraint enforcement efforts throughout the year, and that it must be in addition to the Click it or Ticket mobilization. The agency is also amending the defined level of participation to require that it be based on problem identification in the State. States will be required to show that enforcement activity involves law enforcement covering areas where at least 70 percent of unrestrained fatalities occur.
States are already required to include in the HSP an evidence-based traffic safety enforcement program and planned high-visibility enforcement strategies to support national mobilizations. (§ 1300.11(d)(5) and (6)) States should include information related to seat belt enforcement in these sections of the HSP. In this discussion, States must describe efforts to integrate seat belt enforcement into routine traffic enforcement throughout the year and engage law enforcement agencies in at-risk locations with high numbers of unrestrained fatalities to increase seat belt use throughout the year. The use of a few scheduled efforts to promote seatbelt use will not be sufficient to meet the standard of sustained enforcement. The agency is requiring that States submit the seat belt enforcement application material as part of the HSP, in lieu of a separate submission.
As noted earlier, States are already required to cover the occupant protection program area, including an evidence-based traffic safety enforcement program and planned high-visibility enforcement strategies to support national mobilizations, in the HSP. These sections of the HSP contain many of the same elements to address high risk populations, such as problem identification, countermeasure strategies and projects to meet performance targets. If a State wishes to qualify under this criterion, it should include information related to at least two at-risk populations in those sections of the HSP. The agency is requiring that States submit high risk population countermeasure program materials as part of the HSP, in lieu of a separate submission.
A lower seat belt use rate State must implement a comprehensive occupant protection program in which the State has conducted a NHTSA-facilitated program assessment, developed a Statewide strategic plan, designated an occupant protection coordinator, and established a Statewide occupant protection task force. The MAP-21 IFR permitted an assessment reaching back to 2005. Today's IFR includes an amendment to require that States have a more recent assessment of their program (within five years prior to the application date). Today's IFR also makes updates to the program requirements to emphasize the importance of a comprehensive occupant protection program that is based on data and designed to achieve performance targets set by the States. The IFR also stresses the importance of the occupant protection coordinator's role in managing the entire Statewide program. With enhanced knowledge of the Statewide program and activities, a strategic approach to the development of the occupant protection program area of the annual HSP can be developed and executed.
In addition to listing all the qualifying uses, the agency has reorganized this section under the IFR to list special rules that cover any other statutory requirement conditioning how grant funds are spent. Specifically, high belt use rate States are now permitted to use up to 100 percent of their occupant protection funds for any project or activity eligible for funding under section 402.
The FAST Act made no changes to the State Traffic Safety Information System Improvements Grants authorized under MAP-21. However, in this IFR, NHTSA streamlines the application process to reduce the burden on States.
In response to the MAP-21 IFR, commenters generally expressed concern that application requirements were burdensome. One commenter objected to the requirement that States submit different data for the applications for fiscal years 2013 and 2014, despite being allowed to use the same performance measures for both years. The agency does not address this comment as it is specific to those years and no longer applies. The agency addresses additional comments under the relevant headings below.
The role of the TRCC in the State Traffic Safety Information System Improvements Grant program under this IFR remains the same as it was under the MAP-21 IFR, but the application requirements have been streamlined. NHTSA has removed many TRCC requirements, and is instead requiring a more refined set of information in order to determine that a State's TRCC can meet the goals of the statute.
Two commenters stated that the documentation requirements for the TRCC in the MAP-21 IFR, including meeting minutes, reports and guidance, were burdensome. While it remains good practice to keep and retain meeting minutes, reports and guidance, this IFR requires submission of only the dates of the TRCC meetings held in the 12 months prior to application. In order to meet this requirement in future grant years, States will have to schedule at least 3 meetings for the upcoming fiscal year, but NHTSA no longer requires States to provide proposed dates of the meetings.
One commenter proposed reducing the required number of TRCC meetings from three times a year to twice a year. However, the statute explicitly requires that the TRCC meet at least 3 times each year. The statute also requires that the State designate a TRCC coordinator.
In order to ensure that the TRCC has a diverse membership that is able to provide necessary expertise, the State must submit a list identifying at least one member (including the member's home organization), that represents each of the following core safety databases: (1) Crash, (2) citation or adjudication, (3) driver, (4) emergency medical services/injury surveillance system, (5) roadway, and (6) vehicle databases. The State's TRCC should have a broad multidisciplinary membership that includes, among others, owners, operators, collectors and users of traffic records and public health and injury control data systems; highway safety, highway infrastructure, law enforcement or adjudication officials; and public health, emergency medical services (EMS), injury control, driver licensing and motor carrier agencies and
This IFR requires a State to have a traffic records strategic plan that has been approved by the TRCC and describes specific quantifiable and measurable anticipated improvements in the State's core safety databases. More information on the requirements for performance measures is set forth in Section IV.D.3 below.
The Strategic Plan must identify all recommendations from the State's most recent traffic records system assessment and explain how each recommendation will be implemented or the reason a recommendation will not be addressed. One commenter stated that the requirement that a State explain why it will not address a particular recommendation is too burdensome and should be removed. However, NHTSA believes that the State's response to each recommendation, even those that it decides not to address, is necessary to ensure that the assessment recommendations serve their intended purpose of improving the State traffic safety information system. In order to emphasize the importance of coordinating the traffic records strategic plan with the State HSP, this IFR requires the State to identify the project in the HSP that will address each recommendation to be addressed in that fiscal year.
Continuing the emphasis on performance measures and measurable progress, this IFR requires the State to provide a written description of the State's chosen performance measures along with supporting documentation. Performance measures must use the methodology set forth in the Model Performance Measures for State Traffic Records Systems (DOT HS 811 441) collaboratively developed by NHTSA and GHSA. Because NHTSA and GHSA may update this publication in future years, and intend the most recent version to be used, this IFR adds the language “as updated.” The Model Minimum Uniform Crash Criteria (MMUCC), the Model Impaired Driving Records Information System (MIDRIS), the Model Inventory of Roadway Elements (MIRE) and the National Emergency Medical Services Information System (NEMSIS) model data sets continue to be central to States' efforts to improve their highway safety data and traffic records systems. For this reason, NHTSA strongly encourages States to achieve a higher level of compliance with a national model inventory in order to demonstrate measurable progress.
To satisfy this quantitative progress requirement, the State must submit supporting documentation demonstrating that quantitative improvement was achieved within the preceding 12 months. The documentation must cover a contiguous 12 month performance period preceding the date of application starting no earlier than April of the preceding calendar year as well as a comparative 12 month baseline period. In the fiscal year 2017 application, for example, a State would submit documentation covering a performance period starting no earlier than April 1, 2015, and extending through March 31, 2016, and a baseline period starting no earlier than April 1, 2014, and extending through March 31, 2015. Acceptable supporting documentation will vary depending on the performance measure and database used, but may include analysis spreadsheets, system screen shots of the related query and aggregate results.
States are strongly encouraged to submit one or more voluntary interim progress reports to their Regional office documenting performance measures and supporting data that demonstrate quantitative progress in relation to one or more of the six significant data program attributes. NHTSA recommends submission of the interim progress reports prior to the application due date to provide time for the agency to interact with the State to obtain any additional information needed to verify the State's quantifiable, measurable progress. However, Regional office review of an interim progress report does not constitute pre-approval of the performance measure for the grant application.
This IFR requires that a State's certification be based on an assessment that complies with the procedures and methodologies outlined in NHTSA's Traffic Records Highway Safety Program Advisory. As in the past, NHTSA will continue to conduct State assessments that meet the requirements of this section without charge, subject to the availability of funding.
States may use grant funds awarded under this subsection for making data program improvements to their core highway safety databases (including crash, citation and adjudication, driver, EMS or injury surveillance system, roadway and vehicle databases) related to quantifiable, measurable progress in any of the significant data program attributes of accuracy, completeness, timeliness, uniformity, accessibility or integration. This IFR makes no change to the allowable use of funds under this grant program.
The FAST Act did not make substantive changes to the basic impaired driving countermeasures grants authorized under MAP-21, but added flexibility to the separate grant program for States with mandatory ignition interlock laws and created a new grant for States with 24-7 sobriety programs.
The FAST Act made no changes to the classification of low-, mid- and high-range States and to the use of average impaired driving fatality rates to determine what requirements a State must meet in order to receive a grant. This IFR retains those requirements in the MAP-21 IFR. To provide ample time to meet any application requirements, the agency will make the classification information available to the States in January each year.
States that have an average impaired driving fatality rate of 0.30 or lower are considered low-range States. Under the MAP-21 IFR, all States, including low-range States, were required to submit certain assurances indicating their intent to meet statutory requirements related to qualifying uses of funds and maintenance of effort requirements. This IFR makes no changes to that requirement.
States that have an average impaired driving fatality rate that is higher than 0.30 and lower than 0.60 are considered mid-range States. The statute specifies that States qualifying as mid-range States are required to submit a Statewide impaired driving plan that addresses the problem of impaired driving. The submitted plan must have
In an effort to streamline the application process developed under the MAP-21 IFR, mid-range States will be required to submit only a single document (in addition to any required certifications and assurances)—a Statewide impaired driving plan—to demonstrate compliance with the statute. In the past, a wide-range of formats and efforts were used by States to meet the plan requirements. In this IFR, the agency is requiring the use of a uniform format. Compliance will be determined based on the review of three specific sections.
The first section requires the State to provide a narrative statement that explains the authority of the task force to operate and describes the process used by the task force to develop and approve the plan. The State must also identify the date of approval of the plan in this section. This information will allow the agency to determine compliance with the requirement that the impaired driving plan be developed by a task force within three years prior to the application due date.
The second section continues the MAP-21 IFR requirement for a list of task force members. This IFR clarifies that the list must include the names, titles and organizations of all task force members. From that information, the agency must be able to determine that the task force includes key stakeholders from the State highway safety agency, State law enforcement groups, and the State's criminal justice system, covering areas such as prosecution, adjudication, and probation. The State may include other individuals on the task force, as determined appropriate, from areas such as 24-7 sobriety programs, driver licensing, data and traffic records, treatment and rehabilitation, public health, communication, alcohol beverage control, and ignition interlock programs. The State must include a variety of individuals from different offices that bring different perspectives and experiences to the task force. Such an approach ensures that the required plan will be a comprehensive treatment of impaired driving issues in a State. For guidance on the development of these types of task forces, we encourage States to review the NHTSA report entitled, “A Guide for State-wide Impaired Driving Task Forces.”
The final section requires the State to provide its strategic plan for preventing and reducing impaired driving behavior. The agency is requiring that an impaired driving plan be organized in accordance with Highway Safety Program Guideline No. 8—Impaired Driving (“the Guideline”)
While NHTSA has identified the areas that must be considered, the agency has not defined a level of effort that must be exerted by the State in the development of the strategic plan (
To receive a grant in subsequent years, once a plan has been approved, a mid-range State is required to submit the certifications and assurances covering qualifying uses of funds, maintenance of effort requirements, and use of previously submitted plan (as applicable). This assurance about the previously submitted plan does not apply to a Statewide plan that has been revised. In that case, the State is required to submit the revised Statewide plan for review to determine compliance with the statute and implementing regulation.
States that have an average impaired driving fatality rate that is 0.60 or higher are considered high-range States. High-range States are required to have conducted an assessment of the State's impaired driving program within the three years prior to the application due date.
Based on this assessment, a high-range State is required to convene an impaired driving task force to develop a Statewide impaired driving plan (both the task force and plan requirements are described in the preceding section under mid-range States). In addition to meeting the requirements associated with developing a Statewide impaired driving plan, the plan also must include a separate section that expressly addresses the recommendations from the required assessment. The assessment review should be an obvious section of a high-range plan. A high-range State must address each of the recommendations in the assessment and explain how it intends to carry out each recommendation (or explain why it cannot carry out a recommendation).
The plan also must include a section that provides a detailed project list for spending grant funds on impaired driving activities, which must include high-visibility enforcement efforts as one of the projects (required by statute). The section also must include a description of how the spending supports the State's impaired driving program and achievement of its performance targets.
To receive a grant in subsequent years, the State's impaired driving task force must update the Statewide plan and submit the updated plan for NHTSA's review and comment. The statutory requirements also include
The FAST Act continues a separate grant program for States that adopt and enforce mandatory alcohol-ignition interlock laws covering all individuals convicted of a DUI offense, but adds flexibility for States to qualify for a grant. The FAST Act amends the program to include exceptions that allow an individual to drive a vehicle in certain situations without an interlock. Specifically, a State's law may include exceptions from mandatory interlock use in the following three situations: (1) An individual is required to drive an employer's motor vehicle in the course and scope of employment, provided the business entity that owns the vehicle is not owned or controlled by the individual (“employment exception”); (2) an individual is certified in writing by a physician as being unable to provide a deep lung breath sample for analysis by an ignition interlock device (“medical exception”); or (3) a State-certified ignition interlock provider is not available within 100 miles of the individual's residence (“locality exception”). In response to the statutory change, the agency has included these exceptions in the IFR.
In this IFR, the agency increases the minimum period that a State law must authorize an offender to use an ignition interlock from 30 days to six months. Under the MAP-21 IFR, the agency required only 30 days as the minimum period because no exceptions were permitted from the mandatory requirement to use an interlock. With the addition of the exceptions under the FAST Act, States are afforded significantly more flexibility in their interlock programs, and the justification for allowing a shorter period of interlock use no longer exists. This is also consistent with comments the agency received under the MAP-21 IFR, urging the agency to adopt a longer restriction. These comments asserted that several States require interlock use for offenders for six months or more, and that the agency should adopt a period consistent with these existing State laws. The laws identified by the commenters were examples that contained exceptions, and would not have qualified under the MAP-21 IFR for that reason. We recognize that several States amended their laws, removing exceptions in order to comply with the grant requirements under the MAP-21 IFR. In all cases, these amended laws required interlock use for at least six months, despite the 30-day requirement in the MAP-21 IFR. With the addition of permissible exceptions under the FAST Act, we do not believe that the six-month duration requirement is an onerous one.
Under the MAP-21 IFR, the agency received several other comments regarding these grants, including a criticism of the program under the assumption that taxpayers typically pay for interlock programs. In fact, States often defray their own program costs by making the offender, and not taxpayers, responsible for the costs associated with the installation and maintenance of an interlock. We believe that interlock programs should be part of every State's strategy for eliminating impaired driving. Strong evidence exists supporting the effectiveness of interlock programs for reducing drunk driving recidivism while the technology is installed on an individual's vehicle.
Among several comments that were supportive of the grant program, one commenter requested that the agency add criteria to the interlock requirements beyond those stated in the statute. Since the statute directs the basis for qualification, we decline to include other requirements. We agree, however, with the comment that States should consider agency-supported studies and materials that identify and explain best practices for improving ignition interlock programs.
In order to qualify, a State must submit legal citations to its mandatory ignition interlock laws each year with its application. In accordance with the statute, not more than 12 percent of the total amount available for impaired driving countermeasures grants may be used to fund these grants. The agency plans to continue to calculate the award amounts for this program in the same manner as it did under the MAP-21 IFR. This IFR makes no change to this provision.
At present, few States qualify for these grants. To avoid the circumstance where a relatively few States might receive large grant amounts, the agency may choose to reduce the percent of total funding made available for these grants, consistent with the flexibility afforded by the statute, which specifies that “not more than 12 percent” may be made available for these grants.
The FAST Act includes a separate grant program for States that meet requirements associated with having a 24-7 sobriety program. NHTSA recognizes the value of impaired driving interventions such as 24-7 sobriety programs. The agency acknowledges that the effectiveness of such programs is likely associated with their alignment with traditional principles of deterrence:
Under this provision, grants are provided to States that meet two separate requirements, and this IFR implements these requirements. The first requirement mandates that a State enact and enforce a law that requires all individuals convicted of driving under the influence of alcohol or of driving while intoxicated to receive a restriction on driving privileges. Under this first requirement, the license restriction must apply for at least a 30-day period. The IFR adds a definition of the term “restriction on driving privileges” to clarify the type of restrictions that comply and to make clear that States have broad flexibility in meeting the requirement. The definition covers any type of State-imposed limitation and provides examples of the most common restrictions, including license revocations or suspensions, location restrictions, alcohol-ignition interlock device requirements or alcohol use prohibitions.
The second requirement mandates that a State provide a 24-7 sobriety program. Under the statute, a 24-7 sobriety program means a State law or program that authorizes a State court or an agency with jurisdiction to require an individual who has committed a DUI offense to abstain totally from alcohol or drugs for a period of time and be subject to testing for alcohol or drugs at least twice per day at a testing location, by continuous transdermal monitoring device, or by an alternative method approved by NHTSA. In order to comply, the State must be able to point to a law or program that meets this requirement. Also, the law or program must have Statewide applicability. Although the law or program need not
In line with the statutory definition, a compliant law or program must use certain types of testing to regularly monitor DUI offenders under the 24-7 sobriety program. Under the MAP-21 IFR, the agency received comments suggesting additional testing methods and minimum performance requirements for testing devices. However, we do not believe that approach is necessary. The statute defines a testing process that States must apply to offenders in a 24-7 program. Specifically, in accordance with the definition, an offender must be subject to testing for alcohol or drugs at least twice per day at a testing location, or by continuous monitoring via electronic monitoring device, or by an alternative method approved by NHTSA. If the State uses these types of identified test methods, it will be eligible to receive a grant. Although the agency does not identify additional testing methods or set specific performance requirements in this IFR, it reserves the right to do so, consistent with the statutory allowance for alternative methods to be approved. Any additional testing method that might be approved must allow the program to meet the general deterrence model discussed above, ensuring a swift and certain response from the State for program violators. For example, a method used for alcohol testing should be conducted at least twice per day and a method used for drug testing should be conducted on at least a scheduled basis. In addition, the periods for testing must be clear in the law or program cited, so that a State has the ability to take swift action. For these requirements, covering the types and periods of testing that should be used in 24-7 sobriety programs, we are particularly interested in public comments.
Under the MAP-21 IFR, the agency received several comments regarding the inclusion of 24-7 sobriety programs as a qualifying use of grant funds. The prior IFR simply added the statutory definition without intended change.
In order to qualify, a State must submit the required legal citations or program information by the application deadline. A State wishing to receive a grant is required to submit legal citations to its law authorizing a restriction on driving privileges for all DUI offenders for at least 30 days. The State must also submit legal citations to its law or a copy of its program information that authorizes a Statewide 24-7 sobriety program.
In accordance with the statute, not more than 3 percent of the total amount available under this section may be used to fund these grants. The agency plans to calculate award amounts in the same manner as for Alcohol-Ignition Interlock Law Grants. Amounts not used for these grants will be used for grants to low-, mid- and high-range States. The agency believes it is possible that few States will initially qualify for a grant. Therefore, as with Alcohol-Ignition Interlock Law Grants, the agency may choose to reduce the percent of total funding made available for these grants, consistent with the flexibility afforded by the statute, which specifies that “not more than 3 percent” may be made available for these grants.
States may use grant funds for any of the uses identified in the FAST Act. In this IFR, the agency includes definitions for some of the uses. In all cases, the definitions are consistent with those provided for in the FAST Act or were developed under the MAP-21 IFR. The agency received comments related to a State's ability to fund certain projects using grant funds provided for impaired driving countermeasures. These comments related to the use of funds for specific impaired driving programs, arguing for specific approaches over others and for more funds to be spent on drug impaired driving programs. In general, we agree that States should use several different types of programs as part of a comprehensive approach to addressing impaired driving. However, the programs for which grant funds may be used are limited to those identified by Congress in the statute. We choose not to prioritize one type of authorized program over another, and qualifying States may use the funds on any of the identified programs. Unless the program is specifically identified to alcohol enforcement, grant funds may be used for programs identified in statute that address the problem of drug-impaired driving. We encourage States to have programs that focus on this growing problem.
In addition to listing all the qualifying uses, the agency has reorganized this section under today's IFR to list special rules that cover any other statutory requirements conditioning how grant funds are spent. For low-range States, grant funds may be used for any of the projects identified in the statute and for those designed to reduce impaired driving based on problem identification. In addition, low-range States may use up to 50 percent of grant funds for any eligible project or activity under Section 402.
For mid-range States, grant funds may be used for any of the projects identified in the statute and for projects designed to reduce impaired driving based on problem identification, provided the State has received advance approval from NHTSA for such projects based on problem identification. The agency received one comment questioning the approval requirement under the MAP-21 IFR. However, that requirement is a statutory one. Although the requirement did not appear in SAFETEA-LU, it was added by Congress in MAP-21 and continued under the FAST Act. We agree with the commenter that programs based on problem identification included in the application of a mid-range State that receives approval do not need further review. However, if the State creates a separate spending plan in its HSP based on its Statewide impaired driving plan and later revises that plan,
High-range States may use grant funds for the projects identified above only after submission of a Statewide impaired driving plan, and review and approval of the plan by NHTSA. States receiving Alcohol-Ignition Interlock Law Grants or 24-7 Sobriety Program Grants may use those grant funds for any of the projects identified and for any eligible project or activity under Section 402.
MAP-21 created a new program authorizing incentive grants to States that enact and enforce laws prohibiting distracted driving. Few States qualified for a Distracted Driving Grant under the statutory requirements of MAP-21. The FAST Act amended the qualification criteria for a Distracted Driving Grant, revising the requirements for a Comprehensive Distracted Driving Grant and providing for Special Distracted Driving Grants for States that do not qualify for a Comprehensive Distracted Driving Grant.
The basis for a Comprehensive Distracted Driving Grant is a requirement that the State tests for distracted driving issues on the driver's license examination and that the State have a statute that complies with the criteria set forth in 23 U.S.C. 405(e), as amended by the FAST Act. Specifically, the Sta te must have a conforming law that prohibits texting while driving and youth cell phone use while driving.
To qualify for a grant under MAP-21, the State statute had to require distracted driving issues to be tested as part of the State driver's license examination. Few States met this requirement. In response to the MAP-21 IFR, one commenter disagreed with this requirement and believed that the State should be able to certify that State driver licensing examinations tested for distracted driving questions. The agency need not address this comment because it is no longer applicable. The FAST Act amended this requirement to allow a State to qualify for a grant if it does, in fact, test for distracted driving issues on the driver's license examination, without the need for a statutory mandate. To demonstrate that it tests for distracted driving issues under today's IFR, the State must submit sample distracted driving questions from its driver's license examination as part of its application.
The FAST Act amended the definition of “driving” to strike the words “including operation while temporarily stationary because of traffic, a traffic light or stop sign, or otherwise”. As amended, “driving” means “operating a motor vehicle on a public road; and does not include operating a motor vehicle when the vehicle has pulled over to the side of, or off, an active roadway and has stopped in a location where it can safely remain stationary.” The IFR adopts this definition without change.
The FAST Act retained much of the MAP-21 requirements related to the texting prohibition, including the types of behaviors prohibited, primary enforcement, and a minimum fine. Those provisions are retained in this section. The FAST Act removed the requirement for increased fines for repeat violations and added the requirement that the State statute may not include an exemption that specifically allows a driver to text through a personal wireless communications device while stopped in traffic. Those FAST Act amendments are adopted in this section without change.
The FAST Act retained much of the MAP-21 requirements related to the prohibition on young drivers using a personal wireless communications device while driving, including the types of behaviors prohibited, and the requirements for primary enforcement and a minimum fine. Those provisions are retained in this section.
MAP-21 required the State statute to prohibit a driver who is younger than 18 years of age from using a personal wireless communications device while driving. The FAST Act amended this provision to allow a State to qualify for a grant if the State statute prohibited a driver under 18 years of age or a driver with a learner's permit or intermediate license from using a personal wireless communications device while driving. As with the texting prohibition, the FAST Act removed the requirement for increased fines for repeat violations and added the requirement that the State statute not include an exemption that specifically allows a driver to text through a personal wireless communications device while stopped in traffic. Those FAST Act amendments are adopted in this section without change.
MAP-21 provided that each State that receives a Section 405(e) grant must use at least 50 percent of the grant funds for specific distracted driving related activities and up to 50 percent for any eligible project or activity under Section 402. In addition to listing all the qualifying uses, the agency has reorganized this section under today's IFR to list special rules that cover any other statutory requirement conditioning how grant funds are spent.
The FAST Act allows a State to use up to 75 percent of Section 405(e) funds for any eligible project or activity under Section 402 if the State has conformed its distracted driving data to the most recent Model Minimum Uniform Crash Criteria (MMUCC), a voluntary guideline designed to help States determine what crash data to collect on their police accident reports (PARs) and what data to code and carry in their crash databases. In “Mapping to MMUCC: A process for comparing police crash reports and state crash databases to the Model Minimum Uniform Crash Criteria” (DOT HS 812 184), NHTSA and the Governors Highway Safety Association developed a methodology for mapping the data collected on PARs and the data entered and maintained on crash databases to the data elements and attributes in the MMUCC Guideline. This methodology will be the basis for determining whether a State has conformed its distracted driving data to the most recent MMUCC. Because NHTSA may update this publication in future years, and intends the most recent version to be used, this IFR adds the language “as updated.” If a State qualifies for a Comprehensive Distracted Driving Grant, the State must demonstrate that its distracted driving data collection conforms with MMUCC,
The FAST Act authorized additional distracted driving grants for those States that do not qualify for a Comprehensive Distracted Driving Grant for fiscal years 2017 and 2018. In this IFR, the agency refers to these additional distracted driving grants as “Special Distracted Driving Grants.” For fiscal year 2017, a State qualifies for a Special Distracted Driving Grant if it has a “basic text messaging statute” that is enforced on a primary or secondary basis and the State does not qualify for a Comprehensive Distracted Driving Grant. The statute uses the term, “basic text messaging statute,” but does not define it. The agency believes the intent was to distinguish “basic text messaging” from “texting” as defined by MAP-21 (and unchanged by the FAST Act). For this reason, the agency is defining “basic text messaging statute” as a statute that prohibits a driver from manually inputting or reading from an electronic device while driving for the purpose of written communication.
The requirements for a Special Distracted Driving Grant become stricter in fiscal year 2018. In addition to the requirement for a basic text messaging statute, the State must also enforce the law on a primary basis, impose a fine for a violation of the law, and prohibit drivers under the age of 18 from using a personal wireless communications device while driving. As is the case for fiscal year 2017, the State must also not qualify for a Comprehensive Distracted Driving Grant. The IFR adopts these statutory provisions without change.
The FAST Act specifies allowable uses for grant funds—activities related to the enforcement of distracted driving laws, including public information and awareness. In addition, States may use up to 15 percent of the grant funds in fiscal year 2017 and 25 percent in fiscal year 2018 for any eligible project or activity under Section 402. This IFR makes no change to the allowable use of funds under this grant program.
In 2005, Congress enacted the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), Public Law 109-59, which authorized the Motorcyclist Safety Grants under section 2010. MAP-21 adopted the SAFETEA-LU Motorcyclist Safety Grants largely unchanged. (23 U.S.C. 405(f)) The Fast Act amended the Motorcyclist Safety grants to address the allocation of funds, provide flexibility in the use of funds, and add a requirement that the Secretary update and provide to the States model Share The Road language. The FAST Act did not amend the qualifications for the Motorcyclist Safety grants, which remain the same as under MAP-21. States qualify for a grant by meeting two of the following six grant criteria: Motorcycle Rider Training Courses; Motorcyclists Awareness Program; Reduction of Fatalities and Crashes Involving Motorcycles; Impaired Driving Program; Reduction of Fatalities and Accidents Involving Impaired Motorcyclists; and Use of Fees Collected from Motorcyclists for Motorcycle Programs. (23 U.S.C. 405(f)(3)). To streamline the application process for section 405 grants, this IFR amends the six grant criteria to require that materials demonstrating compliance for each criterion be submitted with the State's HSP.
Prior to today's IFR, the Motorcyclist Safety Grant regulation first identified the elements to satisfy a specific criterion and then the elements to demonstrate compliance. In general, States provided application information and data as attachments to their HSP. This approach required States to submit a significant number of documents and data, and often required the States and the agency to engage in additional efforts to clarify whether a State demonstrated compliance. Today's IFR streamlines the regulatory text for each of the six Motorcyclist Safety Grant criteria and reduces State application burdens for a Motorcyclist Safety Grant. This IFR eliminates the requirement for separate submissions to satisfy each criterion, as long as the relevant required information is included in the HSP. This approach is intended to shift the focus to ensure that each State bases its motorcycle safety programs on data-driven problem identification and countermeasures to meet the criteria for a Motorcycle Safety Grant.
To qualify for a grant under this criterion, section 405(f)(3)(A) requires a State to have “an effective motorcycle rider training course that is offered throughout the State, provides a formal program of instruction in accident avoidance and other safety-oriented operational skills to motorcyclists and that may include innovative training opportunities to meet unique regional needs.” Based upon many years of experience in administering the Motorcycle Safety Grants, the agency is reevaluating the requirements to demonstrate compliance with this criterion. At this time, every State has adopted an established motorcycle rider training program that is a result of a systematic and standardized approach to teach crash avoidance and the safe operation of motorcycles. Therefore, States will no longer be required to submit multiple documents to justify and support the selected training curriculum. Instead, States must use one of the following four identified training programs: The Motorcycle Safety Foundation (MSF) Basic Rider Course, TEAM OREGON Basic Rider Training (TEAM OREGON), Idaho STAR Basic I (Idaho STAR), or the California Motorcyclist Safety Program Motorcyclist Training Course (California). These curricula are well-established, formal instruction programs in common use across the United States. Each of them has been formalized and standardized through scientific research and field testing. And, each offers instruction in crash avoidance, motorcycle operation and other safety-oriented skills that require in-class instruction and on-the-motorcycle training, provide certified trainers, and have institutionalized quality control measures. With the requirement to use one of these well-established training courses, the need for documentation establishing the merits of the training course no longer exists.
In lieu of the previously required documentation submission, today's IFR instead requires a certification from the Governor's Representative for Highway Safety identifying the head of the designated State authority having jurisdiction over motorcyclist safety issues and that head of the designated State authority having jurisdiction over motorcyclist safety issues has approved and the State has adopted and uses one of these four established and standardized introductory motorcycle rider curricula. Alternatively, in order to allow development of training that meets unique regional needs, the IFR permits the Governor's Representative for Highway Safety to certify that head of the designated State authority has approved and the State has adopted and uses a curriculum that meets NHTSA's Model National Standards for Entry-Level Motorcycle Rider Training. Such curriculum must have been approved by NHTSA as meeting NHTSA's Model National Standards for Entry-Level Motorcycle Rider Training before the application.
The statute requires the State motorcycle rider training program to be Statewide. (23 U.S.C. 405(f)(e)) To meet
Finally, to meet this criterion, the State must submit the official State document identifying the designated State authority having jurisdiction over motorcyclist safety issues, as was required under the MAP-21 IFR.
To qualify under this criterion, a State must have “an effective statewide program to enhance motorist awareness of the presence of motorcyclists on or near roadways and safe driving practices that avoid injuries to motorcyclists.” (23 U.S.C. 405(f)(3)(B)) The statute defines Motorcycle Awareness Program as “an informational or public awareness program designed to enhance motorcyclist awareness that is developed by or in coordination with the designated State authority having jurisdiction over motorcyclist safety issues, which may include the State motorcycle safety administrator or a motorcycle advisory council appointed by the governor of the State.” (23. U.S.C. 405(f)(5)(B)) Motorcycle Awareness is also defined by the statute to mean “individual or collective awareness of (i) the presence of motorcycles on or near roadways; and (ii) safe driving practices that avoid injury to motorcyclists.” (23 U.S.C. 405(f)(5)(C)) The FAST Act did not amend the statutory criterion or these definitions.
The agency is streamlining the submission requirements under this criterion. Today's IFR continues to require the State's Motorcycle Awareness Program to be developed by, or in coordination with, the designated State authority having jurisdiction over motorcyclist safety issues. It requires a certification from the Governor's Representative for Highway Safety identifying the head of the designated State authority having jurisdiction over motorcyclist safety issues and that the State's motorcyclist awareness program was developed by or in coordination with the designated State authority having jurisdiction over motorcyclist safety issues. The IFR no longer requires submission of the detailed strategic communications plan. One commenter under the MAP-21 IFR stated that the requirement for a strategic communications plan did not reflect the practical realities of the program (especially considering the small amount of grant funds), and should be scaled back. The agency agrees, and we have substituted a different approach.
Based upon experience, the agency believes that State motorcycle awareness programs have not used available State crash data to its fullest extent to target specific motorcycle problem areas. Rather, the awareness programs have been based upon generalized use of crash data that has resulted in messages and slogans that bear little relation to the causes of motorcycle crashes. Therefore, to demonstrate that a State is implementing a data-driven State awareness program that targets problem areas, this IFR requires the State to submit in its HSP a performance measure and performance targets with a list of countermeasure strategies and projects that will be deployed to meet these targets. True data-driven problem identification and prioritization will take into account crash location and causation in the development of specific countermeasures.
In the problem identification process, the State must use crash data queries to determine, at a minimum, the jurisdictions with the highest to lowest number of multi-vehicle crashes involving motorcycles. The State must select countermeasure strategies and projects implementing the motorist awareness activities based on the geographic location of crashes. For example, if a State plans to procure a digital media buy aimed at educating motorists about speed variability and blind spots, it should specify in which counties the digital media buy will take place to effectuate the statutory requirement that the motorcycle awareness program be Statewide. Creating awareness messages infrequently during the year or in only a few geographic locations will not be sufficient to meet the requirement for a Statewide awareness program. Today's IFR provides the State flexibility to address specific motorcycle awareness issues while focusing the State's resources to target motorist behaviors or geographic area based upon problem identification.
Previously, a State had to submit separate data and specific countermeasures to reduce impaired motorcycle operation. This requirement was separate from the performance measures, targets and countermeasure strategies required in the HSP under § 1300.11. Today's IFR directs States to use the HSP process of problem identification, performance measures and targets, and countermeasure strategies to apply under this criterion. A State must provide performance measures and corresponding performance targets developed to reduce impaired motorcycle operation in its HSP in accordance with § 1300.11(c). In addition, the State must list the countermeasure strategies and projects the State plans to implement to achieve its performance targets in the HSP.
Today's action makes no structural amendments to two criteria—reduction of fatalities and crashes involving motorcycles and reduction in fatalities and accidents involving impaired motorcyclists. However, to provide additional flexibility, the IFR amends the age of the data that States must use. Specifically, the IFR allows States to use FARS data from up to three calendar years before the application date. The agency will make this information available to the States in January each year.
Today's action does not make any changes to this criterion. However, the agency is explaining its requirements in further detail to better assist States in demonstrating compliance and to address some continuing confusion.
To be eligible for a Motorcyclist Safety Grant under this criterion, the Federal statute requires that “[a]ll fees collected by the State from motorcyclists for the purposes of funding motorcycle training and safety programs will be used for motorcycle training and safety purposes.” (23 U.S.C. 405(f)(3)(F)) This requires a State to take two actions with respect to fees for motorcyclist training: (1) Collect and deposit all the fees from motorcyclists; and (2) distribute all fees collected, without diversion, for training and safety programs. Whether a State applies as a “Law State” or a “Data State” under this criterion, NHTSA requires
In response to the MAP-21 IFR, one commenter raised concerns that some States might seek to transfer the fees collected for motorcycle training to other uses, thereby jeopardizing the State's ability to qualify under the Use of Fees criterion. The agency shares these concerns, and they form the basis for the requirements described below.
To confirm that a Law State has not diverted motorcyclist fees to another program, the agency requires the State to provide the citation to the law or laws collecting all fees requiring that the fees be used for motorcyclist training or safety
Under the typical legislative process, a legislature enacts two laws: One that authorizes a particular governmental action (an authorizing statute) and another that draws money from the State treasury to fund the action (an appropriation). In the typical case, appropriations are enacted annually in the State's budget process. Because an authorizing act and an appropriation are generally not enacted simultaneously, and often originate in separate legislative committees, there is the potential during the budget cycle for a diversion of motorcyclist fees to other purposes than motorcycle training or safety, even though language in the originating account may specify otherwise. For this reason, the agency requires citations to both the authorizing statute and the appropriation.
In response to the MAP-21 IFR, one commenter suggested that the agency be flexible and permit a State to demonstrate compliance without the need to submit its appropriation law as there are other laws that transfer funds without an appropriation. The commenter cites to one State's law as an example of a law that transfers motorcycle fees collected without an appropriation. That State's law provides that motorcycle fees are “appropriated on a continual basis” to the State Department of Transportation which shall administer the account. This is an example of a continuing appropriation, and citation to this provision would meet the requirement for a State to provide the citation to its appropriation law.
To confirm that a Data State has not diverted motorcyclist fees to another program, the State must submit detailed data and/or documentation that show that motorcyclist fees are collected and used only on motorcyclist training and safety. This requires a detailed showing from official records that revenues collected for the purposes of funding motorcycle training and safety programs were placed into a distinct account and expended only for motorcycle training and safety programs. The detailed documentation must include the account string, starting with the collection of the motorcycle fees into a specific location or account and following it to the expenditure of the funds, over a time period including the previous fiscal year. The documentation must provide NHTSA with the ability to “follow the money” to ensure that no diversion of funds takes place.
The FAST Act amended the formula for allocation of grant funds under 23 U.S.C. 405(f), specifying that the allocation is to be in proportion to the State's apportionment under Section 402 for fiscal year 2009, instead of fiscal year 2003, bringing this grant into conformance with other Section 405 grants. In addition, the FAST Act amended the total amount a State may receive under 23 U.S.C. 405(f). Unlike the regulatory 10 percent cap identified for the other Section 405 grants in § 1300.20(e), the statute provides that a State may not receive more than 25% of its Section 402 apportionment for fiscal year 2009.
The FAST Act amended the eligible use of funds under this section. In addition to listing all the qualifying uses, the agency has reorganized this section under the IFR to list special rules that cover any other statutory requirement conditioning how grant funds are spent. Specifically, a State may use up to 50 percent of its grant funds under this section for any eligible project or activity under Section 402 if the State is in the lowest 25 percent of all States for motorcyclist deaths per 10,000 motorcycle registrations, based on the most recent data that conforms to criteria established by the Secretary (by delegation, NHTSA).
To determine if a State is eligible for this use of funds under Section 402, NHTSA will continue to use final FARS and FHWA registration data, as under MAP-21. Final FARS data provide the most comprehensive and quality-controlled fatality data for all 50 States, the District of Columbia, and Puerto Rico. FHWA motorcycle registration data are compiled in a single source for all 50 States, the District of Columbia, and Puerto Rico. The agency will make calculations and notify the States in January each year prior to the application due date of July 1.
The FAST Act mandates that within 1 year after its enactment, NHTSA update and provide to the States model language for use in traffic safety education courses, driver's manuals, and other driver training materials that provide instruction for drivers of motor vehicles on the importance of sharing the road safely with motorcyclists. NHTSA intends to update Share the Road language and make it available on its Web site located at
In response to the MAP-21 IFR, the agency received two comments that are not addressed above. One commenter recommended that a universal motorcycle helmet law be included as a requirement to qualify for a Motorcyclist Safety Grant. Because the Federal statute does not include such a requirement to qualify for the grant, we decline to adopt this recommendation. Another commenter recommended that the agency allow States to cite to internet links to meet some requirements. We decline to adopt the use of internet links, as they are subject to change and therefore provide inadequate documentation and an insufficient audit trail.
In general, a graduated driver's licensing (GDL) system consists of a multi-staged process for issuing driver's licenses to young, novice drivers to ensure that they gain valuable driving experience under controlled circumstances and demonstrate responsible driving behavior and proficiency to move through each level of the system before graduating to the next. All 50 States and the District of Columbia have enacted GDL laws as a means of providing a safe transition for novice drivers to the driving task. MAP-21 reintroduced an incentive grant for States to adopt and implement GDL laws (codified at 23 U.S.C. 405(g)). MAP-21 established a series of criteria that were prescriptive and difficult for States to meet. No State GDL incentive grants were awarded under MAP-21 due to the statute's strict compliance requirements.
The FAST Act resets the State GDL incentive grant program by significantly amending the statutory compliance criteria. It makes technical corrections, allows States additional flexibility to comply, reduces some driving restrictions, and better aligns the compliance criteria with commonly accepted best practices for GDL programs. The statutory requirements remain challenging, and it is possible that few States may comply in the first year of the revised program. However, the agency believes that because the new compliance criteria better reflect commonly accepted best practices and are more feasible for States to meet, some States will take action to amend their laws in order to qualify for a grant.
NHTSA based some of its implementation decisions in the MAP-21 IFR on research evidence, commonly accepted best practices, and public comments received under that program. Two commenters raised concerns about the agency's reliance on research evidence to establish certain qualification criteria. However, the FAST Act codified into law many of the NHTSA-established qualification criteria, including those cited by one of the commenters (minimum number of supervised behind-the-wheel training hours and nighttime driving restriction hours). As a result, NHTSA may no longer deviate from these criteria, and many of these requirements are therefore retained in this IFR.
The following sections explain the requirements of the State GDL incentive grant program under the FAST Act. In addition, the agency addresses public comments received on the MAP-21 IFR and, where appropriate, public comments received on a Notice of Proposed Rulemaking (NPRM) that NHTSA published on October 5, 2012, in the
To qualify for a State GDL incentive grant, a State must submit an application with legal citations to the State statute(s) demonstrating compliance with the minimum qualification criteria specified in this IFR. (§ 1300.26(c)) Under 23 U.S.C. 405(g), as amended by the FAST Act, a State qualifies for an incentive grant if its driver's license law requires novice drivers younger than 18 years of age to comply with a “learner's permit stage” and an “intermediate stage” prior to receiving an unrestricted driver's license. (§ 1300.26(a)) Previously, under MAP-21, all novice drivers younger than 21 years of age were required to comply with such a 2-stage licensing process prior to receiving an unrestricted driver's license. This IFR reflects the statutory change from 21 years of age to 18 years of age. (§§ 1300.26(a), (d)(1)(i))
This change has significant impacts on NHTSA's interpretation of the minimum qualification criteria and their application to State laws. A number of commenters to the MAP-21 IFR and the NPRM requested clarification on the application of the GDL requirements to novice drivers age 18 and older. The agency need not address these comments because the FAST Act amendment lowered the evaluation age to 18, and therefore the requirements of the FAST Act do not extend to the State's treatment of novice drivers once they have reached that age. For example, under this IFR, the automatic issuance of an unrestricted driver's license upon turning 18 years of age (regardless of the length of time an intermediate license was held) will no longer prevent a State from qualifying for an incentive grant because the minimum qualification criteria must apply only up to, but not including, 18 years of age.
This IFR uses the commonly accepted term “unrestricted driver's license,” as used in the FAST Act instead of “full driver's license,” which was used in the MAP-21 IFR. (§ 1300.26(b)) In the MAP-21 IFR, NHTSA used the term “full driver's license” to avoid confusion with driver licenses containing such restrictions as a requirement to wear corrective lenses. However, the FAST Act continues to use “unrestricted driver's license,” and NHTSA believes that phrase is well-understood. This IFR defines “unrestricted driver's license” to mean “full, non-provisional driver's licensure to operate a motor vehicle on public roadways.” An “unrestricted driver's license” for purposes of this section may include narrow restrictions such as requiring use of corrective lenses or assistive devices. However, it does not include learner's permits, intermediate licenses, or other similar restricted licenses.
The following sections describe the minimum qualification criteria for the learner's permit stage and the intermediate stage that all novice drivers younger than 18 years of age must complete prior to receiving an unrestricted driver's license in order for the State to qualify for an incentive grant. The agency does not have statutory authority in 23 U.S.C. 405(g) to allow States to meet only a few of the minimum qualification criteria dictated by the FAST Act or to phase in the program over several years, as recommended by some commenters. In addition, because the FAST Act sets minimum qualification criteria, NHTSA cannot award grants while allowing States complete flexibility to set “their own restrictions based on their unique conditions and problems,” as one commenter suggested.
The FAST Act requires all 2-stage licensing processes to begin with a learner's permit stage. This IFR requires a State driver's licensing statute to include a learner's permit stage that applies to any driver who is younger than 18 years of age prior to being issued by the State any other permit, license, or endorsement to operate a motor vehicle on public roadways. However, recognizing that some drivers younger than 18 years of age may change residence across State lines, a learner's permit stage is not required for any driver who has already received an intermediate license or unrestricted driver's license from any State, including a State that does not meet the minimum qualification criteria for an incentive grant. Drivers younger than 18 years of age who possess only a learner's permit from another State must be integrated into the State's learner's permit stage.
The FAST Act requires applicants to successfully pass a vision and knowledge assessment prior to receiving a learner's permit. A “knowledge assessment” (commonly called a “written test”) is generally written or
Under the FAST Act and the IFR, the learner's permit stage must be at least six months in duration, and it must remain in effect until the driver reaches 16 years of age and enters the intermediate stage or reaches 18 years of age. These requirements are independent and must each be satisfied. For example, a learner's permit stage that automatically ends with the issuance of an intermediate license at age 17 would not comply with the minimum requirements because, in some cases, it may not be in effect for a period of at least 6 months. However, a learner's permit stage that automatically ends at age 18 would not be a bar to compliance because, as discussed above, a State's GDL program is not required to cover drivers who have reached that age. A driver who successfully completes the learner's permit stage and is younger than 18 must enter the intermediate stage; he or she may not be issued an unrestricted driver's license or any other permit, license, or endorsement.
The key feature of a learner's permit stage is the requirement that the learner's permit holder be accompanied and supervised at all times while operating a motor vehicle. The FAST Act and this IFR require that the supervising individual be a licensed driver who is at least 21 years of age or a State-certified driving instructor. The IFR defines “licensed driver” to mean “an individual who possess a valid unrestricted driver's license.” (§ 1300.26(b)). An individual who possesses only a learner's permit or intermediate license, or whose license is expired, suspended, revoked, or otherwise invalid for any reason, may not supervise a learner's permit holder. The FAST Act does not allow for any exceptions to the requirement that a learner's permit holder be accompanied and supervised “
With regard to driver's education (or a similar training course) and behind-the-wheel training, both of which were required under MAP-21, the FAST Act provides significantly more flexibility. Some commenters to the MAP-21 IFR noted that driver's education was difficult to implement in rural areas, that evidence on the effectiveness of driver's education courses is mixed, and that States facing budgetary challenges may face an insurmountable burden in certifying driver's education courses and requiring all learner's permit holders to attend them. Under the FAST Act, a learner's permit holder must
To qualify, a State must also make it a primary offense for a learner's permit holder to use a personal wireless communications device while driving. The FAST Act made a few changes to this distracted driving provision of the GDL program (“GDL prohibition”) to bring it into closer alignment with the criteria to qualify for a Distracted Driving Grant (under 23 CFR § 1300.24). First, the GDL prohibition bans the use of any “personal wireless communications device,” which has a common definition in both programs. Second, the GDL prohibition uses the Distracted Driving Grant definition of “driving.” Finally, the same exceptions permitted under the Distracted Driving Grant are permitted under this GDL prohibition. To bring these further into alignment, NHTSA has incorporated into the GDL prohibition the requirement under the Distracted Driving Grant that the State's statute not include an exemption that specifically allows a driver to text through a personal wireless communication device while stopped in traffic. This provision goes to the heart of how the agency interprets “driving” as it applies to State laws, and will ensure consistency between the programs. As under the MAP-21 IFR and the Distracted Driving Grant, violation of the GDL prohibition must be a primary offense. However, NHTSA is not incorporating the minimum fine requirement of the Distracted Driving Grant into the GDL prohibition. It is not expressly required under the FAST Act to qualify for a State GDL incentive grant, and the automatic extension requirement (discussed next) already provides for an appropriate penalty under a GDL program.
Finally, under this IFR, the learner's permit stage must require that, in addition to any other penalties imposed by State statute, its duration be extended if the learner's permit holder is convicted of a driving-related offense or misrepresentation of a driver's true age during at least the first six months of that stage. Under the FAST Act, NHTSA has discretion to define any “driving-related offense” for which this penalty must apply. (23 U.S.C. 405(g)(2)(B)(iii)) NHTSA has defined “driving-related offense” broadly to include “any offense under State or local law relating to the use or operation of a motor vehicle.” Further, the IFR provides examples of such offenses, including those from the FAST Act (driving while intoxicated, reckless driving, driving without wearing a seat belt, and speeding), other priority safety programs (child restraint violation and prohibited use of a personal wireless communications device), any violation of a GDL program, and general “moving violations.” NHTSA believes that an extension of the learner's permit period is an effective tool for ensuring that novice drivers clearly demonstrate responsibility before advancing to a licensure stage requiring less supervision, and therefore it should apply to any violation of the State's driving laws. However, the IFR makes clear that “driving-related offense” does not include offenses related to motor vehicle registration, insurance, parking, or the presence or functionality of motor vehicle equipment (such as headlights or taillights that require replacement). As motor vehicles are often owned by the parents of novice drivers, NHTSA does not believe that offenses related to the vehicles themselves (registration, insurance, or functioning of equipment) should apply to the novice driver. Parking violations are also excluded from the definition because the violation generally applies to the owner of the vehicle, and such violations do not generally implicate safety. We note
The FAST Act also changed the automatic extension requirement in the MAP-21 IFR by applying this penalty only during the first six months of the stage, not for its entirety. A State that requires the extension of a learner's permit stage for a conviction that occurs after the first six months would not be disqualified from a grant, but it is no longer required. At this time, NHTSA is not requiring that the learner's permit stage extension be for a particular length of time.
The FAST Act requires all 2-stage licensing processes to continue with an intermediate stage after the learner's permit stage but prior to receipt of an unrestricted license. As discussed above, the intermediate stage must apply to any novice driver who completes the learner's permit stage and is less than 18 years of age. (23 CFR §§ 1300.26(a), (d)(3), (e)(1)(i)) If a driver completes the learner's permit stage after turning 18 years of age, he or she is not required to participate in an intermediate stage and may receive an unrestricted license.
Under the IFR, the intermediate stage must commence after the applicant successfully completes the learner's permit stage, but prior to being issued by the State another permit, license, or endorsement (other than the intermediate license) to operate a motor vehicle on public roadways. This structure allows for a gap between the learner's permit stage and the intermediate stage, in the event the former expires prior to the novice driver being issued the latter. However, the novice driver may not be granted additional driving privileges beyond the intermediate stage until completion of that stage. In addition, the novice driver may not be issued an intermediate stage license until after he or she has passed a behind-the-wheel driving skills assessment (commonly known as a “road test”).
The intermediate stage must be in effect for a period of at least 6 months, and it must remain in effect until the intermediate license holder reaches at least 17 years of age. Thus, a State will not qualify for an incentive grant if it issues additional permits, licenses (including an unrestricted driver's license), or endorsements to an intermediate stage driver who has not reached at least 17 years of age and completed the requirements of that stage. As described above, a State may now qualify for an incentive grant if the intermediate stage expires automatically upon reaching 18 years of age, because drivers are no longer required to complete a 2-stage driving process once they have reached that age.
One of the two primary features of an intermediate stage in a GDL program is nighttime driving restrictions. Under the IFR, for the first six months of the intermediate stage, the driver must be accompanied and supervised by a licensed driver who is at least 21 years of age or a State-certified driving instructor while operating a motor vehicle between the hours of 10:00 p.m. and 5:00 a.m. The FAST Act changed this requirement as it existed under MAP-21 to apply only to the first six months of the intermediate stage, rather than to the entire stage. The FAST Act adopted the MAP-21 nighttime hours of 10:00 p.m. through 5:00 a.m., but added additional exceptions for “transportation to work, school, religious activities, or emergencies.” NHTSA believes that “to” was not intended to limit such exceptions to driving only toward these destinations and not to returning from these destinations. The IFR makes clear that the exceptions may apply to driving “for the purposes of work, school, religious activities, or emergencies.” This broadening of the nighttime driving exceptions should address the comments received in response to the MAP-21 IFR. Consistent with the purpose of the statute, the IFR allows accompaniment by a State-certified driving instructor, in addition to someone at least 21 years of age, to better align the accompaniment and supervision requirement with the learner's permit stage, as well as to allow for formal training during nighttime hours.
The second primary feature of an intermediate stage in a GDL program is the passenger restriction. The IFR requires that, for the entirety of the learner's permit stage, an intermediate license holder be prohibited from operating a motor vehicle with more than one nonfamilial passenger younger than 21 years of age unless a licensed driver who is at least 21 years of age or is a State-certified driving instructor is in the motor vehicle. This requirement is essentially unchanged from the MAP-21 IFR, though NHTSA has allowed a State-certified driving instructor to accompany a driver with more than one nonfamilial passenger younger than 21 years of age in order to allow for group behind-the-wheel training and ensure consistency with the learner's permit phase. We emphasize that the FAST Act does not include a 6-month limitation on this restriction; therefore, it must apply for the entirety of the intermediate stage.
Finally, the intermediate stage must include a prohibition on the use of a personal wireless communications device while driving and a requirement that the stage be extended if the intermediate license holder is convicted of a driving related offense or misrepresentation of a driver's true age during at least the first 6 months of the stage. The language of these restrictions is identical in the FAST Act for both the learner's permit and intermediate stages, and the IFR applies these restrictions to both stages identically.
The MAP-21 IFR included a requirement that the State's learner's permit, intermediate license, and full driver's license be distinguishable from each other. One commenter did not support this license distinguishability criterion, stating it was not an inherent aspect of GDL law or directly related to improving the safety of novice drivers. The FAST Act repealed the statutory provision that gave NHTSA authority to prescribe additional requirements for State GDL programs to qualify for an incentive grant. License distinguishability was not included as a requirement in the FAST Act. For this reason, NHTSA removes this requirement to qualify for a GDL grant.
MAP-21 created limited exceptions for States that enacted a law prior to January 1, 2011, establishing either of the following two classes of permit or license: a permit or license that allows drivers younger than 18 years of age to operate a motor vehicle in connection with work performed on, or the operation of, a farm owned by family members who are directly related; or a permit or license that is issued because demonstrable hardship would result from its denial to the licensee or applicant. For the second class of permit or license, the MAP-21 IFR clarified that a demonstration of unique, individualized hardship was required. Further, the MAP-21 IFR made clear that although novice drivers may possess one of these classes of permits or licenses, States were not permitted to provide them any other permit, license or endorsement until they completed the GDL process. The FAST Act did not
Under MAP-21, NHTSA was required to award grants to States that met the qualification criteria on the basis of the apportionment formula under Section 402 for that fiscal year. The FAST Act did not amend this provision, so it continues to be used in this IFR. (23 CFR 1300.26(g)) This grant award formula for the State GDL incentive grant program differs from the formula for the other Section 405 programs, where distributions are made in proportion to the State's apportionment under Section 402 for fiscal year 2009.
In addition to listing all the qualifying uses, the agency has reorganized this section under the IFR to list special rules that cover any other statutory requirement conditioning how grant funds are spent. As a general rule, grant funds must be used for certain expenses connected with the State's GDL law or to carry out a teen traffic safety program under 23 U.S.C. 402(m). Notwithstanding these uses, a State may use no more than 75 percent of the grant funds for any eligible project under Section 402. In addition, the FAST Act creates a special rule for low fatality States that allows them to use up to 100 percent of the grant funds awarded under this section for any eligible project under Section 402. Low fatality States are defined in the FAST Act as those “in the lowest 25 percent of all States for the number of drivers under age 18 involved in fatal crashes in the State per the total number of drivers under age 18 in the State based on the most recent data that conforms with criteria established by the Secretary.” For fatality information, the agency intends to use the most recently available final FARS data. For number of drivers, the agency intends to use Table DL-22 from the most recently available FHWA Highway Statistics publication issued by its Office of Highway Policy Information.
The FAST Act created a new Nonmotorized Safety Grant program, authorizing grants to enhance safety for bicyclists and pedestrians. The purpose of the new grant program is to support State efforts to decrease pedestrian and bicyclist fatalities and injuries that result from crashes involving a motor vehicle.
For assistance in developing nonmotorized safety programs, NHTSA encourages States to look to NHTSA's Uniform Guidelines for State Highway Safety Programs No. 14—Pedestrian and Bicycle Safety.
As directed in the FAST Act, States are eligible for the Nonmotorized Safety Grant if the annual combined pedestrian and bicyclist fatalities in the State exceed 15 percent of the total annual crash fatalities in the State using the most recently available final data from NHTSA's FARS. Recently, FHWA established a nonmotorized performance measure for State departments of transportation to use to carry out the HSIP and to assess the number of serious injuries and fatalities of nonmotorized users. In creating this performance measure, FHWA includes other nonmotorized users besides pedestrians and bicyclists in its calculation of the “number of non-motorized fatalities.” However for the Nonmotorized Safety Grant program, the FAST Act specifies that eligible States shall receive a grant for “the purpose of decreasing pedestrian and bicycle fatalities and injuries that result from crashes involving a motor vehicle,” and does not mention other types of nonmotorized users. Using FARS data, NHTSA will calculate the percentage of each State's annual combined pedestrian and bicyclist fatalities in relation to the State's annual total crash fatalities, using Statistical Analysis System (SAS) software. NHTSA will not round or truncate this calculation. All States that exceed 15 percent will be eligible for a grant.
In January each year prior to the application due date, the agency will inform each State that is eligible for a grant.
To qualify for a grant under this section, an eligible State must provide assurances that the State will use grant funds awarded under 23 U.S.C. 405(h) only for authorized uses.
The FAST Act specifies with particularity how States may use Nonmotorized Safety Grant funds. The IFR adopts the FAST Act language without change.
Section 1906 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy For Users (SAFETEA-LU) established an incentive grant program to prohibit racial profiling. Section 4011 of the FAST Act revised several aspects of the Section 1906 Program.
The purpose of the SAFETEA-LU grant program was to encourage States to enact and enforce laws that prohibit the use of racial profiling in traffic law enforcement and to maintain and allow public inspection of statistical information regarding the race and ethnicity of the driver and any passengers for each motor vehicle stop in the State. The purpose of the new Section 1906 grant program is to encourage States to maintain and allow public inspection of statistical information on the race and ethnicity of the driver for all motor vehicle stops made on all public roads except those classified as local or minor rural roads.
Under the SAFETEA-LU Section 1906 Program, States could qualify for a grant in one of two ways: (a) By enacting and enforcing a law that prohibits the use of racial profiling in the enforcement of State laws regulating the use of Federal-aid highways
Section 4011 of the FAST Act revised several aspects of the Section 1906 grant program. States now may qualify for a 1906 grant by: (1) Maintaining and allowing public inspection of statistical information on the race and ethnicity of the driver for each motor vehicle stop made by a law enforcement officer on a Federal-aid highway; or (2) undertaking activities during the fiscal year of the grant to do so. Under the new 1906 Program, the clear emphasis is to encourage States to maintain and provide public access to statistical information on the race and ethnicity of drivers stopped by law enforcement officers on Federal-aid highways. This requirement extends to all law enforcement officers in a State, including local law enforcement. Use of the term “Federal-aid highway” is governed by Chapter 1 of Title 23, which defines it as a highway eligible for assistance under Chapter 1 other than a highway classified as a local road or rural minor collector. Consequently, the program's data collection requirement extends to all public roads except local and minor rural roads.
To qualify under the first criterion, the State must submit official documents (
The FAST Act places two limitations on grants. First, a State may not qualify for a grant under this section by providing assurances for more than two fiscal years. This IFR adopts this requirement.
The FAST Act also limits the total amount of grant funds awarded to a State each fiscal year. A State may not receive more than 5 percent of the grant funds made available under this section. By statute, NHTSA may reallocate funds not awarded under this section to carry out any of other activities authorized under 23 U.S.C. 403. (Activities authorized under 23 U.S.C. 403 are beyond the scope of this rule.)
Consistent with its emphasis on data collection, the new 1906 Program now provides that a State may use grant funds only for the costs of (1) collecting and maintaining data on traffic stops; and (2) evaluating the results of the data.
Today's action makes nonsubstantive changes to some sections and amends other sections to clarify existing requirements, provide for improved accountability of Federal funds and update requirements based on the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, 2 CFR part 200, and the Department of Transportation's implementing regulation at 2 CFR part 1201.
In subparts D and E, the agency makes nonsubstantive changes, such as updating cross references, and terms, and adding references to Section 1906. Specifically, the agency makes nonsubstantive and clarifying changes to the following provisions in subparts D and E: §§ 1300.30 General, 1300.31 Equipment, 1300.36 Appeals of Written Decisions by a Regional Administrator, and 1300.42 Post-Grant Adjustments, 1300.43 Continuing Requirements.
A number of other requirements apply to the Section 402, 405 and 1906 programs, including such government-wide provisions as the Office of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 200) and DOT's implementing regulations of those Uniform Administrative Requirements (2 CFR part 1201). These provisions are independent of today's notice, and continue to apply in accordance with their terms. Throughout this IFR, citations to 49 CFR parts 18 and 19 and to OMB Circulars have been updated to refer to OMB's Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards as well as DOT's implementing regulations (2 CFR parts 200 and 1201). In addition, NHTSA has added citations to various provisions of OMB's Uniform Administrative Requirements throughout this IFR in order to provide additional notice to States about certain provisions, including risk assessment and consequences of non-compliance with government-wide or NHTSA grant requirements. Finally, NHTSA has deleted the provision on program income (§ 1300.34), and will rely the Uniform Administrative Requirements to address program income.
The agency is responsible for overseeing and monitoring implementation of the grant programs to help ensure that recipients are meeting program and accountability requirements. Oversight procedures for monitoring the recipients' use of awarded funds can help the agency determine whether recipients are operating efficiently and effectively. Effective oversight procedures based on internal control standards for monitoring the recipients' use of awarded funds are key to ensuring that program funds are being spent in a manner consistent with statute and regulation. In order to improve oversight of grantee activities and management of federal funds, this IFR updates the procedures for administering the highway safety grant programs.
As noted in Section II.A. above, NHTSA anticipates implementing the Grants Management Solutions Suite (GMSS) beginning with fiscal year 2018 grants. GMSS satisfies the FAST Act requirement that NHTSA allow States to submit HSPs electronically. States will submit their HSPs electronically in GMSS to apply for grants. In addition, States will amend their HSPs and submit vouchers in GMSS. The agency expects GMSS to reduce the administrative burden on States. This IFR continues the existing requirement for approval of changes in the HSP by Regional Administrators. Today's action makes conforming changes to § 1300.32, including deleting the reference to the HS Form 217, which will no longer be required.
While grantees or recipients have primary responsibility to administer, manage, and account for the use of grant funds, the Federal grant-awarding agency retains responsibility for oversight in accordance with applicable laws and regulations. Changes to the regulation are necessary to reflect the complexity of current grant programs
Consistent with the agency's expected implementation of GMSS, today's action amends § 1300.33. Most paragraphs in this section remain unchanged except for nonsubstantive updates to cross-references and terms. This IFR amends the content of the vouchers to conform with the implementation of GMSS and the revised HSP content requirements. As is currently required, States will continue to identify the amount of Federal funds for reimbursement, amount of Federal funds allocated to local benefit, and matching rate. In order to better maintain oversight of Federal grant funds, this IFR requires States to identify project numbers, amount of indirect cost, amount of planning and administration costs and program funding code. To ease the burden on States, the agency is working to program GMSS to populate a number of fields, such as project number and program funding code, from the HSP submission so that States will not have to upload duplicative entries into GMSS.
In response to the MAP-21 IFR, one commenter stated that a list of projects and project numbers was too burdensome because it would require, among other things, double entries. NHTSA is responsible for oversight in accordance with applicable laws and regulations. Without such information, the agency is unable to track whether grant funds are used in accordance with Federal law, including the period of availability for such funds. As stated above, NHTSA expects to implement GMSS to accept the submission of HSPs electronically so that many of the fields will automatically populate, and thus reduce the burden on States.
With these changes, the agency will be better able to track the State's expenditure of grant funds.
Today's action retains much of the existing requirements for the State's annual report and makes two targeted additions to require a description of the State's evidence-based enforcement program activities and an explanation of reasons for projects that were not implemented. The statute requires States to have sustained enforcement of traffic safety laws (
A fundamental expectation of Congress is that funds made available to States will be used promptly and effectively to address the highway safety problems for which they were authorized. Section 402 and 405 grant funds are authorized for apportionment or allocation each fiscal year. Because these funds are made available each fiscal year, it is expected that States will strive to use these grant funds to carry out highway safety programs during the fiscal year of the grant. States should, to the fullest extent possible, expend these funds during the fiscal year to meet the intent of the Congress in funding an annual program.
Today's action retains many provisions in the MAP-21 IFR, such as the provision on deobligation of funds, but conforms the treatment of carry-forward funds to the revised HSP content requirements in § 1300.11(d). Two commenters to the MAP-21 IFR sought clarification on the treatment of grant funds awarded under previous authorizations. As provided in the MAP-21 IFR, the codified regulations in place at the time of grant award continue to apply.
Today's action reorganizes and clarifies 23 CFR 1300.51 in accordance with 23 U.S.C. 402(c). No substantive changes are made to this section.
This IFR adds a new sanction provision (23 CFR 1300.52) related to risk assessment and noncompliance with Federal requirements for grants. The OMB Circular (2 CFR part 200) introduced increased risk assessment procedures for Federal agencies and sub-recipients. This IFR explains that NHTSA will conduct risk assessments and incorporate risk assessment results into existing grant monitoring activities. NHTSA may impose conditions proportional to the degree of risk found.
The FAST Act left a number of the National Priority Safety Program grants unchanged, provided additional flexibility for States to receive grants under others, and established new grants. Today's action streamlines and consolidates grant application requirements for Sections 402, 405 and 1906. For Section 402 grants, States are required to submit HSPs with performance measures and targets, a strategy for programming funds on projects and activities, and data and data analysis supporting the effectiveness of the countermeasures for NHTSA's approval. This IFR revises some of the HSP content requirements to allow States to use the HSP contents to not only meet the Section 402 requirements, but also meet some of the Section 405 grant requirements.
While these changes to the HSP and Section 405 grant requirements will reduce the application burden on States, NHTSA is not making these changes a requirement for fiscal year 2017 grants. States begin drafting their HSP for the next fiscal year months in advance of the July 1 application deadline. It would be difficult for States to meet the revised requirements in the short time between the issuance of this IFR and July 1, 2016.
In order to limit any disruption to the State highway safety program planning process, the amendments to the application requirements in this part are not mandatory until the fiscal year 2018 application cycle for grants without substantive changes in the FAST Act. For those grants (Occupant Protection Grants, State Traffic Safety Information System Improvements Grants, Impaired Driving Countermeasures Grants and Motorcyclist Safety Grants), States may follow the application requirements in the MAP-21 IFR (Part 1200). As discussed in Section I, for additional flexibility, States may elect to follow the new procedures (
For
Today's action makes a number of changes to the general and administrative provisions applicable to grants awarded under 23 U.S.C. Chapter 4 and Section 1906. In order to reduce the burden on States, the agency is delaying the applicability of some of these provisions. Specifically, the provisions that impact the HSP contents and the process for reimbursement of grant expenditures are delayed until fiscal year 2018 grants.
For fiscal year 2017 grants awarded under 23 U.S.C. Chapter 4 and Section 1906, the following provisions from part 1300 are applicable:
• Subpart A—all sections;
• Subpart B: 23 CFR 1300.10 General; 23 CFR 1300.12 Due Date for Submission; (iii) 23 CFR 1300.13 Special Funding Conditions for Section 402 Grants; (iv) 23 CFR 1300.15 Apportionment and Obligation of Federal Funds;
• Subpart C—23 CFR 1300.20 General; 23 CFR 1300.21(a)-(c) and (f); 23 CFR 1300.22(a) and (d); 23 CFR 1300.23(a)-(c), (i) and (j); 23 CFR 1300.1300.24—all paragraphs; 23 CFR 1300.25(a)-(c), (k) and (l); 23 CFR 1300.26—all paragraphs; 23 CFR 1300.27—all paragraphs; 23 CFR 1300.28—all paragraphs;
• Subpart D: 23 CFR 1300.30 General; 23 CFR 1300.31 Equipment; 23 CFR 1300.35 Annual Report; 23 CFR 1300.36 Appeals of Written Decision by Regional Administrator;
• Subpart E—all sections;
• Subpart F—all sections.
For all other general or administrative provisions, the following provisions of 23 CFR part 1200 apply for fiscal year 2017—
• Subpart B—23 CFR 1200.14 Review and Approval Procedures;
• Subpart D: 23 CFR 1200.32 Changes—Approval of the Approving Official (Regional Administrator); 23 CFR 1200.33 Vouchers and Project Agreements.
This preamble addressed comments from the MAP-21 IFR in applicable sections. Some comments, however, were of general applicability or applied to multiple sections of the IFR. Those comments are addressed in this section.
One commenter suggested that States conduct their own assessments rather than NHTSA-facilitated assessments. There are a number of assessment requirements within MAP-21 and continued under the FAST Act,
One commenter sought clarification about whether grant funds may be used to fund an impaired driving task force. While the question was specific to the impaired driving task force, there are other grants where task forces or similar entities are requirements for a Section 405 grant. Generally, under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, costs incurred by advisory councils or committees are unallowable unless authorized by statute, the Federal awarding agency or as an indirect cost where allocable to Federal awards. 2 CFR 200.422. As the agency stated in response to questions about the Cost Principles, the costs of advisory councils (or similar entities) are not allowable if the advisory council or entity is required to qualify for a grant by which it is funded (
Several commenters had questions about the qualification requirements for MAP-21 grants based on enactment of
The Administrative Procedure Act authorizes agencies to dispense with certain procedures for rules when they find “good cause” to do so. The FAST Act contains a general provision requiring the agency to award grants through rulemaking and continues the specific provision requiring the agency to award the GDL grants through notice and comment provisions under 5 U.S.C. 553. The agency finds good cause to dispense with the notice and comment requirements and the 30-day delayed effective date requirement.
Under Section 553(b)(B), the requirements of notice and comment do not apply when the agency, for good cause, finds that those procedures are “impracticable, unnecessary, or contrary to public interest.” Because the statutory deadline for fiscal year 2017 grant applications is July 1, 2016, the agency finds it impracticable to implement the grant provisions with notice and comment. However, the agency invites public comment on all aspects of this IFR as the agency intends to address comments in a final rule.
Under Section 553(d), the agency may make a rule effective immediately, avoiding the 30-day delayed effective date requirement for good cause. We have determined that it is in the public interest for this final rule to have an immediate effective date. NHTSA is expediting a rulemaking to provide notice to the States of the requirements for the substantively changed grants and the new grants established by the FAST Act. NHTSA is providing the option for States to apply the new requirements immediately to all grants, and this also requires an expedited rule. The fiscal year 2017 grant funds must be awarded to States before the end of the fiscal year 2016, and States need the time to complete their fiscal year 2017 grant applications before the July 1, 2016 deadline. Early publication of the rule setting forth the requirements for State applications for multiple grants that have separate qualification requirements is therefore imperative.
For these reasons, NHTSA is issuing this rulemaking as an interim final rule that will be effective immediately. As an interim final rule, this regulation is fully in effect and binding upon its effective date. No further regulatory action by the agency is necessary to make this rule effective. However, in order to benefit from comments that interested parties and the public may have, the agency is requesting that comments be submitted to the docket for this notice.
Comments received in response to this notice, as well as continued interaction with interested parties, will be considered in making future changes to these programs. Following the close of the comment period, the agency will publish a notice responding to the comments and, if appropriate, the agency will amend the provisions of this rule.
For ease of reference, this IFR sets forth in full part 1300.
NHTSA has considered the impact of this rulemaking action under Executive Order 12866, Executive Order 13563, and the Department of Transportation's regulatory policies and procedures. This rulemaking document was not reviewed under Executive Order 12866 or Executive Order 13563. This action establishes revised uniform procedures implementing State highway safety grant programs, as a result of enactment of the Fixing America's Surface Transportation Act (FAST Act). While this interim final rule (IFR) would establish minimum criteria for highway safety grants, most of the criteria are based on statute. NHTSA has no discretion over the grant amounts, and its implementation authority is limited and non-controversial. Therefore, this rulemaking has been determined to be not “significant” under the Department of Transportation's regulatory policies and procedures and the policies of the Office of Management and Budget.
The Regulatory Flexibility Act (RFA) of 1980 (5 U.S.C. 601
This IFR is a rulemaking that will establish revised uniform procedures implementing State highway safety grant programs, as a result of enactment of the Fixing America's Surface Transportation Act (FAST Act). Under these grant programs, States will receive funds if they meet the application and qualification requirements. These grant programs will affect only State governments, which are not considered to be small entities as that term is defined by the RFA. Therefore, I certify that this action will not have a significant impact on a substantial number of small entities and find that the preparation of a Regulatory Flexibility Analysis is unnecessary.
Executive Order 13132 on “Federalism” requires NHTSA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” 64 FR 43255 (August 10, 1999). “Policies that have federalism implications” are defined in the Executive Order to include regulations that 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.” Under Executive Order 13132, an agency may not issue a regulation with Federalism implications that imposes substantial direct compliance costs and that is not required by statute unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments or the agency consults with State and local governments in the process of developing the proposed regulation. An agency also may not issue a regulation with Federalism implications that preempts a State law without consulting with State and local officials.
The agency has analyzed this rulemaking action in accordance with the principles and criteria set forth in Executive Order 13132, and has determined that this IFR would not have sufficient Federalism implications as defined in the order to warrant formal consultation with State and local officials or the preparation of a federalism summary impact statement. However, NHTSA continues to engage with State representatives regarding general implementation of the FAST Act, including these grant programs, and expects to continue these informal dialogues.
Pursuant to Executive Order 12988 (61 FR 4729 (February 7, 1996)), “Civil Justice Reform,” the agency has considered whether this proposed rule would have any retroactive effect. I conclude that it would not have any retroactive or preemptive effect, and judicial review of it may be obtained pursuant to 5 U.S.C. 702. That section does not require that a petition for reconsideration be filed prior to seeking judicial review. This action meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
Under the Paperwork Reduction Act of 1995 (PRA), as implemented by the Office of Management and Budget (OMB) in 5 CFR part 1320, a person is not required to respond to a collection of information by a Federal agency unless the collection displays a valid OMB control number. The grant application requirements in this IFR are considered to be a collection of information subject to requirements of the PRA. Because the agency cannot reasonably comply with the submission time periods under the PRA and provide States sufficient time to apply for the grants to be awarded in fiscal year 2017, the agency is seeking emergency clearance for the information collection related to the fiscal year 2017 grant application process. The agency is proceeding under the regular PRA clearance process for the collection of information related to grants beginning with fiscal year 2018 grants. Accordingly, in compliance with the PRA, we announce that NHTSA is seeking comment on a new information collection for grant programs beginning with fiscal year 2018 grants.
Unlike the prior authorization under MAP-21, the FAST Act does not significantly change the structure of these grant programs. The FAST Act instead made targeted amendments, adding more flexibility for States to qualify for some of the grants. For Section 402, the FAST Act made limited administrative changes and no substantive changes to the contents of the required Highway Safety Plan (HSP). For Section 405, the FAST Act made no substantive changes to four programs covering occupant protection grants, state traffic safety information systems improvements grants, impaired driving countermeasures grants and motorcyclist safety grants; made limited changes that added flexibility for States to qualify for three grant programs covering alcohol-ignition interlock law grants, distracted driving grants and state graduated driving licensing incentive grants; and created two new grant programs covering 24-7 sobriety programs grants and nonmotorized safety grants. For Section 1906, the FAST Act made changes that simplified the basis for States to receive a grant.
Consequently, for all of these grants, the agency continues to follow the process directed in MAP-21 establishing a consolidated application that uses the HSP States submit under the Section 402 program as a single application. The information required to be submitted for these grants includes the HSP consisting of information on the highway safety planning process, performance plan, highway safety countermeasure strategies and projects, performance report, certifications and assurances, and application materials that covers Section 405 grants and the reauthorized Section 1906 grant. In addition, States must submit an annual report evaluating the State's progress in achieving performance targets.
Under this IFR, the agency has taken significant steps to streamline the application process. This includes allowing States to more easily cross reference sections of their HSP under Section 402 where similar information is required to be submitted to qualify for a Section 405 grant and the introduction of a revised electronic submission process. As discussed above, in accordance with FAST Act requirements that require the agency to make greater use of an electronic application process, the agency intends to start using the Grants Management Solutions Suite (GMSS) for fiscal year 2018 grants. GMSS replaces the current grants tracking system and represents an enhanced and improved electronic system that will allow States to apply for and receive grants and also manage grants and invoicing electronically. The agency's approach will contribute overall to reducing the paperwork requirements associated with responding to the statutory requirements.
The Highway Safety Plan (HSP) is a planning document for a State's entire traffic safety program and outlines the countermeasure strategies, program activities, and funding for key program areas as identified by State and Federal data and problem identification. By statute, States must submit and NHTSA must approve the HSP as a condition of Section 402 grant funds. States also are required to submit their Sections 405
The estimated burden hours for the collection of information are based on all eligible respondents for each of the grants:
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•
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We estimate that it will take each respondent approximately 240 hours to collect, review and submit the required information to NHTSA for the Section 402 program. We further estimate that it will take each respondent approximately 180 hours to collect, review and submit the required information to NHTSA for the Section 405 program. Based on the above information, the estimated annual burden hours for all respondents are 23,760 hours.
Assuming the average salary of individuals responsible for submitting the information is $50.00 per hour, the estimated cost for each respondent is $21,000; the estimated total cost for all respondents is $1,197,000. These estimates are based on every eligible respondent submitting the required information for every available grant every year. However, all States do not apply for and receive a grant each year under each of these programs. Similarly, under Section 405 grants, some requirements allow States to submit a single application covering multiple years allowing States to simply recertify in subsequent years. Considering the agency's steps to streamline the current submission process under this IFR and the greater use of an electronic submission process beginning in fiscal year 2018, these estimates represent the highest possible burden hours and amounts possible for States submitting the required information.
Comments are invited on:
• Whether the collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility.
• Whether the Agency's estimate for the burden of the information collection is accurate.
• Ways to minimize the burden of the collection of information on respondents, including the use of automated collection techniques or other forms of information technology.
The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in expenditures by State, local or tribal governments, in the aggregate, or by the private sector, of more than $100 million annually (adjusted annually for inflation with base year of 1995). This IFR would not meet the definition of a Federal mandate because the resulting annual State expenditures would not exceed the minimum threshold. The program is voluntary and States that choose to apply and qualify would receive grant funds.
NHTSA has considered the impacts of this rulemaking action for the purposes of the National Environmental Policy Act. The agency has determined that this IFR would not have a significant impact on the quality of the human environment.
Executive Order 13211 (66 FR 28355, May 18, 2001) applies to any rulemaking that: (1) Is determined to be economically significant as defined under Executive Order 12866, and is likely to have a significantly adverse effect on the supply of, distribution of, or use of energy; or (2) that is designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action. This rulemaking is not likely to have a significantly adverse effect on the supply of, distribution of, or use of energy. This rulemaking has not been designated as a significant energy action. Accordingly, this rulemaking is not subject to Executive Order 13211.
The agency has analyzed this IFR under Executive Order 13175, and has determined that today's action would not have a substantial direct effect on one or more Indian tribes, would not impose substantial direct compliance costs on Indian tribal governments, and would not preempt tribal law. Therefore, a tribal summary impact statement is not required.
Executive Order 12866 and the President's memorandum of June 1, 1998, require each agency to write all rules in plain language. Application of the principles of plain language includes consideration of the following questions:
• Have we organized the material to suit the public's needs?
• Are the requirements in the rule clearly stated?
• Does the rule contain technical language or jargon that isn't clear?
• Would a different format (grouping and order of sections, use of headings, paragraphing) make the rule easier to understand?
• Would more (but shorter) sections be better?
• Could we improve clarity by adding tables, lists, or diagrams?
• What else could we do to make the rule easier to understand?
The Department of Transportation assigns a regulation identifier number (RIN) to each regulatory action listed in the Unified Agenda of Federal Regulations. The FAST Act requires NHTSA to award highway safety grants pursuant to rulemaking. (Section 4001(d), FAST Act) The Regulatory Information Service Center publishes the Unified Agenda in or about April and October of each year. You may use the RIN contained in the heading at the beginning of this document to find this action in the Unified Agenda.
Please note that anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
Your comments must be written and in English. To ensure that your comments are correctly filed in the Docket, please include the docket number of this document in your comments.
Your comments must not be more than 15 pages long. (49 CFR 553.21). We established this limit to encourage you to write your primary comments in a concise fashion. However, you may attach necessary additional documents to your comments. There is no limit on the length of the attachments.
Comments may also be submitted to the docket electronically by logging onto the Docket Management System Web site at
Please note that pursuant to the Data Quality Act, in order for substantive data to be relied upon and used by the agency, it must meet the information quality standards set forth in the OMB and DOT Data Quality Act guidelines. Accordingly, we encourage you to consult the guidelines in preparing your comments. OMB's guidelines may be accessed at
If you wish Docket Management to notify you upon its receipt of your comments, enclose a self-addressed, stamped postcard in the envelope containing your comments. Upon receiving your comments, Docket Management will return the postcard by mail.
If you wish to submit any information under a claim of confidentiality, you should submit three copies of your complete submission, including the information you claim to be confidential business information, to the Chief Counsel, NHTSA, at the address given above under
We will consider all comments received before the close of business on the comment closing date indicated above under
You may read the comments received by the docket at the address given above under
Please note that even after the comment closing date, we will continue to file relevant information in the docket as it becomes available. Further, some people may submit late comments. Accordingly, we recommend that you periodically check the Docket for new material. You can arrange with the docket to be notified when others file comments in the docket. See
Grant programs—Transportation, Highway safety, Intergovernmental relations, Reporting and recordkeeping requirements, Administrative practice and procedure, Alcohol abuse, Drug abuse, Motor vehicles—motorcycles.
For the reasons discussed in the preamble, under the authority of 23 U.S.C. 401
23 U.S.C. 402; 23 U.S.C. 405; Sec. 1906, Pub. L. 109-59, 119 Stat. 1468, as amended by Sec. 4011, Pub. L. 114-94, 129
This part establishes uniform procedures for State highway safety programs authorized under 23 U.S.C. Chapter 4 and Sec. 1906, Public Law 109-59, as amended by Sec. 4011, Public Law 114-94.
As used in this part—
(a)
(b)
(1) Develop and execute the Highway Safety Plan and highway safety program in the State;
(2) Manage Federal grant funds effectively and efficiently and in accordance with all Federal and State requirements;
(3) Obtain information about highway safety programs and projects administered by other State and local agencies;
(4) Maintain or have access to information contained in State highway safety data systems, including crash, citation or adjudication, emergency medical services/injury surveillance, roadway and vehicle record keeping systems, and driver license data;
(5) Periodically review and comment to the Governor on the effectiveness of programs to improve highway safety in the State from all funding sources that the State plans to use for such purposes;
(6) Provide financial and technical assistance to other State agencies and political subdivisions to develop and carry out highway safety strategies and projects; and
(7) Establish and maintain adequate staffing to effectively plan, manage, and provide oversight of projects approved in the HSP and to properly administer the expenditure of Federal grant funds.
(c)
(1) Develop and prepare the HSP based on evaluation of highway safety data, including crash fatalities and injuries, roadway, driver and other data sources to identify safety problems within the State;
(2) Establish projects to be funded within the State under 23 U.S.C. Chapter 4 based on identified safety problems and priorities and projects under Section 1906;
(3) Conduct a risk assessment of subrecipients and monitor subrecipients based on risk, as provided in 2 CFR 200.331;
(4) Provide direction, information and assistance to subrecipients concerning highway safety grants, procedures for participation, development of projects and applicable Federal and State regulations and policies;
(5) Encourage and assist subrecipients to improve their highway safety planning and administration efforts;
(6) Review and approve, and evaluate the implementation and effectiveness of, State and local highway safety programs and projects from all funding sources that the State plans to use under the HSP, and approve and monitor the expenditure of grant funds awarded under 23 U.S.C. Chapter 4 and Section 1906;
(7) Assess program performance through analysis of highway safety data and data-driven performance measures;
(8) Ensure that the State highway safety program meets the requirements of 23 U.S.C. Chapter 4, Section 1906 and applicable Federal and State laws, including but not limited to the standards for financial management systems required under 2 CFR 200.302 and internal controls required under 2 CFR 200.303;
(9) Ensure that all legally required audits of the financial operations of the State Highway Safety Agency and of the use of highway safety grant funds are conducted;
(10) Track and maintain current knowledge of changes in State statutes or regulations that could affect State qualification for highway safety grants or transfer programs;
(11) Coordinate the HSP and highway safety data collection and information systems activities with other federally and non-federally supported programs relating to or affecting highway safety, including the State strategic highway safety plan as defined in 23 U.S.C. 148(a); and
(12) Administer Federal grant funds in accordance with Federal and State requirements, including 2 CFR parts 200 and 1201.
If any deadline or due date in this part falls on a Saturday, Sunday or Federal holiday, the applicable deadline or due date shall be the next business day.
To apply for any highway safety grant under 23 U.S.C. Chapter 4 and Section 1906, a State shall submit electronically a Highway Safety Plan meeting the requirements of this subpart.
The State's Highway Safety Plan documents a State's highway safety program that is data-driven in establishing performance targets and selecting the countermeasure strategies and projects to meet performance targets. Each fiscal year, the State's HSP shall consist of the following components:
(a)
(2) Identification of the participants in the processes (
(3) Description and analysis of the State's overall highway safety problems as identified through an analysis of data, including but not limited to fatality, injury, enforcement, and judicial data, to be used as a basis for setting performance targets and developing countermeasure strategies.
(4) Discussion of the methods for project selection (
(5) List of information and data sources consulted; and
(6) Description of the outcomes from the coordination of the HSP, data collection, and information systems with the State SHSP.
(b)
(c)
(2) All performance measures developed by NHTSA in collaboration with the Governors Highway Safety Association (“Traffic Safety Performance Measures for States and Federal Agencies” (DOT HS 811 025)),
(i) At least one performance measure and performance target that is data-driven shall be provided for each program area that enables the State to track progress toward meeting the quantifiable annual target;
(ii) For each program area performance measure, the State shall provide—
(A) Documentation of current safety levels (baseline) calculated based on a 5-year rolling average for common performance measures in the HSP and HSIP, as provided in paragraph (c)(2)(iii) of this section;
(B) Quantifiable performance targets; and
(C) Justification for each performance target that explains how the target is data-driven, including a discussion of the factors that influenced the performance target selection; and
(iii) State HSP performance targets are identical to the State DOT targets for common performance measures (fatality, fatality rate, and serious injuries) reported in the HSIP annual report, as coordinated through the State SHSP. These performance measures shall be based on a 5-year rolling average that is calculated by adding the number of fatalities or number of serious injuries as it pertains to the performance measure for the most recent 5 consecutive calendar years ending in the year for which the targets are established. The ARF may be used, but only if final FARS is not yet available. The sum of the fatalities or sum of serious injuries is divided by five and then rounded to the tenth decimal place for fatality or serious injury numbers and rounded to the thousandth decimal place for fatality rates.
(3) Additional performance measures not included under paragraph (c)(2) of this section. For program areas where performance measures have not been jointly developed (
(d)
(i) An assessment of the overall projected traffic safety impacts of the countermeasure strategies chosen and of the proposed or approved projects to be funded; and
(ii) A description of the linkage between program area problem identification data, performance targets, identified countermeasure strategies and allocation of funds to projects.
(2) Description of each project within the countermeasure strategies in paragraph (d)(1) of this section that the State plans to implement to reach the performance targets identified in paragraph (c) of this section, including, at a minimum—
(i) A list and description of the projects that the State will conduct to support the countermeasure strategies within each program area to address its problems and achieve its performance targets; and
(ii) For each project, identification of the project name and description, sub-recipient, funding sources, funding amounts, amount for match, indirect cost, local benefit and maintenance of effort (as applicable), project number, and program funding code.
(3) Data and data analysis or other documentation consulted that support the effectiveness of proposed countermeasure strategies and support the selection of and funding allocation for the proposed projects described in paragraph (d)(2) of this section (
(4) For innovative countermeasure strategies (
(5) Evidence-based traffic safety enforcement program (TSEP) to prevent traffic violations, crashes, and crash fatalities and injuries in areas most at risk for such incidents, provided that—
(i) The State shall identify the projects that collectively constitute a data-driven TSEP and include—
(A) An analysis of crashes, crash fatalities, and injuries in areas of highest risk; and
(B) An explanation of the deployment of resources based on that analysis.
(ii) The State shall describe how it plans to monitor the effectiveness of enforcement activities, make ongoing adjustments as warranted by data, and update the countermeasure strategies and projects in the HSP, as applicable, in accordance with this part.
(6) The planned high-visibility enforcement (HVE) strategies to support national mobilizations. The State shall implement activities in support of national highway safety goals to reduce motor vehicle related fatalities that also reflect the primary data-related crash factors within the State, as identified by the State highway safety planning process, including:
(i) Participation in the National high-visibility law enforcement mobilizations in accordance with 23 U.S.C. 404. The planned high-visibility enforcement strategies to support the national mobilizations shall include not less than three mobilization campaigns in each fiscal year to reduce alcohol-impaired or drug-impaired operation of motor vehicles and increase use of seatbelts by occupants of motor vehicles; and
(ii) Submission of information regarding mobilization participation (
(e)
(f)
(g)
(a) A State shall submit its Highway Safety Plan electronically to NHTSA no later than 11:59 p.m. EDT on July 1 preceding the fiscal year to which the HSP applies.
(b) Failure to meet this deadline may result in delayed approval and funding of a State's Section 402 grant or disqualification from receiving Section 405 or racial profiling data collection grants.
The State's highway safety program under Section 402 shall be subject to the following conditions, and approval under § 1300.14 of this part shall be deemed to incorporate these conditions:
(a)
(2) P&A tasks and related costs shall be described in the P&A module of the State's Highway Safety Plan. The State's matching share shall be determined on the basis of the total P&A costs in the module.
(b)
(c)
(d)
(i) Certify, as provided in Appendix A, that automated traffic enforcement systems are not used on any public road in the State; or
(ii)(A) Conduct a survey during the fiscal year of the grant meeting the requirements of paragraph (d)(2) of this section and provide assurances, as provided in Appendix A, that it will do so; and
(B) Submit the survey results to the NHTSA Regional office no later than March 1 of the fiscal year of the grant.
(2)
(i) List of automated traffic enforcement systems in the State;
(ii) Adequate data to measure the transparency, accountability, and safety attributes of each automated traffic enforcement system; and
(iii) Comparison of each automated traffic enforcement system with—
(A) “Speed Enforcement Camera Systems Operational Guidelines” (DOT HS 810 916), as updated; and
(B) “Red Light Camera Systems Operational Guidelines” (FHWA-SA-05-002), as updated.
(a)
(b)
(1) For Section 402 grants, the Regional Administrator shall issue—
(i) A letter of approval, with conditions, if any, to the Governor's Representative for Highway Safety; or
(ii) A letter of disapproval to the Governor's Representative for Highway Safety informing the State of the reasons for disapproval and requiring resubmission of the HSP with proposed revisions necessary for approval.
(2) For Section 405 and Section 1906 grants, the NHTSA Administrator shall notify States in writing of Section 405 and Section 1906 grant awards and specify any conditions or limitations imposed by law on the use of funds.
(c)
(a) Except as provided in paragraph (b) of this section, on October 1 of each fiscal year, or soon thereafter, the NHTSA Administrator shall, in writing, distribute funds available for obligation under 23 U.S.C. Chapter 4 and Section 1906 to the States and specify any conditions or limitations imposed by law on the use of the funds.
(b) In the event that authorizations exist but no applicable appropriation act has been enacted by October 1 of a fiscal year, the NHTSA Administrator may, in writing, distribute a part of the funds authorized under 23 U.S.C. Chapter 4 and Section 1906 contract authority to the States to ensure program continuity, and in that event shall specify any conditions or limitations imposed by law on the use of the funds. Upon appropriation of grant funds, the NHTSA Administrator shall, in writing, promptly adjust the obligation limitation and specify any conditions or limitations imposed by law on the use of the funds.
(c) Funds distributed under paragraph (a) or (b) of this section shall be available for expenditure by the States to satisfy the Federal share of expenses under the approved Highway Safety Plan, and shall constitute a contractual obligation of the Federal Government, subject to any conditions or limitations identified in the distributing document. Such funds shall be available for expenditure by the States as provided in § 1300.41(b), after which the funds shall lapse.
(d) Notwithstanding the provisions of paragraph (c) of this section, reimbursement of State expenses or advance payment of 23 U.S.C. Chapter 4 and Section 1906 funds shall be
(a)
(b)
(c)
(2)
(ii) For all grant applications under Section 405 and Section 1906, if the State is relying on specific elements of the HSP as part of its application materials for grants under this subpart, the State shall include the specific page numbers in the HSP.
(d)
(e)
(2) Notwithstanding paragraph (e)(1) of this section, and except as provided in §§ 1300.25(k) and 1300.28(c)(2), a grant awarded to a State in a fiscal year under Section 405 may not exceed 10 percent of the total amount made available for that subsection for that fiscal year.
(3) Except for amounts made available for grants under § 1300.28, if it is determined after review of applications that funds for a grant program under Section 405 will not all be distributed, such funds shall be transferred to Section 402 and shall distributed in proportion to the amount each State received under Section 402 for fiscal year 2009 to ensure, to the maximum extent practicable, that each State receives the maximum funding for which it qualifies.
(f)
(2) The Federal share of the costs of activities or programs funded with grants awarded to the U.S. Virgin Islands, Guam, American Samoa and the Commonwealth of the Northern Mariana Islands shall be 100 percent.
(a)
(b)
(c)
(d)
(1)
(2)
(3)
(A) The total number of inspection stations/events in the State; and
(B) The total number of inspection stations and/or inspection events that service rural and urban areas and at-risk populations (
(ii) Certification, signed by the Governor's Representative for Highway Safety, that the inspection stations/events are staffed with at least one current nationally Certified Child Passenger Safety Technician.
(4)
(5)
(e)
(1)
(2)
(i) Require—
(A) Each occupant riding in a passenger motor vehicle who is under eight years of age, weighs less than 65 pounds and is less than four feet, nine inches in height to be secured in an age-appropriate child restraint;
(B) Each occupant riding in a passenger motor vehicle other than an occupant identified in paragraph (e)(2)(i)(A) of this section to be secured in a seat belt or age-appropriate child restraint;
(C) A minimum fine of $25 per unrestrained occupant for a violation of the occupant protection statutes described in paragraph (e)(2)(i) of this section.
(ii) Notwithstanding paragraph (e)(2)(i), permit no exception from coverage except for—
(A) Drivers, but not passengers, of postal, utility, and commercial vehicles that make frequent stops in the course of their business;
(B) Persons who are unable to wear a seat belt or child restraint because of a medical condition, provided there is written documentation from a physician;
(C) Persons who are unable to wear a seat belt or child restraint because all other seating positions are occupied by persons properly restrained in seat belts or child restraints;
(D) Emergency vehicle operators and passengers in emergency vehicles during an emergency;
(E) Persons riding in seating positions or vehicles not required by Federal Motor Vehicle Safety Standards to be equipped with seat belts; or
(F) Passengers in public and livery conveyances.
(3)
(4)
(i) Drivers on rural roadways;
(ii) Unrestrained nighttime drivers;
(iii) Teenage drivers;
(iv) Other high-risk populations identified in the occupant protection program area required under paragraph (d)(1) of this section.
(5)
(i) Date of NHTSA-facilitated program assessment that was conducted within five years prior to the application due date that evaluates the occupant protection program for elements designed to increase seat belt usage in the State;
(ii) Multi-year strategic plan based on input from Statewide stakeholders (task force) under which the State developed—
(A)
(B)
(C)
(D)
(iii) The name and title of the State's designated occupant protection coordinator responsible for managing the occupant protection program in the State, including developing the occupant protection program area of the HSP and overseeing the execution of the projects designated in the HSP; and
(iv) A list that contains the names, titles and organizations of the Statewide occupant protection task force membership that includes agencies and organizations that can help develop, implement, enforce and evaluate occupant protection programs.
(6)
(f)
(i) To support high-visibility enforcement mobilizations, including paid media that emphasizes publicity for the program, and law enforcement;
(ii) To train occupant protection safety professionals, police officers, fire and emergency medical personnel, educators, and parents concerning all aspects of the use of child restraints and occupant protection;
(iii) To educate the public concerning the proper use and installation of child restraints, including related equipment and information systems;
(iv) To provide community child passenger safety services, including programs about proper seating positions for children and how to reduce the improper use of child restraints;
(v) To establish and maintain information systems containing data about occupant protection, including the collection and administration of child passenger safety and occupant protection surveys; or
(vi) To purchase and distribute child restraints to low-income families, provided that not more than five percent of the funds received in a fiscal year are used for such purpose.
(2)
(a)
(b)
(1)
(i) At least three meeting dates of the TRCC during the 12 months immediately preceding the application due date;
(ii) Name and title of the State's Traffic Records Coordinator;
(iii) List of TRCC members by name, title, home organization and the core safety database represented, provided that at a minimum, at least one member represents each of the following core safety databases:
(A) Crash;
(B) Citation or adjudication;
(C) Driver;
(D) Emergency medical services or injury surveillance system;
(E) Roadway; and
(F) Vehicle.
(2)
(i) Describes specific, quantifiable and measurable improvements, as described in paragraph (b)(3) of this section, that are anticipated in the State's core safety databases, including crash, citation or adjudication, driver, emergency medical services or injury surveillance system, roadway, and vehicle databases;
(ii) Includes a list of all recommendations from its most recent highway safety data and traffic records system assessment;
(iii) Identifies which recommendations described in paragraph (b)(2)(ii) of this section the State intends to address in the fiscal year, the projects in the HSP that implement each recommendation, and the performance measures to be used to demonstrate quantifiable and measurable progress; and
(iv) Identifies which recommendations described in paragraph (b)(2)(ii) of this section the State does not intend to address in the fiscal year and explains the reason for not implementing the recommendations.
(3)
(i) A written description of the performance measures that clearly identifies which performance attribute for which core database the State is relying on to demonstrate progress using the methodology set forth in the “Model Performance Measures for State Traffic Records Systems” (DOT HS 811 441), as updated; and
(ii) Supporting documentation covering a contiguous 12 month performance period starting no earlier than April 1 of the calendar year prior to the application due date that demonstrates quantitative improvement when compared to the comparable 12 month baseline period.
(4)
(c)
(d)
(a)
(b)
(i) Abstain totally from alcohol or drugs for a period of time; and
(ii) Be subject to testing for alcohol or drugs at least twice per day at a testing location, by continuous transdermal alcohol monitoring via an electronic
(c)
(d)
(1) The State shall use the funds awarded under 23 U.S.C. 405(d)(1) only for the implementation and enforcement of programs authorized in paragraph (j) of this section; and
(2) The lead State agency responsible for impaired driving programs shall maintain its aggregate expenditures for impaired driving programs at or above the average level of such expenditures in fiscal years 2014 and 2015.
(e)
(i) Section that describes the authority and basis for the operation of the Statewide impaired driving task force, including the process used to develop and approve the plan and date of approval;
(ii) List that contains names, titles and organizations of all task force members, provided that the task force includes key stakeholders from the State highway safety agency, law enforcement and the criminal justice system (
(iii) Strategic plan based on the most recent version of Highway Safety Program Guideline No. 8—Impaired Driving, which, at a minimum, covers the following—
(A) Prevention;
(B) Criminal justice system;
(C) Communication programs;
(D) Alcohol and other drug misuse, including screening, treatment, assessment and rehabilitation; and
(E) Program evaluation and data.
(2)
(f)
(i) Review that addresses in each plan area any related recommendations from the assessment of the State's impaired driving program;
(ii) Detailed project list for spending grant funds on impaired driving activities listed in paragraph (j)(4) of this section that must include high-visibility enforcement efforts, at the
(iii) Description of how the spending supports the State's impaired driving program and achievement of its performance targets, at the level of detail required under § 1300.11(d).
(2)
(g)
(2)
(i) The individual is required to operate an employer's motor vehicle in the course and scope of employment and the business entity that owns the vehicle is not owned or controlled by the individual;
(ii) The individual is certified in writing by a physician as being unable to provide a deep lung breath sample for analysis by an ignition interlock device; or
(iii) A State-certified ignition interlock provider is not available within 100 miles of the individual's residence.
(h)
(1) Legal citation(s) to State statute demonstrating that the State has enacted and is enforcing a statute that requires all individuals convicted of driving under the influence of alcohol or of driving while intoxicated to receive a restriction on driving privileges, unless an exception in paragraph (g)(2) of this section applies, for a period of not less than 30 days; and
(2) Legal citation(s) to State statute or submission of State program information that authorizes a Statewide 24-7 sobriety program.
(i)
(2) The amount available for grants under 23 U.S.C. 405(d)(6)(A) shall not exceed 12 percent of the total amount made available to States under 23 U.S.C. 405(d) for the fiscal year.
(3) The amount available for grants under 23 U.S.C. 405(d)(6)(B) shall not exceed 3 percent of the total amount made available to States under 23 U.S.C. 405(d) for the fiscal year.
(j)
(i) High-visibility enforcement efforts;
(ii) Hiring a full-time or part-time impaired driving coordinator of the State's activities to address the enforcement and adjudication of laws regarding driving while impaired by alcohol;
(iii) Court support of high-visibility enforcement efforts, training and education of criminal justice professionals (including law enforcement, prosecutors, judges, and probation officers) to assist such professionals in handling impaired driving cases, hiring traffic safety resource prosecutors, hiring judicial outreach liaisons, and establishing driving while intoxicated courts;
(iv) Alcohol ignition interlock programs;
(v) Improving blood-alcohol concentration testing and reporting;
(vi) Paid and earned media in support of high-visibility enforcement of impaired driving laws, and conducting standardized field sobriety training, advanced roadside impaired driving evaluation training, and drug recognition expert training for law enforcement, and equipment and related expenditures used in connection with impaired driving enforcement;
(vii) Training on the use of alcohol and drug screening and brief intervention;
(viii) Training for and implementation of impaired driving assessment programs or other tools designed to increase the probability of identifying the recidivism risk of a person convicted of driving under the influence of alcohol, drugs, or a combination of alcohol and drugs and to determine the most effective mental health or substance abuse treatment or sanction that will reduce such risk;
(ix) Developing impaired driving information systems; or
(x) Costs associated with a 24-7 sobriety program.
(2)
(i) Grant funds awarded under 23 U.S.C. 405(d) for programs designed to reduce impaired driving based on problem identification, in accordance with § 1300.11; and
(ii) Up to 50 percent of grant funds awarded under 23 U.S.C. 405(d) for any eligible project or activity under Section 402.
(3)
(4)
(i) High-visibility enforcement efforts; and
(ii) Any of the eligible uses described in paragraph (j)(1) of this section or programs designed to reduce impaired driving based on problem identification, in accordance with § 1300.11, if all proposed uses are described in a Statewide impaired driving plan submitted to and approved by NHTSA in accordance with paragraph (f) of this section.
(5)
(a)
(b)
(c)
(1) Sample distracted driving questions from the State's driver's license examination; and
(2) Legal citations to the State statute demonstrating compliance with the following requirements:
(i)
(A) Prohibit all drivers from texting through a personal wireless communications device while driving;
(B) Make a violation of the statute a primary offense;
(C) Establish a minimum fine of $25 for a violation of the statute; and
(D) Not include an exemption that specifically allows a driver to text through a personal wireless communication device while stopped in traffic.
(ii)
(A) Prohibit a driver who is younger than 18 years of age or in the learner's permit or intermediate license stage set forth in § 1300.26(d) and (e) from using a personal wireless communications device while driving;
(B) Make a violation of the statute a primary offense;
(C) Establish a minimum fine of $25 for a violation of the statute; and
(D) Not include an exemption that specifically allows a driver to text through a personal wireless communication device while stopped in traffic.
(iii)
(A) A driver who uses a personal wireless communications device to contact emergency services;
(B) Emergency services personnel who use a personal wireless communications device while operating an emergency services vehicle and engaged in the performance of their duties as emergency services personnel; or
(C) An individual employed as a commercial motor vehicle driver or a school bus driver who uses a personal wireless communications device within the scope of such individual's employment if such use is permitted under the regulations promulgated pursuant to 49 U.S.C. 31136.
(d)
(2)
(3)
(e)
(1) For fiscal year 2017—
(i) The State has enacted and is enforcing a basic text messaging statute that applies to drivers of all ages;
(ii) The State statute makes a violation of the basic text messaging statute a primary or secondary offense; and
(iii) The State is not eligible for a Comprehensive Distracted Driving Grant under paragraph (c) of this section.
(2) For fiscal year 2018—
(i) The State has enacted and is enforcing a basic text messaging statute that applies to drivers of all ages;
(ii) The State statute makes a violation of the basic text messaging statute a primary offense;
(iii) The State imposes a fine for a violation of the basic text messaging statute;
(iv) The State has enacted and is enforcing a statute that prohibits drivers under the age of 18 from using a personal wireless communications device while driving; and
(v) The State is not eligible for a Comprehensive Distracted Driving Grant under paragraph (c) of this section.
(3) For purposes of this paragraph (e), “basic text messaging statute” means a statute that prohibits a driver, for the purpose of written communication, from manually inputting or reading from an electronic device while driving.
(4)
(ii)
(A) In fiscal year 2017, a State may elect to use up to 15 percent of grant funds awarded under 23 U.S.C. 405(e)(6) for any eligible project or activity under Section 402.
(B) In fiscal year 2018, a State may elect to use up to 25 percent of grant funds awarded under 23 U.S.C. 405(e)(6) for any eligible project or activity under Section 402.
(f)
(ii) The amount available for grants under 23 U.S.C. 405(e)(6) shall not exceed 25 percent of the total amount made available to States under 23 U.S.C. 405(e) for fiscal years 2017 and 2018.
(a)
(b)
(c)
(d)
(e)
(1) A certification identifying the head of the designated State authority over motorcyclist safety issues and stating that the head of the designated State authority over motorcyclist safety issues has approved and the State has adopted one of the following introductory rider curricula:
(i) Motorcycle Safety Foundation Basic Rider Course;
(ii) TEAM OREGON Basic Rider Training;
(iii) Idaho STAR Basic I;
(iv) California Motorcyclist Safety Program Motorcyclist Training Course;
(v) A curriculum that has been approved by the designated State authority and NHTSA as meeting NHTSA's Model National Standards for Entry-Level Motorcycle Rider Training; and
(2) A list of the counties or political subdivisions in the State where motorcycle rider training courses will be conducted during the fiscal year of the grant and the number of registered motorcycles in each such county or political subdivision according to official State motor vehicle records, provided that the State must offer at least one motorcycle rider training course in counties or political subdivisions that collectively account for a majority of the State's registered motorcycles.
(f)
(1) A certification identifying head of the designated State authority over motorcyclist safety issues and stating that the State's motorcyclist awareness program was developed by or in coordination with the designated State authority over motorcyclist safety issues; and
(2) One or more performance measures and corresponding performance targets developed for motorcycle awareness at the level of detail required under § 1300.11(c) that identifies, using State crash data, the counties or political subdivisions within the State with the highest number of motorcycle crashes involving a motorcycle and another motor vehicle. Such data shall be from the most recent calendar year for which final State crash data is available, but data no older than three calendar years prior to the application due date (
(3) Countermeasure strategies and projects, at the level of detail required under § 1300.11(d), demonstrating that the State will implement data-driven programs in a majority of counties or political subdivisions where there is at least one motorcycle crash causing a serious or fatal injury. The State shall select countermeasure strategies and projects to address the State's motorcycle safety problem areas in order to meet the performance targets identified in paragraph (f)(2) of this section.
(g)
(1) Submit in its HSP State data showing the total number of motor vehicle crashes involving motorcycles in the State for the most recent calendar year for which final State crash data is available, but data no older than three calendar years prior to the application due date and the same type of data for the calendar year immediately prior to that calendar year (
(2) Experience a reduction of at least one in the number of motorcyclist fatalities for the most recent calendar year for which final FARS data is available as compared to the final FARS data for the calendar year immediately prior to that year; and
(3) Based on State crash data expressed as a function of 10,000 motorcycle registrations (using FHWA motorcycle registration data), experience at least a whole number reduction in the rate of crashes involving motorcycles for the most recent calendar year for which final State crash data is available, but data no older than three calendar years prior to the application due date, as compared to the calendar year immediately prior to that year.
(h)
(1) One or more performance measures and corresponding performance targets developed to reduce impaired motorcycle operation at the level of detail required under § 1300.11(c). Each performance measure and performance target shall identify
(2) Countermeasure strategies and projects, at the level of detail required under § 1300.11(d), demonstrating that the State will implement data-driven programs designed to reach motorcyclists in those jurisdictions where the incidence of motorcycle crashes involving an impaired operator is highest (
(i)
(1) Submit in its HSP State data showing the total number of reported crashes involving alcohol- and drug-impaired motorcycle operators in the State for the most recent calendar year for which final State crash data is available, but data no older than three calendar years prior to the application due date and the same type of data for the calendar year immediately prior to that year (
(2) Experience a reduction of at least one in the number of fatalities involving alcohol-impaired and drug-impaired motorcycle operators for the most recent calendar year for which final FARS data is available as compared to the final FARS data for the calendar year immediately prior to that year; and
(3) Based on State crash data expressed as a function of 10,000 motorcycle registrations (using FHWA motorcycle registration data), experience at least a whole number reduction in the rate of reported crashes involving alcohol-and drug-impaired motorcycle operators for the most recent calendar year for which final State crash data is available, but data no older than three calendar years prior to the application due date, as compared to the calendar year immediately prior to that year.
(j)
(1) To demonstrate compliance as a Law State, the State shall submit, in accordance with part 7 of appendix B, the legal citation to the statutes or regulations requiring that all fees collected by the State from motorcyclists for the purposes of funding motorcycle training and safety programs are to be used for motorcycle training and safety programs and the legal citations to the State's current fiscal year appropriation (or preceding fiscal year appropriation, if the State has not enacted a law at the time of the State's application) appropriating all such fees to motorcycle training and safety programs.
(2) To demonstrate compliance as a Data State, the State shall submit, in accordance with part 7 of appendix B, data or documentation from official records from the previous State fiscal year showing that all fees collected by the State from motorcyclists for the purposes of funding motorcycle training and safety programs were, in fact, used for motorcycle training and safety programs. Such data or documentation shall show that revenues collected for the purposes of funding motorcycle training and safety programs were placed into a distinct account and expended only for motorcycle training and safety programs.
(k)
(l)
(i) Improvements to motorcyclist safety training curricula;
(ii) Improvements in program delivery of motorcycle training to both urban and rural areas, including—
(A) Procurement or repair of practice motorcycles;
(B) Instructional materials;
(C) Mobile training units; and
(D) Leasing or purchasing facilities for closed-course motorcycle skill training;
(iii) Measures designed to increase the recruitment or retention of motorcyclist safety training instructors; or
(iv) Public awareness, public service announcements, and other outreach programs to enhance driver awareness of motorcyclists, including “share-the-road” safety messages developed using Share-the-Road model language available on NHTSA's Web site at
(2)
(3)
(a)
(b)
(c)
(d)
(1) Applies to any driver, prior to being issued by the State any permit, license, or endorsement to operate a motor vehicle on public roadways other than a learner's permit, who—
(i) Is younger than 18 years of age; and
(ii) Has not been issued an intermediate license or unrestricted driver's license by any State;
(2) Commences only after an applicant for a learner's permit passes a vision test and a knowledge assessment (
(3) Is in effect for a period of at least 6 months, and remains in effect until the learner's permit holder—
(i) Reaches at least 16 years of age and enters the intermediate stage; or
(ii) Reaches 18 years of age;
(4) Requires the learner's permit holder to be accompanied and supervised, at all times while operating a motor vehicle, by a licensed driver who is at least 21 years of age or is a State-certified driving instructor;
(5) Requires the learner's permit holder to either—
(i) Complete a State-certified driver education or training course; or
(ii) Receive at least 50 hours of behind-the-wheel training, with at least 10 of those hours at night, with a licensed driver who is at least 21 years of age or is a State-certified driving instructor;
(6) Prohibits the learner's permit holder from using a personal wireless communications device while driving (as defined in § 1300.24(b)) except as permitted under § 1300.24(c)(2)(iii), provided that the State's statute—
(i) Makes a violation of the prohibition a primary offense; and
(ii) Does not include an exemption that specifically allows a driver to text through a personal wireless communication device while stopped in traffic; and
(7) Requires that, in addition to any other penalties imposed by State statute, the duration of the learner's permit stage be extended if the learner's permit holder is convicted of a driving-related offense or misrepresentation of a driver's true age during at least the first 6 months of that stage.
(e)
(1) Commences—
(i) After an applicant younger than 18 years of age successfully completes the learner's permit stage;
(ii) Prior to the applicant being issued by the State another permit, license, or endorsement to operate a motor vehicle on public roadways other than an intermediate license; and
(iii) Only after the applicant passes a behind-the-wheel driving skills assessment;
(2) Is in effect for a period of at least 6 months, and remains in effect until the intermediate license holder reaches at least 17 years of age;
(3) Requires the intermediate license holder to be accompanied and supervised, while operating a motor vehicle between the hours of 10:00 p.m. and 5:00 a.m. during the first 6 months of the intermediate stage, by a licensed driver who is at least 21 years of age or is a State-certified driving instructor, except when operating a motor vehicle for the purposes of work, school, religious activities, or emergencies;
(4) Prohibits the intermediate license holder from operating a motor vehicle with more than 1 nonfamilial passenger younger than 21 years of age unless a licensed driver who is at least 21 years of age or is a State-certified driving instructor is in the motor vehicle;
(5) Prohibits the intermediate license holder from using a personal wireless communications device while driving (as defined in § 1300.24(b)) except as permitted under § 1300.24(c)(2)(iii), provided that the State's statute—
(i) Makes a violation of the prohibition a primary offense; and
(ii) Does not include an exemption that specifically allows a driver to text through a personal wireless communication device while stopped in traffic; and
(6) Requires that, in addition to any other penalties imposed by State statute, the duration of the intermediate stage be extended if the intermediate license holder is convicted of a driving-related offense or misrepresentation of a driver's true age during at least the first 6 months of that stage.
(f)
(1) The State enacted a statute prior to January 1, 2011, establishing a class of permit or license that allows drivers younger than 18 years of age to operate a motor vehicle—
(i) In connection with work performed on, or for the operation of, a farm owned by family members who are directly related to the applicant or licensee; or
(ii) If demonstrable hardship would result from the denial of a license to the licensee or applicant, provided that the State requires the applicant or licensee to affirmatively and adequately demonstrate unique undue hardship to the individual; and
(2) A driver younger than 18 years of age who possesses only the permit or license described in paragraph (f)(1) of this section and applies for any other permit, license, or endorsement to operate a motor vehicle is subject to the graduated driver's licensing requirements of paragraphs (d) and (e) of this section and is required to begin with the learner's permit stage.
(g)
(h)
(i) To enforce the State's graduated driver's licensing process;
(ii) To provide training for law enforcement personnel and other relevant State agency personnel relating to the enforcement of the State's graduated driver's licensing process;
(iii) To publish relevant educational materials that pertain directly or indirectly to the State's graduated driver's licensing law;
(iv) To carry out administrative activities to implement the State's graduated driver's licensing process; or
(v) To carry out a teen traffic safety program described in 23 U.S.C. 402(m).
(2)
(3)
(a)
(b)
(c)
(d)
(1) Training of law enforcement officials on State laws applicable to pedestrian and bicycle safety;
(2) Enforcement mobilizations and campaigns designed to enforce State traffic laws applicable to pedestrian and bicycle safety; or
(3) Public education and awareness programs designed to inform motorists, pedestrians, and bicyclists of State traffic laws applicable to pedestrian and bicycle safety.
(a)
(b)
(1) Official documents (
(2) The assurances that the State will undertake activities during the fiscal year of the grant to comply with the requirements of paragraph (b)(1) of this section and a list of one or more projects in its HSP to support the assurances.
(c)
(2) Notwithstanding § 1300.20(e)(2), the total amount of a grant awarded to a State under this section in a fiscal year may not exceed 5 percent of the funds available under this section in the fiscal year.
(d)
(1) Collecting and maintaining data on traffic stops; or
(2) Evaluating the results of the data.
Subject to the provisions of this subpart, the requirements of 2 CFR parts 200 and 1201 govern the implementation and management of State highway safety programs and projects carried out under 23 U.S.C. Chapter 4 and Section 1906.
(a)
(b)
(c)
(d)
(1) Purchases shall receive prior written approval from the Regional Administrator;
(2) Dispositions shall receive prior written approval from the Regional Administrator unless the equipment has exceeded its useful life as determined under State law and procedures.
(e)
(1) The equipment shall be identified in the grant or otherwise made known to the State in writing;
(2) The Regional Administrator shall issue disposition instructions within 120 calendar days after the equipment is determined to be no longer needed for highway safety purposes, in the absence of which the State shall follow the applicable procedures in 2 CFR parts 200 and 1201.
(f)
(1) Title shall remain vested in the Federal Government;
(2) Management shall be in accordance with Federal rules and procedures, and an annual inventory listing shall be submitted by the State;
(3) The State or its subrecipient shall request disposition instructions from the Regional Administrator when the item is no longer needed for highway safety purposes.
During the fiscal year of the grant, States may amend the HSP, except performance targets, after approval under § 1300.14. States shall document changes to the HSP electronically, including project information. Such changes are subject to approval by the Regional Administrator. The Regional Administrator must approve changes in the HSP before reimbursement of vouchers related to such changes.
(a)
(b)
(1) Project numbers for which expenses were incurred and for which reimbursement is being sought;
(2) Amount of Federal funds for reimbursement;
(3) Amount of Federal funds allocated to local benefit (provided no less than mid-year (by March 31) and with the final voucher);
(4) Amount of indirect cost;
(5) Amount of Planning and Administration costs;
(6) Matching rate (or special matching writeoff used,
(7) Program funding code.
(c)
(d)
(e)
(2) Failure to meet the deadlines specified in paragraph (d) of this section may result in delayed reimbursement.
(3) Vouchers that request reimbursement for projects whose project numbers or amounts claimed do not match the projects or exceed the estimated amount of Federal funds provided under § 1300.11(d) or amended under § 1300.32, shall be rejected, in whole or in part, until an amended project and/or estimated amount of Federal funds is submitted to and approved by the Regional Administrator in accordance with § 1300.32.
Within 90 days after the end of the fiscal year, each State shall submit electronically an Annual Report providing—
(a) An assessment of the State's progress in achieving performance targets identified in the prior year HSP;
(b) A description of the projects and activities funded and implemented along with the amount of Federal funds obligated and expended under the prior year HSP;
(c) A description of the State's evidence-based enforcement program activities;
(d) An explanation of reasons for projects that were not implemented; and
(e) A description of how the projects funded under the prior year HSP contributed to meeting the State's highway safety performance targets.
The State shall submit an appeal of any written decision by a Regional Administrator regarding the administration of the grants in writing, signed by the Governor's Representative for Highway Safety, to the Regional Administrator. The Regional Administrator shall promptly forward the appeal to the NHTSA Associate Administrator, Regional Operations and Program Delivery. The decision of the NHTSA Associate Administrator shall be final and shall be transmitted to the Governor's Representative for Highway Safety through the Regional Administrator.
(a) The State's Highway Safety Plan for a fiscal year and the State's authority to incur costs under that HSP shall expire on the last day of the fiscal year.
(b) Except as provided in paragraph (c) of this section, each State shall submit a final voucher which satisfies the requirements of § 1300.33(b) within 90 days after the expiration of the State's HSP. The final voucher constitutes the final financial reconciliation for each fiscal year.
(c) The Regional Administrator may extend the time period for no more than 30 days to submit a final voucher only in extraordinary circumstances. States shall submit a written request for an extension describing the extraordinary circumstances that necessitate an extension. The approval of any such request for extension shall be in writing, shall specify the new deadline for submitting the final voucher, and shall be signed by the Regional Administrator.
(a)
(1) The State's new Highway Safety Plan has been approved by the Regional Administrator pursuant to § 1300.14 of this part, including any amendments to the HSP pursuant to § 1300.32; and
(2) The State has assigned all available 23 U.S.C. Chapter 4 and Section 1906 funds to specific project agreements, including project numbers.
(b)
(2) NHTSA shall notify States of any such unexpended grant funds no later than 180 days prior to the end of the period of availability specified in paragraph (b)(1) of this section and inform States of the deadline for commitment. States may commit such unexpended grant funds to a specific project by the specified deadline, and shall provide documentary evidence of that commitment, including a copy of an executed project agreement, to the Regional Administrator.
(3) Grant funds committed to a specific project in accordance with paragraph (b)(2) of this section shall remain committed to that project and must be expended by the end of the succeeding fiscal year. The final voucher for that project shall be submitted within 90 days after the end of that fiscal year.
(4) NHTSA shall deobligate unexpended balances at the end of the time period in paragraph (b)(1) or (3) of this section, whichever is applicable, and the funds shall lapse.
The expiration of a Highway Safety Plan does not affect the ability of NHTSA to disallow costs and recover funds on the basis of a later audit or
Notwithstanding the expiration of a Highway Safety Plan, the provisions in 2 CFR parts 200 and 1201 and 23 CFR part 1300, including but not limited to equipment and audit, continue to apply to the grant funds authorized under 23 U.S.C. Chapter 4 and Section 1906.
Where a State is found to be in non-compliance with the requirements of the grant programs authorized under 23 U.S.C. Chapter 4 or Section 1906, or with other applicable law, the sanctions in §§ 1300.51 and 1300.52, and any other sanctions or remedies permitted under Federal law, including the special conditions of 2 CFR 200.207 and 200.388, may be applied as appropriate.
(a)
(2) If the Administrator has apportioned funds under Section 402 to a State and subsequently determines that the State is not implementing an approved highway safety program, the Administrator shall reduce the apportionment by an amount equal to not less than 20 percent, until such time as the Administrator determines that the State is implementing an approved highway safety program. The Administrator shall consider the gravity of the State's failure to implement an approved highway safety program in determining the amount of the reduction.
(i) When the Administrator determines that a State is not implementing an approved highway safety program, the Administrator shall issue to the State an advance notice, advising the State that the Administrator expects to withhold funds from apportionment or reduce the State's apportionment under Section 402. The Administrator shall state the amount of the expected withholding or reduction.
(ii) The State may, within 30 days after its receipt of the advance notice, submit documentation demonstrating that it is implementing an approved highway safety program. Documentation shall be submitted to the NHTSA Administrator, 1200 New Jersey Avenue SE., Washington, DC 20590.
(b)
(2)(i) If the Administrator concludes, after reviewing all relevant documentation submitted by the State or if the State has not responded to the advance notice, that the State did not correct its failure to have or implement an approved highway safety program, the Administrator shall issue a final notice, advising the State of the funds being withheld from apportionment or of the reduction of apportionment under Section 402 by July 31 of the fiscal year for which the funds were withheld.
(ii) The Administrator shall reapportion the withheld funds to the other States, in accordance with the formula specified in 23 U.S.C. 402(c), not later than the last day of the fiscal year.
(a)
(i) Financial stability;
(ii) Quality of management systems and ability to meet management standards prescribed in this part and in 2 CFR part 200;
(iii) History of performance. The applicant's record in managing funds received for grant programs under this part, including findings from Management Reviews;
(iv) Reports and findings from audits performed under 2 CFR part 200, subpart F, or from the reports and findings of any other available audits; and
(v) The State's ability to effectively implement statutory, regulatory, and other requirements imposed on non-Federal entities.
(2) If a State is determined to pose risk, NHTSA may increase monitoring activities and may impose any of the specific conditions of 2 CFR 200.207, as appropriate.
(b)
(a) Except as provided in paragraph (b) of this section, fiscal year 2017 grant applications due July 1, 2016 shall be governed by the following provisions:
(1) For the Highway Safety Plans, 23 CFR 1200.11 (April 1, 2015);
(2) For occupant protection grants under 23 U.S.C. 405(b), 23 CFR 1200.21(d)(1) through (4) and (e) (April 1, 2015) and 23 CFR 1300.21(d)(5) (maintenance of effort);
(3) For State traffic safety information system improvements grants under 23 U.S.C. 405(c), 23 CFR 1200.22(b) through (e) (April 1, 2015) and 23 CFR 1300.22(c) (maintenance of effort);
(4) For impaired griving countermeasures grants under 23 U.S.C. 405(d)(1), 23 CFR 1200.23(d)(1), (e), and (f) (April 1, 2015), and 23 CFR 1300.23(d)(2) (maintenance of effort);
(5) For grants to States with alcohol-ignition interlock laws and 24-7 sobriety programs under 23 U.S.C. 405(d)(6), 23 CFR 1300.23(g) and (h);
(6) For distracted driving grants under 23 U.S.C. 405(e), 23 CFR 1300.24;
(7) For motorcyclist safety grants under 23 U.S.C. 405(f), 23 CFR 1200.25(d)-(j) (April 1, 2015);
(8) For State graduated driver licensing incentive grants under 23 U.S.C. 405(g), 23 CFR 1300.26;
(9) For nonmotorized safety grants under 23 U.S.C. 405(h), 23 CFR 1300.27;
(10) For racial profiling data collection grants under Section 1906, 23 CFR 1300.28.
(b) States may elect to apply under 23 CFR part 1300 for any of the grants under paragraph (a) of this section.
(a) Fiscal year 2017 grants awarded under 23 U.S.C. Chapter 4 and Section 1906 are governed by the following general and administrative provisions in part 1300:
(1) Subpart A—all sections;
(2) Subpart B:
(i) 23 CFR 1300.10 General;
(ii) 23 CFR 1300.12 Due date for submission;
(iii) 23 CFR 1300.13 Special funding conditions for Section 402 Grants;
(iv) 23 CFR 1300.15 Apportionment and obligation of Federal funds;
(3) Subpart C:
(i) 23 CFR 1300.20 General;
(ii) 23 CFR 1300.21(a) through (c) and (f) Occupant protection grants—purpose, definitions, elibigibility determination, and use of grant funds;
(iii) 23 CFR 1300.22(a) and (d) State traffic safety information system improvements grants—purpose and use of grant funds;
(iv) 23 CFR 1300.23(a) through (c), (i), and (j) Impaired driving countermeasures grants—purpose, definitions, eligibility determinations, award and use of grant funds;
(v) 23 CFR 1300.1300.24 Distracted driving grants—all paragraphs;
(vi) 23 CFR 1300.25(a) through (c), (k) and (l) Motorcyclist safety grants—purpose, definitions, eligibility, award limitation, use of grant funds;
(vii) 23 CFR 1300.26 State graduated driving licensing incentive grants—all paragraphs;
(viii) 23 CFR 1300.27 Nonmotorized safety grants—all paragraphs;
(ix) 23 CFR 1300.28 Racial profiling data collection grants—all paragraphs.
(4) Subpart D:
(i) 23 CFR 1300.30 General;
(ii) 23 CFR 1300.31 Equipment;
(iii) 23 CFR 1300.35 Annual report;
(iv) 23 CFR 1300.36 Appeals of written decision by Regional Administrator;
(5) Subpart E—all sections;
(6) Subpart F—all sections.
(b) Except as provided in paragraph (c) of this section, fiscal year 2017 grants awarded under 23 U.S.C. Chapter 4 and Section 1906 are also governed by the following general and administrative provisions in part 1200:
(1) Subpart B—23 CFR 1200.14 Review and approval procedures;
(2) Subpart D:
(i) 23 CFR 1200.32 Changes—approval of the approving official (Regional Administrator);
(ii) 23 CFR 1200.33 Vouchers and project agreements.
(c) States may elect to follow all sections of part 1300.
By submitting an application for Federal grant funds under 23 U.S.C. Chapter 4 or Section 1906, the State Highway Safety Office acknowledges and agrees to the following conditions and requirements. In my capacity as the Governor's Representative for Highway Safety, I hereby provide the following Certifications and Assurances:
The State will comply with applicable statutes and regulations, including but not limited to:
The State has submitted appropriate documentation for review to the single point of contact designated by the Governor to review Federal programs, as required by Executive Order 12372 (Intergovernmental Review of Federal Programs).
The State will comply with FFATA guidance,
• Name of the entity receiving the award;
• Amount of the award;
• Information on the award including transaction type, funding agency, the North American Industry Classification System code or Catalog of Federal Domestic Assistance number (where applicable), program source;
• Location of the entity receiving the award and the primary location of performance under the award, including the city, State, congressional district, and country; and an award title descriptive of the purpose of each funding action;
• A unique identifier (DUNS);
• The names and total compensation of the five most highly compensated officers of the entity if:
(i) the entity in the preceding fiscal year received—
(I) 80 percent or more of its annual gross revenues in Federal awards;
(II) $25,000,000 or more in annual gross revenues from Federal awards; and
(ii) the public does not have access to information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986;
• Other relevant information specified by OMB guidance.
The State highway safety agency will comply with all Federal statutes and implementing regulations relating to nondiscrimination (“Federal Nondiscrimination Authorities”). These include but are not limited to:
•
•
•
•
•
•
•
•
•
The State highway safety agency—
• Will take all measures necessary to ensure that no person in the United States shall, on the grounds of race, color, national origin, disability, sex, age, limited English proficiency, or membership in any other class protected by Federal Nondiscrimination Authorities, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any of its programs or activities, so long as any portion of the program is Federally-assisted.
• Will administer the program in a manner that reasonably ensures that any of its subrecipients, contractors, subcontractors, and consultants receiving Federal financial assistance under this program will comply with all requirements of the Non-Discrimination Authorities identified in this Assurance;
• Agrees to comply (and require any of its subrecipients, contractors, subcontractors, and consultants to comply) with all applicable provisions of law or regulation governing US DOT's or NHTSA's access to records, accounts, documents, information, facilities, and staff, and to cooperate and comply with any program or compliance reviews, and/or complaint investigations conducted by US DOT or NHTSA under any Federal Nondiscrimination Authority;
• Acknowledges that the United States has a right to seek judicial enforcement with regard to any matter arising under these Non-Discrimination Authorities and this Assurance;
• Insert in all contracts and funding agreements with other State or private entities the following clause:
“During the performance of this contract/funding agreement, the contractor/funding recipient agrees—
a. To comply with all Federal nondiscrimination laws and regulations, as may be amended from time to time;
b. Not to participate directly or indirectly in the discrimination prohibited by any Federal non-discrimination law or regulation, as set forth in appendix B of 49 CFR part 2l and herein;
c. To permit access to its books, records, accounts, other sources of information, and its facilities as required by the State highway safety office, US DOT or NHTSA;
d. That, in event a contractor/funding recipient fails to comply with any nondiscrimination provisions in this contract/funding agreement, the State highway safety agency will have the right to impose such contract/agreement sanctions as it or NHTSA determine are appropriate, including but not limited to withholding payments to the contractor/funding recipient under the contract/agreement until the contractor/funding recipient complies; and/or cancelling, terminating, or suspending a contract or funding agreement, in whole or in part; and
e. To insert this clause, including paragraphs a through e, in every subcontract and subagreement and in every solicitation for a subcontract or sub-agreement, that receives Federal funds under this program.
The State will provide a drug-free workplace by:
a. Publishing a statement notifying employees that the unlawful manufacture, distribution, dispensing, possession or use of a controlled substance is prohibited in the grantee's workplace and specifying the actions that will be taken against employees for violation of such prohibition;
b. Establishing a drug-free awareness program to inform employees about:
○ The dangers of drug abuse in the workplace.
○ The grantee's policy of maintaining a drug-free workplace.
○ Any available drug counseling, rehabilitation, and employee assistance programs.
○ The penalties that may be imposed upon employees for drug violations occurring in the workplace.
○ Making it a requirement that each employee engaged in the performance of the grant be given a copy of the statement required by paragraph (a).
c. Notifying the employee in the statement required by paragraph (a) that, as a condition of employment under the grant, the employee will—
○ Abide by the terms of the statement.
○ Notify the employer of any criminal drug statute conviction for a violation occurring in the workplace no later than five days after such conviction.
d. Notifying the agency within ten days after receiving notice under subparagraph (c)(2) from an employee or otherwise receiving actual notice of such conviction.
e. Taking one of the following actions, within 30 days of receiving notice under subparagraph (c)(2), with respect to any employee who is so convicted—
○ Taking appropriate personnel action against such an employee, up to and including termination.
○ Requiring such employee to participate satisfactorily in a drug abuse assistance or rehabilitation program approved for such purposes by a Federal, State, or local health, law enforcement, or other appropriate agency.
f. Making a good faith effort to continue to maintain a drug-free workplace through implementation of all of the paragraphs above.
The State will comply with provisions of the Hatch Act (5 U.S.C. 1501-1508), which limits the political activities of employees whose principal employment activities are funded in whole or in part with Federal funds.
The undersigned certifies, to the best of his or her knowledge and belief, that:
1. No Federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement.
2. If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions.
3. The undersigned shall require that the language of this certification be included in the award documents for all sub-award at all tiers (including subcontracts, subgrants, and contracts under grant, loans, and cooperative agreements) and that all subrecipients shall certify and disclose accordingly.
This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.
None of the funds under this program will be used for any activity specifically designed to urge or influence a State or local legislator to favor or oppose the adoption of any specific legislative proposal pending before any State or local legislative body. Such activities include both direct and indirect (
1. By signing and submitting this proposal, the prospective primary participant is providing the certification set out below and
2. The inability of a person to provide the certification required below will not necessarily result in denial of participation in this covered transaction. The prospective participant shall submit an explanation of why it cannot provide the certification set out below. The certification or explanation will be considered in connection with the department or agency's determination whether to enter into this transaction. However, failure of the prospective primary participant to furnish a certification or an explanation shall disqualify such person from participation in this transaction.
3. The certification in this clause is a material representation of fact upon which reliance was placed when the department or agency determined to enter into this transaction. If it is later determined that the prospective primary participant knowingly rendered an erroneous certification, in addition to other remedies available to the Federal Government, the department or agency may terminate this transaction for cause or default or may pursue suspension or debarment.
4. The prospective primary participant shall provide immediate written notice to the department or agency to which this proposal is submitted if at any time the prospective primary participant learns its certification was erroneous when submitted or has become erroneous by reason of changed circumstances.
5. The terms
6. The prospective primary participant agrees by submitting this proposal that, should the proposed covered transaction be entered into, it shall not knowingly enter into any lower tier covered transaction with a person who is proposed for debarment under 48 CFR part 9, subpart 9.4, debarred, suspended, declared ineligible, or voluntarily excluded from participation in this covered transaction, unless authorized by NHTSA.
7. The prospective primary participant further agrees by submitting this proposal that it will include the clause titled “Instructions for Lower Tier Certification” including the “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion—Lower Tier Covered Transaction,” provided by the department or agency entering into this covered transaction, without modification, in all lower tier covered transactions and in all solicitations for lower tier covered transactions and will require lower tier participants to comply with 2 CFR parts 180 and 1300.
8. A participant in a covered transaction may rely upon a certification of a prospective participant in a lower tier covered transaction that it is not proposed for debarment under 48 CFR part 9, subpart 9.4, debarred, suspended, ineligible, or voluntarily excluded from the covered transaction, unless it knows that the certification is erroneous. A participant may decide the method and frequency by which it determines the eligibility of its principals. Each participant may, but is not required to, check the list of Parties Excluded from Federal Procurement and Non-procurement Programs.
9. Nothing contained in the foregoing shall be construed to require establishment of a system of records in order to render in good faith the certification required by this clause. The knowledge and information of a participant is not required to exceed that which is normally possessed by a prudent person in the ordinary course of business dealings.
10. Except for transactions authorized under paragraph 6 of these instructions, if a participant in a covered transaction knowingly enters into a lower tier covered transaction with a person who is proposed for debarment under 48 CFR part 9, subpart 9.4, suspended, debarred, ineligible, or voluntarily excluded from participation in this transaction, the department or agency may disallow costs, annul or terminate the transaction, issue a stop work order, debar or suspend you, or take other remedies as appropriate.
(1) The prospective primary participant certifies to the best of its knowledge and belief, that its principals:
(a) Are not presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded by any Federal department or agency;
(b) Have not within a three-year period preceding this proposal been convicted of or had a civil judgment rendered against them for commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public (Federal, State or local) transaction or contract under a public transaction; violation of Federal or State antitrust statutes or commission of embezzlement, theft, forgery, bribery, falsification or destruction of record, making false statements, or receiving stolen property;
(c) Are not presently indicted for or otherwise criminally or civilly charged by a governmental entity (Federal, State or Local) with commission of any of the offenses enumerated in paragraph (1)(b) of this certification; and
(d) Have not within a three-year period preceding this application/proposal had one or more public transactions (Federal, State, or local) terminated for cause or default.
(2) Where the prospective primary participant is unable to certify to any of the Statements in this certification, such prospective participant shall attach an explanation to this proposal.
1. By signing and submitting this proposal, the prospective lower tier participant is providing the certification set out below and agrees to comply with the requirements of 2 CFR parts 180 and 1300.
2. The certification in this clause is a material representation of fact upon which reliance was placed when this transaction was entered into. If it is later determined that the prospective lower tier participant knowingly rendered an erroneous certification, in addition to other remedies available to the Federal government, the department or agency with which this transaction originated may pursue available remedies, including suspension and/or debarment.
3. The prospective lower tier participant shall provide immediate written notice to the person to which this proposal is submitted if at any time the prospective lower tier participant learns that its certification was erroneous when submitted or has become erroneous by reason of changed circumstances.
4. The terms
5. The prospective lower tier participant agrees by submitting this proposal that, should the proposed covered transaction be entered into, it shall not knowingly enter into any lower tier covered transaction with a person who is proposed for debarment under 48 CFR part 9, subpart 9.4, debarred, suspended, declared ineligible, or voluntarily excluded from participation in this covered transaction, unless authorized by NHTSA.
6. The prospective lower tier participant further agrees by submitting this proposal that it will include the clause titled “Instructions for Lower Tier Certification” including the “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion—Lower Tier Covered Transaction,” without modification, in all lower tier covered transactions and in all solicitations for lower tier covered transactions and will require lower tier participants to comply with 2 CFR parts 180 and 1300.
7. A participant in a covered transaction may rely upon a certification of a prospective participant in a lower tier covered transaction that it is not proposed for debarment under 48 CFR part 9, subpart 9.4, debarred, suspended, ineligible, or voluntarily excluded from the covered transaction, unless it knows that the certification is erroneous. A participant may decide the method and frequency by which it determines the eligibility of its principals. Each participant may, but is not required to, check the List of Parties Excluded from Federal Procurement and Non-procurement Programs.
8. Nothing contained in the foregoing shall be construed to require establishment of a system of records in order to render in good faith the certification required by this clause. The knowledge and information of a participant is not required to exceed that which is normally possessed by a prudent person in the ordinary course of business dealings.
9. Except for transactions authorized under paragraph 5 of these instructions, if a participant in a covered transaction knowingly enters into a lower tier covered transaction with a person who is proposed for debarment under 48 CFR part 9, subpart 9.4, suspended, debarred, ineligible, or voluntarily excluded from participation in this transaction, the department or agency with which this transaction originated may disallow costs, annul or terminate the transaction, issue a stop work order, debar or suspend you, or take other remedies as appropriate.
1. The prospective lower tier participant certifies, by submission of this proposal, that neither it nor its principals is presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from participation in this transaction by any Federal department or agency.
2. Where the prospective lower tier participant is unable to certify to any of the statements in this certification, such prospective participant shall attach an explanation to this proposal.
The State and each subrecipient will comply with the Buy America requirement (23 U.S.C. 313) when purchasing items using Federal funds. Buy America requires a State, or subrecipient, to purchase only steel, iron and manufactured products produced in the United States with Federal funds, unless the Secretary of Transportation determines that such domestically produced items would be inconsistent with the public interest, that such materials are not reasonably available and of a satisfactory quality, or that inclusion of domestic materials will increase the cost of the overall project contract by more than 25 percent. In order to use Federal funds to purchase foreign produced items, the State must submit a waiver request that provides an adequate basis and justification to and approved by the Secretary of Transportation.
The State and each subrecipient will not use 23 U.S.C. Chapter 4 grant funds for programs to check helmet usage or to create checkpoints that specifically target motorcyclists.
In accordance with Executive Order 13043, Increasing Seat Belt Use in the United States, dated April 16, 1997, the Grantee is encouraged to adopt and enforce on-the-job seat belt use policies and programs for its employees when operating company-owned, rented, or personally-owned vehicles. The National Highway Traffic Safety Administration (NHTSA) is responsible for providing leadership and guidance in support of this Presidential initiative. For information on how to implement such a program, or statistics on the potential benefits and cost-savings to your company or organization, please visit the Buckle Up America section on NHTSA's Web site at
In accordance with Executive Order 13513, Federal Leadership On Reducing Text Messaging While Driving, and DOT Order 3902.10, Text Messaging While Driving, States are encouraged to adopt and enforce workplace safety policies to decrease crashed caused by distracted driving, including policies to ban text messaging while driving company-owned or -rented vehicles, Government-owned, leased or rented vehicles, or privately-owned when on official Government business or when performing any work on or behalf of the Government. States are also encouraged to conduct workplace safety initiatives in a manner commensurate with the size of the business, such as establishment of new rules and programs or re-evaluation of existing programs to prohibit text messaging while driving, and education, awareness, and other outreach to employees about the safety risks associated with texting while driving.
1. To the best of my personal knowledge, the information submitted in the Highway Safety Plan in support of the State's application for a grant under 23 U.S.C. 402 is accurate and complete.
2. The Governor is the responsible official for the administration of the State highway safety program, by appointing a Governor's Representative for Highway Safety who shall be responsible for a State highway safety agency that has adequate powers and is suitably equipped and organized (as evidenced by appropriate oversight procedures governing such areas as procurement, financial administration, and the use, management, and disposition of equipment) to carry out the program. (23 U.S.C. 402(b)(1)(A))
3. The political subdivisions of this State are authorized, as part of the State highway safety program, to carry out within their jurisdictions local highway safety programs which have been approved by the Governor and are in accordance with the uniform guidelines promulgated by the Secretary of Transportation. (23 U.S.C. 402(b)(1)(B))
4. At least 40 percent of all Federal funds apportioned to this State under 23 U.S.C. 402 for this fiscal year will be expended by or for the benefit of political subdivisions of the State in carrying out local highway safety programs (23 U.S.C. 402(b)(1)(C)) or 95 percent by and for the benefit of Indian tribes (23 U.S.C. 402(h)(2)), unless this requirement is waived in writing. (This provision is not applicable to the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.)
5. The State's highway safety program provides adequate and reasonable access for the safe and convenient movement of physically handicapped persons, including those in wheelchairs, across curbs constructed or replaced on or after July 1, 1976, at all pedestrian crosswalks. (23 U.S.C. 402(b)(1)(D))
6. The State will provide for an evidenced-based traffic safety enforcement program to prevent traffic violations, crashes, and crash fatalities and injuries in areas most at risk for such incidents. (23 U.S.C. 402(b)(1)(E))
7. The State will implement activities in support of national highway safety goals to reduce motor vehicle related fatalities that also reflect the primary data-related crash factors within the State, as identified by the State highway safety planning process, including:
• Participation in the National high-visibility law enforcement mobilizations as identified annually in the NHTSA Communications Calendar, including not less than 3 mobilization campaigns in each fiscal year to—
○ Reduce alcohol-impaired or drug-impaired operation of motor vehicles; and
○ Increase use of seatbelts by occupants of motor vehicles;
• Submission of information regarding mobilization participation into the HVE Database;
• Sustained enforcement of statutes addressing impaired driving, occupant protection, and driving in excess of posted speed limits;
• An annual Statewide seat belt use survey in accordance with 23 CFR part 1340 for the measurement of State seat belt use rates, except for the Secretary of Interior on behalf of Indian tribes;
• Development of Statewide data systems to provide timely and effective data analysis to support allocation of highway safety resources;
• Coordination of Highway Safety Plan, data collection, and information systems with the State strategic highway safety plan, as defined in 23 U.S.C. 148(a).
8. The State will actively encourage all relevant law enforcement agencies in the State to follow the guidelines established for vehicular pursuits issued by the International Association of Chiefs of Police that are currently in effect. (23 U.S.C. 402(j))
9. The State will not expend Section 402 funds to carry out a program to purchase, operate, or maintain an automated traffic enforcement system. (23 U.S.C. 402(c)(4))
The State: [
□ Certifies that automated traffic enforcement systems are not used on any public road in the State;
□ Is unable to certify that automated traffic enforcement systems are not used on
I understand that my statements in support of the State's application for Federal grant funds are statements upon which the Federal Government will rely in determining qualification for grant funds, and that knowing misstatements may be subject to civil or criminal penalties under 18 U.S.C. 1001. I sign these Certifications and Assurances based on personal knowledge, and after appropriate inquiry.
• The lead State agency responsible for occupant protection programs will maintain its aggregate expenditures for occupant protection programs at or above the average level of such expenditures in fiscal years 2014 and 2015. (23 U.S.C. 405(a)(9))
• The State's occupant protection program area plan for the upcoming fiscal year is provided as HSP page or attachment # ___.
• The State will participate in the Click it or Ticket national mobilization in the fiscal year of the grant. The description of the State's planned participation is provided as HSP page or attachment # ___.
• A table that documents the State's active network of child restraint inspection stations is provided as HSP page or attachment # ___. Such table includes (1) the total number of inspection stations/events in the State; and (2) the total number of inspection stations and/or inspection events that service rural and urban areas and at-risk populations (
• A table, as provided in HSP page or attachment # ___, identifies the number of classes to be held, location of classes, and estimated number of students needed to ensure coverage of child passenger safety inspection stations and inspection events by nationally Certified Child Passenger Safety Technicians.
□ The State's
□ The State's
• ___ Requirement for all occupants to be secured in seat belt or age appropriate child restraint;
• ___ Coverage of all passenger motor vehicles ;
• ___ Minimum fine of at least $25;
• ___ Exemptions from restraint requirements.
□ The State's seat belt enforcement plan is provided as HSP page or attachment # ___.
□ The State's high risk population countermeasure program is provided as HSP page or attachment # ___.
□ The State's comprehensive occupant protection program is provided as follows:
• Date of NHTSA-facilitated program assessment conducted within 5 years prior to the application date: __/__/__;
• Multi-year strategic plan: HSP page or attachment # __;
• Name and title of State's designated occupant protection coordinator: ___
• List that contains the names, titles and organizations of the Statewide occupant protection task force membership: HSP page or attachment # ___.
□ The State's NHTSA-facilitated occupant protection program assessment of all elements of its occupant protection program was conducted on ___/___/___ (within 3 years of the application due date);
• The lead State agency responsible for traffic safety information system improvements programs will maintain its aggregate expenditures for traffic safety information system improvements programs at or above the average level of such expenditures in fiscal years 2014 and 2015. (23 U.S.C. 405(a)(9))
• A list of at least 3 TRCC meeting dates during the 12 months preceding the application due date is provided as HSP page or attachment # ___.
• The name and title of the State's Traffic Records Coordinator is ______.
• A list of the TRCC members by name, title, home organization and the core safety database represented is provided as HSP page or attachment # ___.
• The State Strategic Plan is provided as follows:
Description of specific, quantifiable and measurable improvements: HSP page or attachment # ___;
List of all recommendations from most recent assessment: HSP page or attachment # ___;
Recommendations to be addressed, including projects and performance measures: HSP page or attachment # ___;
Recommendations not to be addressed, including reasons for not implementing: HSP page or attachment # ___.
• Written description of the performance measures, and all supporting data, that the State is relying on to demonstrate achievement of the quantitative improvement in the preceding 12 months of the application due date in relation to one or more of the significant data program attributes is provided as HSP page or attachment # ___.
• The State's most recent assessment or update of its highway safety data and traffic records system was completed on ___/___/___.
• The lead State agency responsible for impaired driving programs will maintain its aggregate expenditures for impaired driving programs at or above the average level of such expenditures in fiscal years 2014 and 2015.
• The State will use the funds awarded under 23 U.S.C. 405(d) only for the implementation of programs as provided in 23 CFR 1200.23(j) in the fiscal year of the grant.
□ The State submits its Statewide impaired driving plan approved by a Statewide impaired driving task force on ___/___/___. Specifically—
HSP page or attachment # ___ describes the authority and basis for operation of the Statewide impaired driving task force;
HSP page or attachment # ___ contains the list of names, titles and organizations of all task force members;
HSP page or attachment # ___ contains the strategic plan based on Highway Safety Guideline No. 8—Impaired Driving.
□ The State has previously submitted a Statewide impaired driving plan approved by a Statewide impaired driving task force on ___/___/___ and continues to use this plan.
□ The State submits its Statewide impaired driving plan approved by a Statewide impaired driving task force on ___/___/___ that includes a review of a NHTSA-facilitated assessment of the State's impaired driving program conducted on ___/___/___. Specifically,—
HSP page or attachment # ___ describes the authority and basis for operation of the Statewide impaired driving task force;
HSP page or attachment # ___ contains the list of names, titles and organizations of all task force members;
HSP page or attachment # ___ contains the strategic plan based on Highway Safety Guideline No. 8—Impaired Driving;
HSP page or attachment # ___ addresses any related recommendations from the assessment of the State's impaired driving program;
HSP page or attachment # ___ contains the detailed project list for spending grant funds;
HSP page or attachment # ___ describes how the spending supports the State's impaired driving program and achievement of its performance targets.
□ The State submits an updated Statewide impaired driving plan approved by a Statewide impaired driving task force on ___/___/___ and updates its assessment review and spending plan provided as HSP page or attachment # ___.
The State provides citations to a law that requires all individuals convicted of driving under the influence or of driving while intoxicated to drive only motor vehicles with alcohol-ignition interlocks for a period of 6 months that was enacted on ___/___/___ and last amended on ___/___/___, is in effect, and will be enforced during the fiscal year of the grant. Legal citation(s): ____________.
The State provides citations to a law that requires all individuals convicted of driving under the influence or of driving while intoxicated to receive a restriction on driving privileges that was enacted on ___/___/___ and last amended on ___/___/___, is in effect, and will be enforced during the fiscal year of the grant. Legal citation(s): _________.
□
□
□
• The State provides sample distracted driving questions from the State's driver's license examination in HSP page or attachment # ___.
•
The State's texting ban statute, prohibiting texting while driving, a minimum fine of at least $25, was enacted on ___/___/ ___ and last amended on ___/___/___, is in effect, and will be enforced during the fiscal year of the grant.
___ Prohibition on texting while driving;
___ Definition of covered wireless communication devices;
___ Minimum fine of at least $25 for an offense;
___ Exemptions from texting ban.
•
The State's youth cell phone use ban statute, prohibiting youth cell phone use while driving, driver license testing of distracted driving issues, a minimum fine of at least $25, was enacted on ___/___/___ and last amended on ___/___/___, is in effect, and will be enforced during the fiscal year of the grant.
___ Prohibition on youth cell phone use while driving;
___ Definition of covered wireless communication devices;
___ Minimum fine of at least $25 for an offense;
___ Exemptions from youth cell phone use ban.
• The State has conformed its distracted driving data to the most recent Model Minimum Uniform Crash Criteria (MMUCC) and will provide supporting data (
□
• The State's basic text messaging statute applying to drivers of all ages was enacted on ___/___/___ and last amended on ___/___/__, is in effect, and will be enforced during the fiscal year of the grant.
___ Basic text messaging statute;
___ Primary or secondary enforcement.
• The State is
□
• The State's basic text messaging statute applying to drivers of all ages was enacted ___/___/___ and last amended on___/___/___, is in effect, and will be enforced during the fiscal year of the grant.
___ Basic text messaging statute;
___ Primary enforcement;
___ Fine for a violation of the basic text messaging statute;
• The State's youth cell phone use ban statute, prohibiting youth cell phone use while driving, was enacted on ___/___/___ and last amended on ___/___/___, is in effect, and will be enforced during the fiscal year of the grant.
___ Prohibition on youth cell phone use while driving;
___ Definition of covered wireless communication devices.
• The State is
□
• The name and organization of the head of the designated State authority over motorcyclist safety issues is ___.
• The head of the designated State authority over motorcyclist safety issues has approved and the State has adopted one of the following introductory rider curricula: [
□ Motorcycle Safety Foundation Basic Rider Course;
□ TEAM OREGON Basic Rider Training;
□ Idaho STAR Basic I;
□ California Motorcyclist Safety Program Motorcyclist Training Course;
□ Other curriculum that meets NHTSA's Model National Standards for Entry-Level Motorcycle Rider Training and that has been approved by NHTSA.
• On HSP page or attachment # ___, a list of counties or political subdivisions in the State where motorcycle rider training courses will be conducted during the fiscal year of the grant AND number of registered
□
• The name and organization of the head of the designated State authority over motorcyclist safety issues is ___.
• The State's motorcyclist awareness program was developed by or in coordination with the designated State authority having jurisdiction over motorcyclist safety issues.
• On HSP page or attachment # ___, performance measures and corresponding performance targets developed for motorcycle awareness that identifies, using State crash data, the counties or political subdivisions within the State with the highest number of motorcycle crashes involving a motorcycle and another motor vehicle.
• On HSP page or attachment # ___, countermeasure strategies and projects demonstrating that the State will implement data-driven programs in a majority of counties or political subdivisions corresponding with the majority of crashes involving at least one motorcycle and at least one motor vehicle causing a serious or fatal injury to at least one motorcyclist or motor vehicle occupant.
□
• Data showing the total number of motor vehicle crashes involving motorcycles is provided as HSP page or attachment # ___.
• Description of the State's methods for collecting and analyzing data is provided as HSP page or attachment # ___.
□
• On HSP page or attachment # ___, performance measures and corresponding performance targets developed to reduce impaired motorcycle operation.
• On HSP page or attachment # ___, countermeasure strategies and projects demonstrating that the State will implement data-driven programs designed to reach motorcyclists and motorists in those jurisdictions where the incidence of motorcycle crashes involving an impaired operator is highest (
□
• Data showing the total number of reported crashes involving alcohol-impaired and drug-impaired motorcycle operators is provided as HSP page or attachment # ___.
• Description of the State's methods for collecting and analyzing data is provided as HSP page or attachment # ___.
□
□ Applying as a Law State—
• The State law or regulation requires all fees collected by the State from motorcyclists for the purpose of funding motorcycle training and safety programs are to be used for motorcycle training and safety programs.
• The State's law appropriating funds for FY ___ requires all fees collected by the State from motorcyclists for the purpose of funding motorcycle training and safety programs be spent on motorcycle training and safety programs.
□ Applying as a Data State—
• Data and/or documentation from official State records from the previous fiscal year showing that
The State's graduated driver licensing statute, requiring both a learner's permit stage and intermediate stage prior to receiving a full driver's license, was last amended on ___/___/___, is in effect, and will be enforced during the fiscal year of the grant.
• ___ Applies prior to receipt of any other permit, license, or endorsement if applicant is younger than 18 years of age.
• ___Applicant must pass vision test and knowledge assessments
• ___In effect for at least 6 months
• ___In effect until driver is at least 16 years of age
• ___Must be accompanied and supervised at all times
• ___Requires completion of State-certified driver education course or at least 50 hours of behind-the-wheel training with at least 10 of those hours at night
• ___Prohibition on use of personal wireless communications device
• ___Extension of learner's permit stage if convicted
• ___Exemptions from graduated driver licensing law
• ___Commences after applicant younger than 18 years of age successfully completes the learner's permit stage, but prior to receipt of any other permit, license, or endorsement
• ___Applicant must pass behind-the-wheel driving skills assessment
• ___In effect for at least 6 months
• ___In effect until driver is at least 17 years of age
• ___Must be accompanied and supervised between hours of 10:00 p.m. and 5:00 a.m. during first 6 months of stage, except when operating a motor vehicle for the purposes of work, school, religious activities, or emergencies
• ___No more than 1 nonfamilial passenger younger than 21 allowed
•___Prohibition on use of personal wireless communications device
• ___Extension of intermediate stage if convicted
• ___Exemptions from graduated driver licensing law
The State affirms that it will use the funds awarded under 23 U.S.C. 405(h) only for the implementation of programs as provided in 23 CFR 1200.27(d) in the fiscal year of the grant.
□ On HSP page or attachment # ___, the official document(s) (
□ On HSP page or attachment # ___, the State will undertake projects during the fiscal year of the grant to maintain and allow public inspection of statistical information on the race and ethnicity of the driver for each motor vehicle stop made by a law enforcement officer on a Federal-aid highway.
• I have reviewed the above information in support of the State's application for 23 U.S.C. 405 and Section 1906 grants, and based on my review, the information is accurate and complete to the best of my personal knowledge.
• As condition of each grant awarded, the State will use these grant funds in accordance with the specific statutory and regulatory requirements of that grant, and will comply with all applicable laws, regulations, and financial and programmatic requirements for Federal grants.
• I understand and accept that incorrect, incomplete, or untimely information submitted in support of the State's application may result in the denial of a grant award.
(1) In determining whether a State meets the local share requirement in a fiscal year, NHTSA will apply the requirement sequentially to each fiscal year's apportionments, treating all apportionments made from a single fiscal year's authorizations as a single entity for this purpose. Therefore, at least 40 percent of each State's apportionments (or at least 95 percent of the apportionment to the Secretary of Interior) from each year's authorizations must be used in the highway safety programs of its political subdivisions prior to the period when funds would normally lapse. The local participation requirement is applicable to the State's total federally funded safety program irrespective of Standard designation or Agency responsibility.
(2) When Federal funds apportioned under 23 U.S.C. 402 are expended by a political subdivision, such expenditures are clearly part of the local share. Local highway safety-project-related expenditures and associated indirect costs, which are reimbursable to the grantee local governments, are classifiable as local share. Illustrations of such expenditures are the costs incurred by a local government in planning and administration of highway safety project-related activities, such as occupant protection, traffic records system improvements, emergency medical services, pedestrian and bicycle safety activities, police traffic services, alcohol and other drug countermeasures, motorcycle safety, and speed control.
(3) When Federal funds apportioned under 23 U.S.C. 402 are expended by a State agency for the benefit of a political subdivision, such funds may be considered as part of the local share, provided that the political subdivision has had an active voice in the initiation, development, and implementation of the programs for which such funds are expended. A State may not arbitrarily ascribe State agency expenditures as “benefitting local government.” Where political subdivisions have had an active voice in the initiation, development, and implementation of a particular program or activity, and a political subdivision which has not had such active voice agrees in advance of implementation to accept the benefits of the program, the Federal share of the cost of such benefits may be credited toward meeting the local participation requirement. Where no political subdivisions have had an active voice in the initiation, development, and implementation of a particular program, but a political subdivision requests the benefits of the program as part of the local government's highway safety program, the Federal share of the cost of such benefits may be credited toward meeting the local participation requirement. Evidence of consent and acceptance of the work, goods or services on behalf of the local government must be established and maintained on file by the State until all funds authorized for a specific year are expended and audits completed.
(4) State agency expenditures which are generally not classified as local are within such areas as vehicle inspection, vehicle registration and driver licensing. However, where these areas provide funding for services such as driver improvement tasks administered by traffic courts, or where they furnish computer support for local government requests for traffic record searches, these expenditures are classifiable as benefitting local programs.
(2) A State at its option may allocate salary and related costs of State highway safety agency employees to one of the following:
(i) P&A;
(ii) Program management of one or more program areas contained in the HSP; or
(iii) Combination of P&A activities and the program management activities in one or more program areas.
(3) If an employee works solely performing P&A activities, the total salary and related costs may be programmed to P&A. If the employee works performing program management activities in one or more program areas, the total salary and related costs may be charged directly to the appropriate area(s). If an employee is working time on a combination of P&A and program management activities, the total salary and related costs may be charged to P&A and the appropriate program area(s) based on the actual time worked under each
(a) In order to ensure that emerging mass atrocity risks and mass atrocity situations are considered and addressed, the Board shall monitor developments around the world that heighten the risk of mass atrocities, and analyze and closely review specific mass atrocity threats or situations of heightened concern.
(b) The Board shall also identify any gaps related to the prevention of and response to mass atrocities in the current policies and ongoing interagency processes concerning particular regions or countries and shall make recommendations to strengthen policies, programs, resources, and tools related to mass atrocity prevention and response to relevant executive departments and agencies (agencies), including through the Board's function as an interagency policy committee, as detailed in section 4 of this order. In these efforts, the Board shall focus in particular on ways for the U.S. Government to develop, strengthen, and enhance its capabilities to:
(a) The Board shall function as an interagency policy committee, or body of equivalent standing, chaired by a member of the National Security Council staff at the Senior Director level or higher who shall be designated by the President (Chair).
(b) The Chair shall convene the Board on a monthly basis to perform the responsibilities set forth in section 3 of this order. The Board shall also meet as needed on an ad hoc and time-sensitive basis to consider and address emerging mass atrocity threats or situations.
(c) The Deputies Committee of the National Security Council (Deputies) shall meet at least twice per year, and the Principals Committee of the National Security Council (Principals) shall meet at least once per year, to review and direct the work of the Board.
(d) The Board shall be composed of individuals at the Assistant Secretary-level or higher who shall be designated by the leadership of their respective departments or agencies. Within 60 days of a vacancy on the Board, the relevant department or agency or office head shall designate a replacement representative and notify the National Security Advisor. In addition to the Chair, the Board shall consist of the designated representatives from the following:
(e) The Chair shall report, through the National Security Advisor, to the President by April 30 each year on the work of the U.S. Government in mass atrocity prevention and response, including the work of the Board.
(f) The Chair shall prepare written updates for the public, on an annual basis, on the work of the U.S. Government in mass atrocity prevention and response, including the work of the Board.
(g) Consistent with the objectives set out in this order and in accordance with applicable law, the Board shall conduct outreach, including regular consultations, with representatives of nongovernmental organizations with expertise in mass atrocity prevention and response and other appropriate parties. Such outreach shall be for the purpose of assisting the Board with its work on considering and addressing emerging mass atrocity threats or situations and on developing new or improved policies and tools, as well as for the purpose of providing transparency on the work of the Board.
(h) In order to conduct the work set forth in this order effectively, the Board may:
(a) Agencies, in coordination with the Board, shall ensure that mass atrocity prevention and response staffing, training, funding, and activities are addressed in their strategic planning and budget processes, including Department Quadrennial Reviews, Mission Resource Requests, State Department Integrated Country Strategies, U.S. Agency for International Development (USAID) Joint Strategic Plans, State Department Bureau Strategic Resource Plans, and related strategic planning and budget processes and documents. The Chair shall make recommendations to the National Security Advisor on the inclusion of material in the President's National Security Strategy that addresses mass atrocity prevention and response.
(b) The Department of State and USAID shall work with OMB to support the maintenance of civilian assistance accounts and authorities that enable swift civilian responses to mass atrocity threats and situations.
(c) The Department of State and USAID shall offer mass atrocity prevention and response training courses to all officers deployed or planning deployment to countries deemed by the IC to be at high or substantial risk for mass atrocities.
(d) The Department of State and USAID shall continue to build and use civilian capacity (i.e., the ability to deploy personnel with expertise in conflict prevention, civilian protection, mediation, and other relevant skills) effectively for mass atrocity prevention and response, and shall develop mechanisms for enhanced partnerships with non-U.S. Government actors that could provide surge capacity, such as the United Nations and other multilateral and regional organizations, foreign governments, and nongovernmental organizations.
(e) The IC shall continue to monitor developments worldwide and, as changing conditions warrant, prepare an IC-coordinated assessment updating IC judgments in its National Intelligence Estimate on the global risk of mass atrocities and genocide at regular intervals to inform the work of the Board.
(f) Recognizing mass atrocity prevention as a core national security interest of the United States, the IC shall allocate resources so as to permit a collection surge for countries where the Board determines, and the Deputies concur, that there are ongoing or acute risks of mass atrocities that merit increased attention, in accordance with the National Intelligence Priority Framework and available resources.
(g) The IC shall work with partner governments to encourage the collection and analysis of mass atrocity-related intelligence and the sharing of this intelligence with the U.S. Government and its partners in mass atrocity prevention and response.
(h) The Department of Homeland Security (DHS) and the Department of Justice, in coordination with the Department of State, shall continue to develop proposals for legislative, regulatory, or administrative amendments or changes that would permit the more effective use and enforcement of immigration and other laws to deny impunity to perpetrators of mass atrocities and that would enhance our ability to prosecute such perpetrators subject to the jurisdiction of the United States and remove those who are not citizens.
(i) The Department of Defense (DOD) shall continue to develop joint doctrine and training that support mass atrocity prevention and response operations and shall address mass atrocity prevention and response as part of its general planning guidance to combatant commands and services.
(j) The Department of State, the Department of the Treasury, DHS, the U.S. Mission to the United Nations (USUN), and other agencies as appropriate, shall coordinate with bilateral and multilateral partners on the deployment of mass atrocity prevention and response tools, including isolating and deterring perpetrators of mass atrocities through all available authorities (including administrative actions, visa authorities, and capacity-building support), as appropriate.
(k) The Department of State, in coordination with USUN, DOD, and other agencies as appropriate, shall work bilaterally, multilaterally, and with regionally based organizations to enhance effectiveness in the fields of early warning, analysis, prevention, response, and accountability, and shall work with international partners to build or encourage building the capacity of our allies and partners to prevent and respond to mass atrocities.
(b) Nothing in this order shall be construed to impair or otherwise affect:
(c) This order shall be implemented consistent with applicable law, and subject to the availability of appropriations.
(d) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
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| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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