Federal Register Vol. 82, No.12,

On August 24, 2016, OPM issued a proposed rule (81 FR 57809) to define Kent County, Michigan, as an area of application county to the Macomb, MI, NAF FWS wage area and Cameron County, Texas, as an area of application county to the Nueces, TX, NAF FWS wage area.

FPRAC, the national labor-management committee responsible for advising OPM on matters concerning the pay of FWS employees, reviewed and recommended this change by consensus.

The proposed rule had a 30-day comment period, during which OPM received no comments.

I certify that these regulations will not have a significant economic impact on a substantial number of small entities because they will affect only Federal agencies and employees.

Accordingly, OPM is amending 5 CFR part 532 as follows:

Background

The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (referred to below as the Bioterrorism Response Act) provides for the regulation of certain biological agents that have the potential to pose a severe threat to both human and animal health, to animal health, to plant health, or to animal plant health, or to animal and plant products. The Animal and Plant Health Inspection Service (APHIS) has the primary responsibility for implementing the provisions of the Act within the United States Department of Agriculture (USDA). Veterinary Services (VS) select agents and toxins are those that have been determined to have the potential to pose a severe threat to animal health or animal products. Plant Protection and Quarantine (PPQ) select agents and toxins are those that have the potential to pose a severe threat to plant health or plant products. Overlap select agents and toxins are those that have been determined to pose a severe threat to both human and animal health or to human health and animal products. Overlap select agents are subject to regulation by both APHIS and the Centers for Disease Control and Prevention (CDC), which has the primary responsibility for implementing the provisions of the Bioterrorism Response Act for the Department of Health and Human Services (HHS).

Subtitle B (which is cited as the “Agricultural Bioterrorism Protection Act of 2002” and referred to below as the Act), section 212(a), provides, in part, that the Secretary of Agriculture (the Secretary) must establish by regulation a list of each biological agent and each toxin that the Secretary determines has the potential to pose a severe threat to animal or plant health, or to animal or plant products. Paragraph (a)(2) of section 212 requires the Secretary to review and republish the list every 2 years and to revise the list as necessary. In this document, we are amending and republishing the list of select agents and toxins based on the findings of our fourth biennial review of the list.

In determining whether to include an agent or toxin on the list, the Act requires that the following criteria be considered:

• The effect of exposure to the agent or the toxin on animal and plant health, and on the production and marketability of animal or plant products;

• The pathogenicity of the agent or the toxin and the methods by which the agent or toxin is transferred to animals or plants;

• The availability and effectiveness of pharmacotherapies and prophylaxis to treat and prevent any illness caused by the agent or toxin; and

• Any other criteria that the Secretary considers appropriate to protect animal or plant health, or animal or plant products.

We use the term “select agents and toxins” throughout the preamble of this rule. Unless otherwise specified, the term “select agents and toxins” will refer to all agents or toxins listed by APHIS. When it is necessary to specify the type of select agent or toxin, we will use the following terms: “PPQ select agents and toxins” (for the plant agents and toxins listed in 7 CFR 331.3), “VS select agents and toxins” (for the animal agents and toxins listed in 9 CFR 121.3), or “overlap select agents and toxins” (for the overlap agents and toxins listed in both 9 CFR 121.4 and 42 CFR 73.4).

On January 19, 2016, we published in the Federal Register (81 FR 2762-2774, Docket No. APHIS-2014-0095) a proposal 1 to amend and republish the list of select agents and toxins that have the potential to pose a severe threat to animal or plant health, or to animal or plant products, and amend the regulations in order to add definitions and clarify language concerning security, training, biosafety, biocontainment, and incident response.

We solicited comments concerning our proposal for 60 days ending March 21, 2016. We received 24 comments by that date. They were from researchers, scientific organizations, industry groups, laboratories, and universities. Eighteen were supportive of the proposed action. The remaining six comments are discussed below by topic.

We proposed to amend the list of PPQ select agents and toxins listed in 7 CFR 331.3 by removing three PPQ select agents and toxins from the list: Peronosclerospora philippinensis (Peronosclerospora sacchari), Sclerophthora rayssiae, and Phoma glycinicola (formerly Pyrenochaeta glycines).

We also proposed to remove three overlap select agents and toxins from the list set out in 9 CFR 121.4(b): Bacillus anthracis (Pasteur strain), Brucella abortus and Brucella suis.

After carefully considering the technical input of subject matter experts and recommendations from Federal advisory groups, we have decided not to finalize the proposed changes to the list of select agents and toxins at this time.

In 7 CFR 331.1 and 9 CFR 121.1, we proposed to add definitions for inactivation and kill curve to clarify terms contained within the proposed inactivation provisions. As detailed later in this final rule, we have removed the requirement for generation of a kill curve. We are therefore not including the definition in the regulations.

One commenter suggested that we specify that a “validated method” was used for inactivation. The commenter said that the addition of the word “validated” would ensure that tested and appropriate methods of inactivation would be utilized.

We are eliminating the definition for inactivation and instead adding a definition of validated inactivation procedure to the regulations. This definition encompasses the prior definition of inactivation as well as providing further detail which we believe will be useful for regulated entities. Validated inactivation procedure is defined as a procedure, whose efficacy is confirmed by data generated from a viability testing protocol, to render a select agent non-viable but allows the select agent to retain characteristics of interest for future use; or to render any nucleic acids that can produce infectious forms of any select agent virus non-infectious for future use. While the commenter suggested we use the term “method,” we have decided to use the term “procedure” in response to comments received on the CDC docket.

The same commenter suggested that we add definitions of validated sterility test and safety margin as these terms were both proposed for use in the biocontainment and biosafety sections and could prove confusing or be subject to misinterpretation.

Given that we are adding a definition of validated inactivation procedure as described previously, we are not adding a definition of validated sterility test. We are not adding a definition of safety margin since that term will not be in the regulations.

While we did not receive any further comments regarding definitions, in response to comments received by CDC and in the interests of maintaining parity between the APHIS and CDC regulations, we are adding a definition for viability testing protocol. That term, which is now used in §§ 331.3, 121.3, and 121.4, is defined as, “a protocol to confirm the validated inactivation procedure by demonstrating the inability of a select agent to replicate.”

We proposed to amend 7 CFR 331.3(d)(2), 9 CFR 121.3(d)(2), and 9 CFR 121.4(d)(2), which exclude nonviable select agents or nonfunctional toxins from the requirements of the regulations, in order to clarify our policy that an entity must use a validated procedure to render a select agent nonviable or regulated nucleic acids non-infectious for future use. This means that the method must be scientifically sound and that it will produce consistent results each time it is used.

One commenter stated that we need to consistently address toxins throughout the regulations and suggested adding language specifying that required methods would also render a select toxin as nonfunctional.

We did not include language concerning toxins because, unlike select agents, toxins do not replicate. An inactivation failure with a toxin therefore represents a lower level of risk and thus does not justify the potential additional recordkeeping and reporting burden for registered entities at this time. We may revisit this issue in the future.

We proposed that inactivation include the use of one of the following: The exact conditions of a commonly accepted method that has been validated as applied (e.g., autoclaving), a published method with adherence to the exact published conditions (i.e., extrapolations or deductions are to be avoided), or in-house methods, only if validation testing includes the specific conditions used and appropriate controls.

The same commenter also suggested that we require that the inactivation process be repeatable.

We agree with the commenter that the inactivation process has to be validated so that the results are repeatable. The definition of validated inactivation procedure states that the procedure must be supported by data generated from viability testing. A process that is not repeatable would never be validated.

We also proposed that the entity develop a site-specific kill curve in order to define the conditions of inactivation for each select agent or regulated nucleic acid. If there are strain-to-strain variations in the resistance of a select agent to the inactivation procedure, then a specific kill curve would have to be developed for each strain that undergoes the inactivation procedure. A new kill curve would have to be created upon any change in procedure or inactivation equipment. In addition, a validated sterility testing protocol would have to be conducted in order to ensure that the inactivation method has rendered a select agent nonviable or regulated nucleic acids non-infectious.

Several commenters raised objections regarding development and use of the kill curve. We have considered these comments and determined that the kill curve and safety margin requirements are not applicable to all inactivation procedures and should therefore not be included in the regulations. We are instead requiring that registered entities develop a validated inactivation procedure by establishing parameters for quantities of starting material and measures of uncertainty for repeated successful inactivation. This is a broad performance standard that will allow for flexibility given the variety of select agents and toxins under regulation.2 In addition, for the sake of clarity and efficiency, we have removed the requirements specific to extracts of select agents, instead including them within the overall performance standard for select agents and toxins as a whole.

One commenter said that, without more specific direction, the subjectivity of individual inspectors would be the principal factor in determining acceptable inactivation verification.

We will not review or approve inactivation protocols. We believe this activity should be approved at the entity, which will allow for researchers to continue to develop new inactivation procedures. However, inspectors will verify that the entity has developed a validated inactivation procedure and will review viability testing results during the entity's inspection.

Another commenter asked that we provide minimum requirements for the sterility testing protocol and specify whether or not this must be site-specific or if validated methods of sterility testing given in published journal articles may be followed.

We recognize that the limits of detection of the viability testing procedures and expected variation from run to run, even when following an inactivation procedure precisely precludes demonstrating full sterility of an inactivated sample. These sources of error must be considered when the entity establishes performance parameters for inactivation procedures. While complete sterility is not a feasible goal for material that is intended for further use, we expect that the risk of live agent in materials that are removed from containment and are thus no longer subject to select agent requirements will be as low as realistically possible from both a safety and security perspective. We will be addressing the need for onsite validation of both inactivation protocols and viability testing in guidance.

The same commenter cited the guidance document entitled “Non-viable Select Agents and Nonfunctional Select Toxins and Rendering Samples Free of Select Agents and Toxins,” 3 which states that, “this guidance does not apply to inactivation for waste disposal.” The commenter urged us to clearly and accurately describe what is intended regarding verification of non-viability in the regulations, stating that they had received comments from some inspectors indicating confusion between inactivation validation requirements for moving materials to a lower containment level and inactivation validation requirements for waste disposal.

We have modified the reporting requirements to require the responsible official to investigate any viability of material that was subjected to a validated inactivation protocol to determine the reason of the inactivation failure. If the responsible official is unable to determine the reason for this failure, he or she must report the inactivation failure to CDC or APHIS. Our intention is to require registered entities to create an environment where inactivation failures are investigated to determine the root source of the errors instead of re-subjecting the material to an inactivation method that may be flawed or faulty. The revised language only requires reporting of inactivation failures to CDC or APHIS when the responsible official cannot determine the reason for the inactivation failure. We are also clarifying that these provisions apply only to those select agents inactivated for future use as non-select agents and not those intended for waste disposal.

Two commenters asked about the minimum percentage of samples required to be tested to constitute a “representative sample.” Another commenter suggested that inactivated lots be stored with documentation that demonstrates that the lot has met the established standard, but added that it is impractical to conduct validated sterility testing on every sample that is inactivated. The commenter claimed that implementing such a requirement would waste specimens where limited volumes are available, be costly in terms of technical time and resources, and is scientifically unjustified.

Successful implementation of the required validated inactivation procedure and the subsequent data derived from viability testing using that procedure will determine the extent of sampling required. We have removed the sterility testing requirement to allow entities flexibility in establishing and utilizing individualized, validated inactivation procedures.

We also proposed to require that an entity conduct an annual review of their site-specific standard operating procedures to ensure that select agents or regulated nucleic acids that can produce infectious forms of any select agent virus are inactivated by a safety margin and revise as necessary.

Two commenters questioned our use of the term “safety margin.” The commenters requested that we remove or define the term, as its meaning is unclear. The commenters further stated that the need for including a safety margin is unclear and appears superfluous if the intent of the requirement is to define the conditions that achieve conditions that render 100 percent of the select agent non-viable or noninfectious.

We are not defining “safety margin” as the proposed regulatory text using this term will not be incorporated into the final rule.

Finally, we proposed that written records be kept for any select agent that has been rendered nonviable or regulated nucleic acids that have been rendered non-infectious.

Two commenters asked for clarification of the actions constituting review, including description of any documentation that will be expected to demonstrate compliance with the requirement. The commenters wanted to know if it was our expectation that the kill curve and sterility testing be repeated and verified annually, or if this is a review of data and written procedures.

In response, we have modified the language regarding review of site-specific standard operating inactivation procedures to clarify that the entity should review these procedures to determine if they are being adhered to by staff. The annual review requirement does not necessarily involve revalidating inactivation procedures. This review may simply take the form of an evaluation of the site-specific standard operating inactivation procedures to ensure the inactivation conditions used and upper agent limits found in validation data are consistent and that the entity staff are following the site-specific standard operating inactivation procedures. At times an entity may need to revalidate inactivation procedures during the annual review. For example, review may be needed if the entity finds that staff are not adhering to standard operating procedures or if the entity wants to deviate from the established, validated inactivation procedure.

While we did not receive any further comments on this issue, in response to comments received by CDC and in the interests of maintaining parity between the APHIS and CDC regulations, we have made the following changes:

• Establishing that surrogate strains that are known to possess properties equivalent to select agents may be used to validate the required inactivation procedures under certain conditions;

• Replacing the term “extract” with “material containing a select agent” to clarify that the inactivation requirements apply to such materials as serums or liquid cultures from which select agents are typically removed via filtration without first undergoing inactivation. This is intended to more accurately describe an element of a two-step process: An inactivation step to destroy the select agent and a second step intended to remove any remaining, viable select agent; and

• Clarification of when an entity may submit a waiver request to the Administrator as well as the procedure for such determinations.

Finally, in 7 CFR 331.3(d)(2), 9 CFR 121.3(d)(2), and 9 CFR 121.4(d)(2), we are replacing the term “nonfunctional toxin” with “nontoxic toxin.” We have determined that the term “nonfunctional” is overbroad and has caused confusion. Our intent was to exclude toxins that can no longer exert their toxic effect and cause disease. For example, Botulinum neurotoxin has three functional domains: Binding domain, translocation domain, and catalytic domain. Each functional domain may be solely manipulated such that the toxin is no longer toxic and does not cause disease even though the other two domains may remain functional. Note that the example provided is for a CDC toxin due to the fact that APHIS does not currently regulate any select toxins.

The provisions of 7 CFR 331.5, 9 CFR 121.5, and 9 CFR 121.6 concern conditions under which entities may be exempted from the requirements of the regulations. We proposed to add language to paragraph (a) in 7 CFR 331.5, 9 CFR 121.5, and 9 CFR 121.6 that specifies that entities may be required to report identification of agents or toxins to other appropriate authorities when required by Federal, State, or local law. Specifically, we proposed to add provisions that state that we do not regulate material containing select agents or toxins when it is in a patient care setting and is not being collected or otherwise tested or retained, nor do we regulate waste generated during delivery of patient care. However, once delivery of patient care for the select agent or toxin infection has concluded, waste would become subject to the requirements of the regulations. If an entity cannot meet these requirements, then the material may be transferred to another entity according to the select agent regulations or destroyed using an approved method. The decision to retain, transfer, or destroy any specimens must be made within 7 calendar days of the conclusion of patient care.

One commenter disagreed with adding such a provision to 9 CFR 121.5. The commenter said that VS should have authority to regulate waste and carcasses from animals (i.e., veterinary patients) naturally infected with select agents to ensure that infection does not spread to other livestock or poultry. The commenter asked that we alter the wording of the proposed section in order to specify that the requirement refers to human patients only.

The provisions the commenter refers to relate to the care of human patients only. However, it should be noted that any waste or carcasses from animals infected with a select agent, provided the select agent or toxin has not been intentionally introduced, cultivated, collected, or otherwise extracted from its natural source, are already listed as excluded in §§ 121.3(d)(1) and 121.4(d)(1) of the regulations.

While we did not receive any further comments on this issue, in response to comments received by CDC and in the interests of maintaining parity between the APHIS and CDC regulations, we are amending the text to clarify the following:

• That patient care refers to actions by health care professionals;

• To clarify that destruction and transfer requirements apply solely to waste generated in the course of patient care and not specimens or samples taken from the patient; and

• That specimens taken from a patient are not subject to the regulations during the period in which they are directly associated with the diagnosis, but all specimens taken and kept more than 7 days after the conclusion of patient care are subject to the regulations.

The regulations require registered entities to develop and implement a number of plans in order to ensure the safety and security of the select agents they handle. These are:

• A security plan, as described by the regulations in 7 CFR 331.11 and 9 CFR 121.11, that provides for measures sufficient to safeguard the select agent or toxin against unauthorized access, theft, loss, or release;

• A biocontainment plan, in the case of PPQ select agents, or a biosafety plan, in the case of VS and overlap select agents, as described in the regulations in 7 CFR 331.12 and 9 CFR 121.12, that provides for measures sufficient to contain the select agent or toxin (e.g., physical structure and features of the entity, and operational and procedural safeguards); and

• An incident response plan, as described in the regulations in 7 CFR 331.14 and 9 CFR 121.14, that provides for measures that the registered entity will implement in the event of theft, loss, or release of a select agent or toxin; inventory discrepancies; security breaches (including information systems); severe weather and other natural disasters; workplace violence; bomb threats and suspicious packages; and emergencies such as fire, gas leak, explosion, power outage, etc. The response procedures must account for hazards associated with the select agent or toxin and appropriate actions to contain such agent or toxin.

All of these plans require annual review and revision as necessary. Drills or exercises must also be conducted at least annually to test and evaluate the effectiveness of the plans. The plans must be reviewed and revised, as necessary, after any drill or exercise and after any incident. We proposed to require that these drills or exercises be documented to include how the drill or exercise tested and evaluated the plan, any problems identified, any corrective action taken, and the names of the individuals who participated in the drill or exercise. This will provide a more thorough accounting of required activities as well as increasing the efficacy of the plans via testing and entity-directed improvements. We proposed to add these requirements to 7 CFR 331.11(h), 331.12(e), 331.14(f), 9 CFR 121.11(h), 121.12(e), and 121.14(f).

One commenter stated that the requirement to record the names of the individuals who participated in a given drill or exercise should be limited to registered entity personnel and not include first responders or others who participate. The commenter suggested that a list of the participating external agencies (e.g., emergency management, emergency medical services, fire department, etc.) could be included.

We agree with the commenter's suggestion and have updated the regulations in order to clarify that only the names of individuals at the registered entity are required to be listed. The entity may choose to list the names of external agencies (e.g., fire department, police department, etc.) that participated in the drill or exercise.

Comments on more specific proposed changes to these plans may be found below.

Paragraph (a) of 7 CFR 331.12 and 9 CFR 121.12 requires that the biocontainment or biosafety plan contain sufficient information and documentation to describe the biosafety and containment procedures for each select agent or toxin that the registered entity will possess. The plan must also include a description of the biosafety and containment procedures for any animals (including arthropods) or plants intentionally or accidentally exposed to or infected with a select agent. We proposed to additionally require that laboratory-specific biocontainment and/or biosafety manuals must be accessible to individuals working in those laboratories. This change will help to foster an enhanced culture of responsibility by ensuring that appropriate biocontainment and/or biosafety resources are available to all staff with access to select agents and toxins within a select agent laboratory.

One commenter suggested that the specific practice of making manuals accessible is already employed by registered entities. The commenter therefore questioned the need for a separate requirement.

We agree with the commenter and have removed the requirement.

Two commenters urged that, “a description of the biosafety and containment procedures for any animals (including arthropods) or plants intentionally or accidentally exposed to or infected with a select agent” should clearly refer not only to animals within the laboratory but also wildlife, domestic, and stray animals outside of the buildings if they are potentially exposed via accidental release. The commenter added that there should be a system in place to detect such incidents if they occur.

The term “any animals” includes both laboratory animals as well as the wild, domestic, and stray animals described by the commenters. We will, however, add specific clarification to the guidance documents associated with the biocontainment and biosafety plans.

One commenter requested clarification regarding the term “laboratory.” The commenter wanted to know whether the term refers to a single room, a building, or to a group of rooms (e.g., laboratory, animal room, and necropsy) used by a principal investigator for a research project. The commenter also requested clarification regarding the phrase, “must be available to each individual working in the laboratory,” asking if this would require creation of a specific biocontainment or biosafety manual for each room.

We have clarified the language to state that “biosafety and containment procedures specific to use of the select agent or toxin by the principal investigator must be available to each individual involved with that project.” This more appropriately ties the creation and distribution of biocontainment and biosafety manuals to specific projects, select agents, and people.

We also proposed to add specific provisions to the biocontainment and biosafety plans that would require completion of a written risk assessment for each procedure.

Two commenters stated that these requirements are unnecessary and would prove excessively burdensome to researchers and the responsible official and should be removed. The commenters said that the new requirements regarding validation of inactivation procedures would serve the same security function. The commenters added that APHIS already has opportunity to review and require amendment of an entity's biocontainment or biosafety plan as a condition of registration or as a result of inspection.

We agree with the commenter that this level of detail would prove unnecessarily burdensome. We have instead added language to 7 CFR 331.12(a)(1) and 9 CFR 331.12(a)(1) to explicitly require that the biocontainment and biosafety plans include a description of the hazardous characteristics of each agent or toxin listed on the entity's registration and the biosecurity or biosafety risk associated with laboratory procedures related to the select agent or toxin.

One commenter asked that we define “risk assessment,” given that it is a very broad term and therefore open to interpretation. This commenter and another requested that we provide basic templates for these new required sections and indicate where registered entities and entities seeking registration may find these templates.

We have revised and condensed the proposed language as a result of this and other comments. It no longer includes the term “risk assessment.”

We proposed to amend the regulations in 7 CFR 331.15 and 9 CFR 121.15, which concern provision of mandatory training for staff and visitors who work in or visit areas where select agents or toxins are handled or stored. We proposed to require that all individuals who have received approval to have access to select agents and toxins must undergo training regardless of whether they have access to those select agents or toxins. The training would have to be completed within a year of that individual's approval or prior to entry into an area where select agents and toxins are used or stored, whichever occurs first.

Two commenters objected to the proposed addition, stating that we should include a description of the level of training necessary for personnel in varying positions with highly disparate job duties and responsibilities. The commenters requested that we clarify that required training will be conducted at a level appropriate to the registered person's role and level of access to select agents.

We agree with the commenters' point and have altered the required training language to clearly delineate the types of training required for individuals with varying access levels.

One commenter asked that we clearly specify the requirements for both initial and annual training. The commenter also asked that we consider making training a prerequisite for access to select agents and toxins.

While we made no changes to our regulatory language based on this comment, the document entitled, “Guidance for Meeting the Training Requirements of the Select Agent Regulations” 4 will be updated to provide further detail and assistance regarding the content of initial and annual training. The regulations in 7 CFR 331.15(a)(1) and 9 CFR 121.15(a)(1) already require that each approved individual receive information and training on biosecurity/biosafety, security (including security awareness), and incident response before that individual has access to any select agents and toxins.

The regulations in 7 CFR 331.17 and 9 CFR 121.17 concern required recordkeeping procedures for regulated entities as those records relate to select agents and toxins. Paragraph (a)(3)(x) requires that registered entities record the destruction of any toxins by specifically noting the quantity of toxin destroyed, the date of such action, and by whom. However, there is not an equivalent requirement regarding the destruction of select agents. We proposed to add this requirement in order to ensure consistency with the toxin provisions and ensure proper tracking of select agents from acquisition to destruction.

While we did not receive any comments on this issue, in response to comments received by CDC and in the interests of maintaining parity between the APHIS and CDC regulations, we are amending the text to stipulate that registered entities must maintain a record of the select agent used, purpose of use, and, when applicable, final disposition (including destruction) for each select agent held in long-term storage.

We also proposed to state that any records created that contain information related to an entity's registration or its select agents and toxins must be provided promptly upon request. We proposed to specify that such records may include, but are not limited to, biocontainment certifications, laboratory notebooks, institutional biosafety and/or animal use committee minutes and approved protocols, and records associated with occupational health and suitability programs.

One commenter expressed concern regarding the requirement to keep laboratory notebooks for inspection purposes. The commenter stated that items may include proprietary intellectual property and requested clarification regarding the information needed from the notebooks. The commenter asked that we amend the regulatory language in order to protect intellectual property interests and specify if any information would be required from laboratory notebooks apart from that collected for inventory purposes.

We agree with the commenter and we have clarified that only information related to the requirements of the regulations must be produced upon request. Such information may be found in biocontainment certifications, laboratory notebooks, institutional biosecurity/biosafety and/or animal use committee minutes and approved protocols, and records associated with occupational health and suitability programs. Accordingly, we will only be reviewing relevant portions of any laboratory notebooks or documents and only if they contain information related to any requirements of the regulations.

To ensure the accuracy of handwritten records, we also proposed to specify that such records must be legible.

Another commenter suggested that we require that records be written in ink and not pencil and should be signed and dated when appropriate.

We acknowledge this suggestion as good practice. However, in the interests of not being overly prescriptive, we are leaving the interpretation of “legible” up to individual registered entities.

Paragraph (a)(1) in both 7 CFR 331.17 and 9 CFR 121.17 requires entities to maintain an accurate, current inventory for each select agent (including viral genetic elements, recombinant and/or synthetic nucleic acids, and organisms containing recombinant and/or synthetic nucleic acids) held in long-term storage. We continue to receive comments critical of that portion of the regulations. Criticism is typically focused on the belief that a container-based inventory requirement is not a useful mechanism to track inventory of biological agents, since small amounts could be stolen without detection and used to grow larger quantities.

However, the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 obliges APHIS and CDC to include a requirement for “the prompt notification of the Secretary, and appropriate Federal, State, and local law enforcement agencies, of the theft or loss of listed agents and toxins” in the regulations. We therefore solicited comment regarding what regulatory requirement or requirements should be implemented such that a registered entity could quickly determine whether a select agent had been lost or stolen from long-term storage without that registered entity first having an accurate, current inventory for each select agent held in long-term storage. Additionally, we solicited ideas concerning ways in which the current regulations could be amended to address the possibility of theft of a select agent from a container held in long-term storage.

One commenter stated that, while they understand the need for such inventory and notification requirements, an enormous amount of time and effort is spent during inspections validating that inventories are accurate. The commenter said that this has resulted in the loss of valuable virus isolates due to unintentional thawing, failure of ultralow temperature freezers due to repeated opening and the resulting loss of ultralow temperature, and inefficient use of employee time. The commenter said that measuring the volumes of stored vials of bacteria and viruses in the manner that toxins or other non-replicative select agents are inventoried is illogical. The commenter acknowledged that it is important to indicate the nature of the pathogens stored and the numbers of vials in freezer stocks, but even the most fastidious recordkeeping could not demonstrate that vials of replicative organisms had not been accessed. The commenter stated that current select agent practices allow for these stocks to be maintained in tamper-evident stocks (e.g., security ties on freezer boxes) so that vials are not individually removed, thawed, and measured. The commenter concluded that requiring the use of tools of this nature in the case of replicative organisms is a logical step that would not eliminate the need to inventory, but which also would not degrade samples and allow for detection of samples that may have disappeared.

We appreciate this comment and will continue to consider how the recognition of theft and loss might be addressed through alternative approaches.

We are also adding a definition of principal investigator to the regulations in 7 CFR 331.1 and 9 CFR 121.1 as it is used but not defined in the APHIS regulations. The addition also serves to maintain parity with the CDC regulations. Our definition is identical to that used by CDC.

Therefore, for the reasons given in the proposed rule and in this document, we are adopting the proposed rule as a final rule with the changes discussed in this document.

This final rule has been determined to be significant for the purposes of Executive Order 12866 and, therefore, has been reviewed by the Office of Management and Budget.

In accordance with 5 U.S.C. 604, we have performed a final regulatory flexibility analysis, which is summarized below, regarding the economic effects of this rule on small entities. Copies of the full analysis are available on the Regulations.gov Web site (see footnote 1 in this document for a link to Regulations.gov) or by contacting the person listed under FOR FURTHER INFORMATION CONTACT.

Sections 201 and 212(a)(2) of the Act require a biennial review and republication of the select agent and toxin list, with revisions as appropriate in accordance with this law. This final rule will implement the recommendations of the fourth biennial review of select agent regulations and has finalized changes that will increase their usability as well as provide for enhanced program oversight. These amendments include new provisions regarding the inactivation of select agents, specific biosafety and toxin requirements and clarification of regulatory language concerning security, training, and records. The final rule will require that entities develop a validated inactivation procedure by establishing parameters for quantities of starting material and measures of uncertainty for repeated successful inactivation. This is a broad performance standard that will allow for flexibility given the variety of select agents and toxins under regulation to define conditions of inactivation for each select agent or regulated infectious nucleic acid and maintain written records of having done so. Costs of complying with this amendment are expected to be modest.

Currently, there are 291 entities registered with APHIS and CDC. Of these entities, there are 240 registered to possess Tier 1 select agents and toxins, including 78 academic, 29 commercial, 80 State government, 37 Federal government, and 16 private (non-profit) institutions, most of which are considered to be small entities. Based on current recordkeeping and reporting requirements, an additional 10 to 20 hours per year may be required for maintaining records associated with select agents or material containing select agents or regulated nucleic acids that can produce infectious forms of any select agent virus that have been subjected to a validated inactivation procedure or a procedure for removal of viable select agents. At an imputed cost of $33.40 per hour (GS-12, step 2), this additional time requirement per entity will cost between $334 and $668 per year, or in total for all registered entities between $80,000 and $160,000. Assuming that costs of the rule could be considered to be significant if they exceeded 1 percent of revenue earned by the affected entities, revenues would need to average less than $33,400 to $66,800 for this to be the case. While the vast majority of the entities in industries potentially affected by this rule, other than post-secondary institutions, can be considered small, average annual revenues are well above this range.

Due to the reasons summarized here and explained in the analysis accompanying this rule, the Administrator certifies that this action will not have a significant economic impact on a substantial number of small entities.

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are inconsistent with this rule; (2) has no retroactive effect; and (3) does not require administrative proceedings before parties may file suit in court challenging this rule.

This rule has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. Executive Order 13175 requires Federal agencies to consult and coordinate with tribes on a government-to-government basis on policies that have tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

The Animal and Plant Health Inspection Service has assessed the impact of this rule on Indian tribes and determined that this rule does not, to our knowledge, have tribal implications that require tribal consultation under E.O. 13175. If a Tribe requests consultation, the Animal and Plant Health Inspection Service will work with the Office of Tribal Relations to ensure meaningful consultation is provided where changes, additions and modifications identified herein are not expressly mandated by Congress.

In accordance with section 3507(d) of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the reporting, recordkeeping, and third-party disclosure requirements included this rule are in the process of being reinstated by the Office of Management and Budget under 0579-0213.

The Animal and Plant Health Inspection Service is committed to compliance with the E-Government Act to promote the use of the Internet and other information technologies, to provide increased opportunities for citizen access to Government information and services, and for other purposes. For information pertinent to E-Government Act compliance related to this rule, please contact Ms. Kimberly Hardy, APHIS' Information Collection Coordinator, at 301-851-2483.

Accordingly, 7 CFR part 331 and 9 CFR part 121 are amended as follows:

This rule is issued under Marketing Order No. 981, as amended (7 CFR part 981), regulating the handling of almonds grown in California, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Orders 12866, 13563, and 13175.

Section 981.442 of the order regulates almond quality, including the percentage of inedible (low quality) kernels required to be disposed of by handlers. Previously, the weight of inedible kernels in excess of 0.50 percent of kernel weight of almonds received by each handler constituted the handler's disposition obligation. Handlers must satisfy their obligation by disposing of the inedible kernels in Board-accepted, non-human outlets such as animal feed or oil.

In the past several years, total inedible kernel percentages have been trending lower. This is partially due to good agricultural practices used by growers and better technologies in handler facilities. At the same time, the market value of almonds has increased significantly. As a result, some of the Board-accepted outlets have started to clean and repurpose almonds disposed under the obligation causing concern that product is being sold for human consumption without following the order's outgoing quality requirements. Increasing the inedible kernel tolerance to 2 percent provides handlers more control over low quality product, helping ensure any product destined for human consumption is compliant with the order's outgoing quality requirements. In an interim rule published in the Federal Register on August 17, 2016, and effective on August 18, 2016, (81 FR 54719, Doc. No. AMS-SC-16-0047, SC16-981-3 IR), § 981.442(a)(4)(i) was amended by changing the disposition obligation from 0.5 percent to 2 percent. This rule continues in effect that action.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

There are approximately 6,800 almond growers in the production area and approximately 100 handlers subject to regulation under the marketing order. Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts of less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $7,500,000 (13 CFR 121.201).

The National Agricultural Statistics Service (NASS) reported in its 2012 Agricultural Census that there were 6,841 almond farms in the production area (California), of which 6,204 had bearing acres. The following computation provides an estimate of the proportion of producers (farms) and agricultural service firms (handlers) that would be considered small under the SBA definitions.

The NASS Census data indicates that out of the 6,204 California farms with bearing acres of almonds, 4,471 (72 percent) have fewer than 100 bearing acres.

For the almond industry's most recently reported crop year (2015), NASS reported an average yield of 2,130 pounds per acre, and a season average grower price of $2.84 per pound. A 100-acre farm with an average yield of 2,130 pounds per acre would produce about 213,000 pounds of almonds. At $2.84 per pound, that farm's production would be valued at $604,920. Since Census of Agriculture indicates that the majority of California's almond farms are smaller than 100 acres, it could be concluded that the majority of growers had annual receipts from the sale of almonds in 2015 of less than $604,920, which is below the SBA threshold of $750,000. Thus, over 70 percent of California's almond growers would be considered small growers according to SBA's definition.

According to information supplied by the Board, approximately 30 percent of California's almond handlers shipped almonds valued under $7,500,000 during the 2014-15 crop year, and would, therefore, be considered small handlers according to the SBA definition.

This rule continues in effect the revision of § 981.442(a)(4)(i), which relaxed incoming quality requirements by increasing the inedible kernel tolerance from 0.50 percent to 2 percent. This relaxation decreases California almond handlers' disposition obligation, and also allows handlers more flexibility in their operations while continuing to maintain quality control and ensuring compliance with the order's requirements. Authority for this action is provided in § 981.42(a) of the order.

Regarding the impact of this action on affected entities, increasing the inedible kernel tolerance reduces disposition obligation on handlers and provides handlers with more flexibility and control over the low quality product. This rule is not expected to change handler inspection costs, as handlers currently are required to have all lots inspected to determine the percentage of inedible kernels.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the order's information collection requirements have been previously approved by the Office of Management and Budget (OMB) and assigned OMB No. 0581-0178 (Vegetable and Specialty Crops.) No changes are necessary in those requirements as a result of this action. Should any changes become necessary, they would be submitted to OMB for approval.

This rule will not impose any additional reporting or recordkeeping requirements on either small or large almond handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. In addition, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

Further, the Board's meeting was widely publicized throughout the almond industry and all interested persons were invited to attend the meeting and participate in Board deliberations. Like all Board meetings, the April 12, 2016, meeting was a public meeting and all entities, both large and small, were able to express their views on this issue.

Comments on the interim rule were required to be received on or before October 17, 2016. Two comments were received. One commenter stated that this change will allow almond handlers to have more flexibility with their operations. The other commenter stated the increase in tolerance should lead to a decrease in price. Marketing orders do not regulate price. Therefore, for the reasons given in the interim rule, we are adopting the interim rule as a final rule, without change.

To view the interim rule, go to: https://www.regulations.gov/docket?D=AMS-SC-16-0047.

This action also affirms information contained in the interim rule concerning Executive Orders 12866, 12988, 13175, and 13563; the Paperwork Reduction Act (44 U.S.C. Chapter 35); and the E-Gov Act (44 U.S.C. 101).

After consideration of all relevant material presented, it is found that finalizing the interim rule, without change, as published in the Federal Register (81 FR 54719) will tend to effectuate the declared policy of the Act.

In a final rule 1 that was published in the Federal Register on July 2, 2015 (80 FR 37935-37953, Docket No. APHIS-2014-0032), and effective on September 1, 2015, we amended the regulations governing the importation of certain animals, meat, and other animal products to allow, under certain conditions, the importation of fresh (chilled or frozen) beef from a region in Argentina located north of Patagonia South and Patagonia North B, referred to as Northern Argentina. These requirements appear in 9 CFR 94.29, which provides for the importation of fresh beef and ovine meat from certain regions. However, when we added the requirements, we inadvertently limited the requirements in paragraph (i), which provides the requirements for the maturation of carcasses, to meat derived from bovines. Therefore, we are amending the paragraph to remove the limitation.

Accordingly, we are amending 9 CFR part 94 as follows:

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. 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. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would amend the route structure as required to preserve the safe and efficient flow of air traffic.

On September 26, 2014, the FAA published in the Federal Register a final rule (79 FR 57758), Docket No. FAA-2014-0295, that amended, removed, and established multiple ATS routes in the north central U.S. to reflect and accommodate route changes being made in Canadian airspace as part of a Canadian airspace redesign project. On December 5, 2014, the FAA published in the Federal Register a final rule, technical amendment (79 FR 72135), Docket No. FAA-2014-0986, that further amended a number of the routes to reflect changes made by NAV CANADA as part of their airspace redesign effort after publication of the original final rule. During a recent aeronautical review, the FAA identified waypoint coordinate updates for the Canadian waypoints OMRAK, PEPLA, TAGUM, TANKO, and VIGLO.

This rule makes the corrections to be in concert with FAA and Canadian aeronautical databases.

This document amends FAA Order 7400.11A, Airspace Designations and Reporting Points, dated August 3, 2016, and effective September 15, 2016. FAA Order 7400.11A is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11A lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is amending Title 14, Code of Federal Regulations (14 CFR) part 71 by modifying RNAV routes Q-140, Q-816, Q-818, Q-822, Q-824, Q-917, and Q-935. The route modifications correct the OMRAK, PEPLA, TAGUM, TANKO, and VIGLO waypoint geographic coordinates used in the routes to match the FAA and Canadian aeronautical database information. The amendments ensure safe and efficient across border connectivity.

The RNAV route modifications accomplished by this action are outlined below.

Q-140: Change the PEPLA waypoint geographic coordinates from “lat. 43°47′51.00″ N., long. 080°01′02.00″ W.” to read “lat. 43°47′50.98″ N., long. 080°00′53.56″ W.”

Q-816: Change the OMRAK waypoint geographic coordinates from “lat. 43°16′06.00″ N., long. 082°16′25.00″ W.” to read “lat. 43°16′15.45″ N., long. 082°15′52.31″ W.”

Q-818: Change the TANKO waypoint geographic coordinates from “lat. 43°01′32.00″ N., long. 082°22′43.00″ W.” to read “lat. 43°01′32.48″ N., long. 082°23′02.38″ W.”

Q-822: Change the TANKO waypoint geographic coordinates from “lat. 43°01′32.00″ N., long. 082°22′43.00″ W.” to read “lat. 43°01′32.48″ N., long. 082°23′02.38″ W.”

Q-824: Change the TAGUM waypoint geographic coordinates from “lat. 43°28′47.00″ N., long. 082°10′37.00″ W.” to read “lat. 43°28′54.05″ N., long. 082°09′46.39″ W.”

Q-917: Change the VIGLO waypoint geographic coordinates from “lat. 45°23′28.00″ N., long. 082°25′11.00″ W.” to read “lat. 45°23′48.00″ N., long. 082°25′11.00″ W.”, and the PEPLA waypoint geographic coordinates from “lat. 43°47′51.00″ N., long. 080°01′02.00″ W.” to read “lat. 43°47′50.98″ N., long. 080°00′53.56″ W.”

Q-935: Change the OMRAK waypoint geographic coordinates from “lat. 43°16′06.00″ N., long. 082°16′25.00″ W.” to read “lat. 43°16′15.45″ N., long. 082°15′52.31″ W.”

High altitude United States RNAV Q-routes are published in paragraph 2006 and high altitude Canadian RNAV Q-routes are published in paragraph 2007 of FAA Order 7400.11A dated August 3, 2016, and effective September 15, 2016, which is incorporated by reference in 14 CFR 71.1. The high altitude United States and Canadian RNAV Q-routes listed in this rule will be subsequently published in the Order.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA has determined that this action of modifying seven high altitude RNAV Q-routes qualifies for categorical exclusion under the National Environmental Policy Act and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F. Environmental Impacts: Policies and Procedures, Paragraph 5-6.5a, which categorically excludes from further environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points). This action is not expected to cause any potentially significant environmental impacts. In accordance with FAAO 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, this action has been reviewed for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis, and it is determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment.

In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:

The government of the Hong Kong Special Administrative Region maintains an import and export control system. The “Import and Export (Strategic Commodities) Regulations” are an integral part of that system. Schedules in those regulations identify articles that may not be imported or exported without a license from Hong Kong's Director-General of Trade and Industry. Those schedules and much of the CCL are based on the control lists published by four multilateral export control regimes. Export control classification number (ECCN) entries on the CCL identify one or more reason(s) for which listed items are controlled. Four of these reasons for control are based on the four multilateral export control regimes, as follows: The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (NS on the CCL), the Missile Technology Control Regime (MT on the CCL), the Nuclear Suppliers Group (NP column 1 on the CCL), and the Australia Group (CB on the CCL). Because the Hong Kong schedules and most of the CCL are developed from these same four sources, large portions of both sets of documents cover the same items.

The government of the Hong Kong Special Administrative Region uses information from the import licenses that it issues to identify articles that require an export license. This rule imposes new support documentation requirements affecting items subject to the EAR that are exported or reexported to Hong Kong or are reexported from Hong Kong. BIS is taking this action to provide greater assurance that U.S. origin items that are subject to the multilateral control regimes noted above will be properly authorized by the United States to their final destination, even when those items first pass through Hong Kong. This rule does not impose any new license requirements.

This rule requires exporters and reexporters using a BIS license or a license exception to export or reexport to Hong Kong items controlled for NS, MT, NP column 1, or CB reasons to obtain certain documents that verify the items' status under the Hong Kong Import and Export (Strategic Commodities) Regulations. The exporter or reexporter must obtain from its client or consignee a copy of a valid import license issued to the Hong Kong importer by the Hong Kong government authorizing import of the item(s) to be shipped to Hong Kong, or a copy of a written statement issued by the Hong Kong government stating that no import license is required to import the item(s) into Hong Kong. The exporter or reexporter must have the copies in its possession, and any Hong Kong import license must not have expired at the time of the export or reexport to Hong Kong. For purposes of this requirement, a written statement issued by the Hong Kong government includes either a written communication to a license applicant informing the applicant that the item does not require a license or a statement available to the general public (including a statement on a Web site by the Hong Kong government) that a license is not required for the item.

This rule also requires reexporters in Hong Kong intending to reexport from Hong Kong items subject to the EAR that are controlled for NS, MT, NP column 1, or CB reasons to obtain from the Hong Kong government a license authorizing export from Hong Kong of the items, or a copy of a written statement issued by the Hong Kong government stating that no export license is required from Hong Kong to export the items. If a Hong Kong license is issued, the reexport must be in accordance with the terms of that license and must be completed during the validity period of the Hong Kong-issued export license. For purposes of this requirement, a written statement issued by the Hong Kong government includes a written communication to a license applicant informing the applicant that the item does not require a license or a statement available to the general public (including a statement on a Web site by the Hong Kong government) that a license is not required for the item.

Since August 21, 2001, the Export Administration Act of 1979, as amended, has been in lapse. However, the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 2001 Comp., p. 783 (2002), as amended by Executive Order 13637 of March 8, 2013, 78 FR 16129 (March 13, 2013), and as extended by the Notice of August 4, 2016, 81 FR 52587 (August 8, 2016), has continued the EAR in effect under the International Emergency Economic Powers Act. BIS continues to carry out the provisions of the Export Administration Act, as appropriate and to the extent permitted by law, pursuant to Executive Order 13222 as amended by Executive Order 13637.

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

2. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This rule includes an expansion of an existing collection of information approved under OMB control number 0694-0093—Import Certificate and End-User Certificate, for which the current burden estimates are 5,872 responses and 1,618 hours annually. BIS expects that this rule will increase the number of transactions for which exporters and reexporters will have to acquire support documentation by about 12,000 transactions annually, with a corresponding increase in the number of burden hours. Send comments regarding this burden estimate or any other aspect of this collections of information, including suggestions for reducing the burden, to Jasmeet K. Seehra, Office of Management and Budget, by email at [email protected] or by fax to (202) 395-7285 and to Hillary Hess, BIS, at [email protected].

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

4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public participation, and a 30-day delay in effective date, are inapplicable because this regulation involves a military and foreign affairs function of the United States (5 U.S.C. 553(a)(1)). Therefore, we are issuing this action as a final rule. This action will foster effective administration of and compliance with the export control regulations of the Hong Kong Special Administrative Region with respect to U.S.-origin items. Those regulations apply to items that are listed on the control lists of multilateral export control regimes of which the United States is a member. Effective control over such items imported into Hong Kong by the government of the Hong Kong Special Administrative Region serves the United States' national security and foreign policy interests directly, because many of these items are controlled due to their national security significance or their potential to be used in activities that would promote proliferation of weapons of mass destruction or in regional destabilizing activities.

This rule also enhances the effectiveness of the multilateral control regimes, which serves United States interests in two ways. First, widespread consistent implementation of those regime-based export controls promotes peace and stability throughout the world generally. Second, this rule signals to other nations, regime member states and non-members alike, the United States' determination that distribution of U.S. origin items throughout the world will be in accordance with its regime commitments.

Moreover, BIS expects that in nearly all instances, this rule requires only that a party in Hong Kong obtain a license that is already required under Hong Kong law. In those instances, no new action is required by persons reexporting from Hong Kong and the only new action with respect to exports and reexports to Hong Kong is for the person in Hong Kong to send a copy of the license to its supplier. In the limited instances where the CCL covers items with one or more of the reasons for control noted above that are not listed on the Hong Kong control, such as when the Hong Kong Government and the United States Government update their control lists in response the changes in the multilateral export control regime lists at different times, the party in Hong Kong will have to obtain a written statement from the Hong Kong Government that a Hong Kong license is not required. However, the rule gives the party in Hong Kong several options for providing the required information. Various documents, including the Hong Kong government's specific response to a license application informing the applicant that a license is not required and more general statements downloaded from a Hong Kong Government Web site, will be adequate to fulfill this requirement. One document may be used for multiple shipments as long as the document remains accurate.

Despite the importance of prompt publication and effectiveness to our foreign policy goals as noted above, BIS recognizes that some exporters and reexporters will need time to obtain the required documentation from their customers for all transactions subject to this rule. Therefore, the effective date of this final rule is ninety days after publication.

For the reasons set forth in the preamble, parts 740, 742, and 762 of the Export Administration Regulations (15 CFR parts 730 through 774) are amended as follows:

Background

As announced by President Obama and India's Prime Minister Singh in a U.S.-India Joint Statement on November 8, 2010, the United States and India formally committed to work together to strengthen the global nonproliferation and export control framework and further transform bilateral export control cooperation to realize the full potential of the global strategic partnership between the two countries. The leaders agreed to take mutual steps to expand cooperation in civil space, defense, and other high-technology sectors. The steps agreed to by the United States included the removal of Indian defense and space-related entities from the Entity List (Supplement No. 4 to part 744 of the EAR) and the realignment of India in U.S. export control regulations. Additionally, the 2010 Joint Statement announced that the United States “intend[ed] to support India's full membership in the four multilateral export control regimes (Nuclear Suppliers Group, Missile Technology Control Regime, Australia Group, and Wassenaar Arrangement) in a phased manner, and to consult with regime members to encourage the evolution of regime membership criteria,” while maintaining these regimes' core principles, “as the Government of India took steps towards the full adoption of the regimes' export control requirements to reflect its prospective membership, with both processes moving forward together.”

To date, BIS has published two rules implementing the President's and Prime Minister's commitments. The first rule, published on January 25, 2011 (76 FR 4228), revised certain export and reexport controls for India, including the removal of nine Indian entities from the Entity List. In addition, BIS amended the EAR to remove India from Country Groups D:2, D:3 and D:4, and added India to Country Group A:2.

In the second rule, published January 23, 2015 (80 FR 3463), BIS amended the EAR, in furtherance of the United States' commitment to the bilateral understanding, by removing India from Crime Control (CC) columns 1 and 3 and from Regional Stability (RS) column 2 on the Commerce Country Chart in Supplement No. 1 to Part 738 of the EAR, because the Government of India had taken appropriate steps to ensure that U.S.-origin items controlled for CC and RS reasons are not reexported from India without a license. Although the second rule removed the license requirement for the majority of items controlled for CC or RS reasons and destined for India, a license requirement remained for items controlled under export control classification numbers (ECCNs) 6A003.b.4.b and 9A515.e for RS column 2 reasons when destined to India.

In addition, BIS published on August 17, 2016, a third rule (81 FR 54721) that was not specific to the bilateral understanding but nonetheless removed a related requirement to include a destination control statement on shipping documents for items controlled for CC columns 1 and 3, and RS column 2 reasons when the items are exported to India.

In this rule, BIS implements an additional step in furtherance of the U.S.-India bilateral understanding and global strategic partnership. On June 7, 2016, the United States and India issued a Joint Statement entitled, “The United States and India: Enduring Global Partners in the 21st Century.” Specifically, in this rule, BIS implements the understanding between the United States and India expressed in the June Statement regarding U.S. export control policy toward India by establishing a new paragraph (b)(8) in § 742.4 (National Security) and a new paragraph (b)(5) in § 742.6 (Regional Stability). These new provisions establish licensing policies of general approval for exports or reexports to or transfers within India of items subject to the EAR, including “600 series” military items, for civil or military end uses in India or for the ultimate end use by the Government of India, for reexport to a Country Group A:5 country, or for return to the United States, so long as such items are not for use in nuclear, “missile,” or chemical or biological weapons activities. This rule does not amend any other licensing policies in part 742 such as those with respect to Missile Technology items. The rule also does not amend any licensing policies pertaining to naval nuclear propulsion. The Country Group A:5 countries are listed in Supplement Number 1 to part 740 and are often informally referred to as the “STA-36” countries because they are the list of countries to which exports under License Exception Strategic Trade Authorization are authorized pursuant to the conditions and limitations of section 740.20(b)(3).

In addition, BIS amends the end user and end use provisions of the Validated End User (VEU) authorization in § 748.15 (Authorization Validated End-User (VEU)), paragraphs (a) (eligible end user provision) and (d) (end-use restrictions), to allow that items obtained under authorization VEU in India may be used for civil or military end uses other than those that involve items controlled for MT reasons, or if for use in nuclear, “missile,” or chemical or biological weapons activities. Section 748.15(c) does not change the January 23, 2015 (80 FR 3463), amendment to the EAR regarding the export and reexport of Crime Control (CC) columns 1 and 3 items to India. Conforming changes are made to paragraph (7)(ii) in Supplement No. 8 to Part 748 (Information Required in Requests for Validated End-User (VEU) Authorization). No other material changes are made in this rule to the VEU program, such as the process for approving a VEU, VEU compliance obligations, the rules pertaining to VEUs in China, or the process of identifying approved VEUs and eligible items and facilities in Supplement No. 7 to Part 748.

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

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

2. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) control number. This rule involves a collection of information approved under OMB control number 0694-0088—Simplified Network Application Process—Redesign System (SNAP-R) and the Multipurpose Export License Application, which carries an annual estimated burden of 31,833 hours. BIS believes that this rule will not have a material impact on that burden because this rule does not increase or decrease BIS's existing licensing requirements. To the extent that it has any impact, BIS believes that the benefits of this rule justify any additional (and likely minimal) additional burden it might create. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing the burden, to Jasmeet K. Seehra, Office of Management and Budget, by email at [email protected] or by fax to (202) 395-7285.

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

4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking and the opportunity for public participation, and a delay in effective date, are inapplicable because this regulation involves a military or foreign affairs function of the United States (see 5 U.S.C. 553(a)(1)). This rule advances essential foreign policy, national security, and nonproliferation goals of the United States and a critical strategic partner, India. Subsequent agency deliberations following the June Statement culminated in this framework for regulatory implementation of the Statement. Delay in implementing this rule to obtain public comment or for any other reason would undermine the good faith timeliness in which the United States signed, and now implements, the Statement and, therefore, would undermine the foreign policy objectives that the rule is intended to serve. Further, no other law requires that a notice of proposed rulemaking or an opportunity for public comment be given for this rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required for this rule under 5 U.S.C. 553, or by any other law, the requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not applicable.

Accordingly, 15 CFR parts 742 and 748 of the EAR (15 CFR parts 730 through 774) are amended as follows:

Background

The United States is a Contracting Party to the Convention on the Conservation of Antarctic Marine Living Resources (Convention). Under Article VII of the Convention, contracting parties established and agreed to maintain the Commission to give effect to the Convention's objective—conservation of AMLR. The United States, along with 23 other countries and the European Union, are members of the Commission and meet annually to formulate, adopt and revise conservation measures. Article IX(6) of the Convention requires the Commission to notify conservation measures to all members and, 180 days thereafter, such measures become binding. If a member objects to a measure within 90 days of notification, the measure is not binding on that member and, should that occur, Article IX(6)(d) of the Convention includes a procedure that allows other members to notify that they can no longer accept that measure.

The Antarctic Marine Living Resources Convention Act of 1984 (AMLRCA), codified at 16 U.S.C. 2431, et seq., provides the statutory authority for the United States to carry out its obligations under the Convention, including implementation of Commission-adopted conservation measures. AMLRCA section 305(a)(1) authorizes the Secretary of State, with the concurrence of the Secretary of Commerce and the Director of the National Science Foundation, to decide whether the United States is unable to accept or can no longer accept a Commission-adopted conservation measure (16 U.S.C. 2434(a)(1)). AMLRCA also gives the Secretary of Commerce authority to promulgate regulations as necessary and appropriate to implement the Act. This authority has been delegated to the Assistant Administrator for Fisheries (Assistant Administrator), who has implemented Commission-adopted conservation measures that are binding on the United States under Article IX of the Convention through regulations at 50 CFR part 300, subpart G (AMLR regulations).

Through the “Illegal, Unreported, and Unregulated Fishing Enforcement Act” (IUU Fishing Enforcement Act), Public Law 114-81 (2015), Congress amended AMLRCA section 306, 16 U.S.C. 2435, which specifies unlawful activities; section 307, 16 U.S.C. 2436, which provides the Secretary of Commerce authority to promulgate regulations that are necessary and appropriate to implement AMLRCA; and section 308(a), 16 U.S.C. 2437(a), which specifies the penalties available for violations of the Act. Public Law 114-81 (2015), Title I, 106(1)-(2).

At each annual meeting, the Commission may adopt new conservation measures or revise existing measures. While all conservation measures are subject to revision at the annual meeting, some (particularly those in the fishery regulation category) expire after one or two fishing seasons and so must be revised annually or biennially, to reflect management or monitoring needs identified during Commission deliberations, changes in catch limits or bycatch limits, or other considerations.

Through this action, NMFS reorganizes, streamlines, and updates the regulations that implement AMLRCA and Commission-adopted conservation measures. These revisions incorporate regulatory changes that were finalized on August 3, 2016 (80 FR 51126) regarding the collection of trade documentation within the government-wide International Trade Data System and required electronic information collection. Certain sections are rearranged so that regulations applicable to the trade of AMLR are grouped together while other sections that are obsolete are removed. This action removes sections that implement annual measures which will be implemented through vessel permits if applicable to the permitted fishing activities.

On July 21, 2016, NMFS published a notice of proposed rulemaking for this action (81 FR 47325) to reorganize and update the regulations implementing U.S. obligations under the Convention. The preamble of the proposed rule (81 FR 47325) provides a detailed description of the changes to these regulations as well as NMFS's implementation of annual or biennial measures as conditions to vessel permits instead of through regulations. Responses to public comments received on the proposed rule are set forth below.

With the exception of minor, non-substantive editorial corrections, this final rule includes no changes to the regulatory text that was published in the proposed rule.

NMFS received two public comments on the proposed rule which are addressed below.

Comment 1: A commenter expressed concern over the removal of the list of CCAMLR Ecosystem Monitoring Program (CEMP) sites from the regulations.

Response: This final rule removes the list of CEMP sites because these sites (Seal Islands, South Shetland Islands and Cape Shirreff and the San Telmo Islands) are no longer protected under CCAMLR conservation measures. The Scientific Committee advised during the 2007 meeting of the Commission that: “because research on the Seal Island CEMP site was no longer undertaken, Conservation Measure 91-03 should be discontinued.” As a result, the Commission discontinued Conservation Measure 91-03 (Report of the Twenty-Sixth Meeting of the Commission: Paragraphs 7.1 and 7.2). Similarly, during the 2009 meeting of the Commission, upon advice from the Scientific Committee, the Commission rescinded Conservation Measure 91-02 (Protection of the Cape Shirreff CEMP site) to avoid duplication of effort on the part of researchers, national governments and the secretariats of CCAMLR and Antarctic Treaty System and noting that the site would continue to be protected under the management plan of an Antarctic Specially Protected Area (ASPA) (Report of the Twenty-Eighth Meeting of the Commission: Paragraph 12.5). ASPAs, as well as Antarctic Specially Managed Areas (ASMAs) are designated and managed under the Antarctic Treaty, and CCAMLR cooperates in implementing these designations and management plans by having Contracting Parties ensure that their fishing vessels are aware of the location and relevant management plan of all designated ASPAs and ASMAs.

Comment 2: NMFS received a comment from United States Seafoods, LLC suggesting that NMFS consider its experience on managing fisheries under the Magnuson-Stevens Fishery Conservation and Management Act (MSA) to establish a stable regulatory environment for U.S. vessels that intend to fish in the CCAMLR Convention Area.

Response: U.S. fishing vessels have not operated within the Convention Area for over a decade. For U.S. vessels interested in fishing in the Convention Area, NMFS established procedures and requirements under the AMLR regulations and, through this rulemaking, makes improvements to that regulatory framework. One improvement is that, under this rule, NMFS may implement annual and biennial measures adopted by CCAMLR as conditions to vessel permits instead of through regulations. Given the short time period between the adoption of new measures by CCAMLR in the fall and the start of the fishing season on December 1, this approach will make the regulatory process more efficient for U.S. vessels and NMFS.

Section 300.101 of the rule defines “annual or biennial measure” as a conservation measure that: (1) Applies to the operation of the Convention's commercial or exploratory fisheries such as gear, catch, and effort restrictions and time and area closures; (2) generally expires after one or two fishing season(s); and (3) does not require the development of policy options or a regulatory framework. This approach will apply only to conservation measures that do not require the development of policy options or a regulatory framework. NMFS will provide for notice-and-comment rulemaking when implementation of a conservation measure implicates other requirements of domestic law or when NMFS needs to interpret or expand upon a conservation measure.

Under this final rule, an application for a vessel permit must be submitted by April 1 for the fishing season that will commence on or after December 1 of that year. Therefore, as part of the vessel permit application process and through the permit itself once issued by NMFS, the applicant would have notice of applicable measures in advance of the start of the fishing season. Moreover, annual and biennial measures, along with all CCAMLR conservation measures currently in force are updated every year following the Commission's annual meeting and made available on the Commission's Web site, www.ccamlr.org and are, therefore, available to all interested members of the public, including prospective participants in CCAMLR fisheries. NMFS may reconsider its approach to implementation of annual and biennial measures if participation by U.S. fishing vessels in CCAMLR fisheries increases.

This rule is published under the authority of Antarctic Marine Living Resources Convention Act, codified at 16 U.S.C. 2431 et seq.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration (SBA) at the proposed rule stage that this rule is not expected to have a significant economic impact on a substantial number of small entities (81 FR 47330, July 21, 2016). The factual basis for the certification was published in the proposed rule and is not repeated here. No comments were received regarding this certification. As a result, a regulatory flexibility analysis is not required and none has been prepared.

This rule contains a Paperwork Reduction Act (PRA) collection-of-information approved by the Office of Management and Budget (OMB) under control number 0648-0194. The table appearing at 15 CFR part 902 is updated to reflect the reorganization of regulations under this final rule. The current, approved collection of information includes permit applications (CEMP, vessel permit, dealer permit, and pre-approval of toothfish imports), vessel and gear marking requirements, installation of and reporting through a vessel monitoring unit, import tickets, and other items.

This rule also contains a new PRA collection-of-information that requires advance notification of transshipments of AMLRs, bait, fuel, or other goods and materials to the CCAMLR Secretariat and submission of a confirmation of the notification to NMFS Headquarters, including information on the vessels involved in the transshipment and the details of the materials being transshipped. The new information collection requirements have been approved by OMB under control number 0648-0742.

Notwithstanding any other provision of the law, no person is required to respond to, and no person shall be subject to penalty for failure to comply with, a collection-of-information subject to the requirements of the PRA, unless that collection-of-information displays a currently valid OMB control number.

For the reasons set out in the preamble, NMFS amends 15 CFR part 902 and 50 CFR part 300 as follows:

Background

This document contains amendments to 26 CFR part 1 under various provisions of the Code in response to statutory changes made by the Economic Growth and Tax Relief Reconciliation Act of 2001, Public Law 107-16 (EGTRRA) and the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Public Law 111-312 (TRUIRJCA).

Section 501(a) of EGTRRA enacted section 2210 of the Code, which made chapter 11 (the estate tax) inapplicable to the estate of any decedent who died after 2009. Section 542 of EGTRRA also enacted section 1022. While section 1014 generally provides that the recipient's basis in property passing from a decedent is the fair market value of the property on the decedent's date of death, section 1022 sets forth a modified carryover basis system applicable after 2009 generally providing that the recipient's basis in property acquired from a decedent is the lesser of the decedent's adjusted basis in the property or the fair market value of the property on the decedent's date of death. Section 901(a) of EGTRRA, known as the “sunset clause”, provided that all provisions of and amendments made by EGTRRA do not apply to estates of decedents dying, gifts made, or generation-skipping transfers after December 31, 2010. The sunset clause effectively limited the application of sections 501(a) and 542 of EGTRRA to 2010.

Section 301(a) of TRUIRJCA, which became law on December 17, 2010, retroactively reinstated the estate tax and repealed section 1022 with respect to the estates of decedents who died in 2010. However, section 301(c) of TRUIRJCA allowed the executor of the estate of a decedent who died in 2010 to elect to apply the Code and regulations thereunder as though section 301(a) of TRUIRJCA did not apply with respect to chapter 11 and with respect to property acquired or passing from the decedent (within the meaning of section 1014(b) of the Code). Thus, section 301(c) of TRUIRJCA allowed the executor of the estate of a decedent who died in 2010 to elect not to have the provisions of chapter 11 apply to the decedent's estate, but rather to have the provisions of section 1022 apply (a Section 1022 Election).

To provide executors with guidance regarding the making of a Section 1022 Election and certain other collateral issues arising from the determination of basis under section 1022, on August 29, 2011, the Treasury Department and the IRS issued Notice 2011-66 (2011-35 IRB 184) and Revenue Procedure 2011-41 (2011-35 IRB 188). Although section 1022 was applicable only to decedents dying in calendar year 2010, basis determined pursuant to that section will continue to be relevant until all of the property whose basis is determined under that section has been sold or otherwise disposed of in a transaction in which gain or loss is recognized. Accordingly, on May 11, 2015, the Treasury Department and the IRS published in the Federal Register (80 FR 26873) a notice of proposed rulemaking (REG-107595-11, 2015-21 IRB 986) proposing amendments to existing regulations under various sections of the Code to take into account the application of the modified carryover basis rules of section 1022. The IRS received written comments responding to the notice of proposed rulemaking. No public hearing was requested or held.

After consideration of the comments received on the proposed regulations, this Treasury decision adopts the proposed regulations without modification as final regulations. However, the final regulations adopt certain nonsubstantive, clarifying changes. The comments received on the proposed regulations are discussed in the remainder of this preamble.

One commenter noted that the proposed regulations proposed to amend § 1.742-1 to provide that the basis of a partnership interest acquired from a decedent is determined under section 1022 if the decedent died in 2010 and the decedent's executor made a Section 1022 Election with respect to the decedent's estate. The commenter noted that there was no similar amendment proposed to be made to § 1.1367-1(j), relating to the basis of stock of an S corporation where a portion of the value of the stock is attributable to items constituting income in respect of a decedent (IRD). The commenter recommended that the final regulations amend § 1.1367-1(j) with language referencing section 1022.

After considering this comment, the Treasury Department and the IRS have determined that no change is necessary. Section 1.1367-1(j) states, “[t]he basis determined under section 1014 of any stock in an S corporation is reduced by the portion of the value of the stock that is attributable to items constituting income in respect of a decedent.” This regulation section, with its required basis adjustment for IRD, is limited to situations in which section 1014 applies. Section 1.1367-1(j) does not apply when a Section 1022 Election is made because there is no basis adjustment under section 1022 to the date of death value of S corporation stock. Without an adjustment to date of death value, no further adjustment to the basis of S corporation stock is required to account for IRD. Therefore, the final regulations do not adopt this comment.

A commenter noted that the proposed regulations only propose amendments to finalized regulations, and not to proposed regulations or temporary regulations. That commenter specifically requested guidance with respect to proposed regulation § 1.465-69(a) (which provides that a successor to a decedent's amount at risk in an activity is increased by the amount by which the successor's basis in the activity is increased under section 1014) and temporary regulation § 16A.1255-2(b)(2) (which provides that if, as of the date a person acquires section 126 property from a decedent, the basis of the property is determined under section 1014, then on that date the aggregate of excludable portions under section 126 in the hands of such transferee is zero). This Treasury decision cannot modify provisions of the proposed or temporary regulations referenced by the commenter without adopting those provisions as final or temporary regulations. The Treasury Department and the IRS continue to study these areas, and therefore are not prepared to adopt modifications to the proposed or temporary regulations referenced by the commenter at this time. Accordingly, the final regulations do not adopt this comment. However, the Treasury Department and the IRS expect that, if those proposed or temporary regulations are adopted as final or temporary regulations in the future, such regulations will be updated as appropriate to account for the existence of section 1022.

Another commenter asked why the preamble to the proposed regulations omitted any discussion of the revisions made to regulations under six particular sections of the Code, and requested an explanation as to why changes to those regulatory provisions were considered less significant than the changes for which an explanation was given. Generally, the Treasury Department and the IRS included descriptions of the proposed changes in that preamble that involved more than a mere insertion of a reference to section 1022 in addition to an existing reference to section 1014. In such cases, it was determined that an explanation or clarification of the substance or effect of the proposed revision would be helpful. In the case of the proposed amendments to regulations under the six Code sections mentioned by the commenter, the only change proposed was the mere insertion of references to section 1022 in addition to existing references to section 1014. Accordingly, the Treasury Department and the IRS determined that no further explanation of those changes was necessary.

A commenter also asked why the proposed regulations did not incorporate the treatment of items under the various Code sections addressed in Revenue Procedure 2011-41, 2011-35 IRB 188. That revenue procedure provides a safe harbor that determines the effect on the application of various Code sections of a Section 1022 Election. The provisions relating to that safe harbor are available only if the executor of the estate makes a Section 1022 Election and takes no position contrary to a provision in that revenue procedure. Nothing in these final regulations changes or invalidates the provisions of Revenue Procedure 2011-41, so the safe harbor will remain available to qualifying taxpayers. Consequently, it is unnecessary to incorporate the revenue procedure into these regulations.

Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. The Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply to these final regulations because the final regulations do not impose a collection of information requirement on small entities. Therefore, a Regulatory Flexibility Analysis is not required. Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking preceding this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business, and no comments were received.

The principal author of these final regulations is Mayer R. Samuels, Office of the Associate Chief Counsel (Passthroughs and Special Industries). Other personnel from the Treasury Department and the IRS participated in their development.

Accordingly, 26 CFR part 1 is amended as follows:

(i) Effective/applicability date. This section applies on and after January 19, 2017. For rules before January 19, 2017, see § 1.1245-4 as contained in 26 CFR part 1 revised as of April 1, 2016.

(j) Effective/applicability date. The provisions in this section are applicable for taxable years beginning on or after May 3, 2004. The provisions of paragraph (d)(4) of this section relating to section 1022 are effective on and after January 19, 2017.

PBGC's regulation on Benefits Payable in Terminated Single-Employer Plans (29 CFR part 4022) prescribes actuarial assumptions—including interest assumptions—for paying plan benefits under terminating single-employer plans covered by title IV of the Employee Retirement Income Security Act of 1974. The interest assumptions in the regulation are also published on PBGC's Web site (http://www.pbgc.gov).

PBGC uses the interest assumptions in Appendix B to Part 4022 to determine whether a benefit is payable as a lump sum and to determine the amount to pay. Appendix C to Part 4022 contains interest assumptions for private-sector pension practitioners to refer to if they wish to use lump-sum interest rates determined using PBGC's historical methodology. Currently, the rates in Appendices B and C of the benefit payment regulation are the same.

The interest assumptions are intended to reflect current conditions in the financial and annuity markets. Assumptions under the benefit payments regulation are updated monthly. This final rule updates the benefit payments interest assumptions for February 2017.1

The February 2017 interest assumptions under the benefit payments regulation will be 1.25 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for January 2017, these interest assumptions are unchanged.

PBGC has determined that notice and public comment on this amendment are impracticable and contrary to the public interest. This finding is based on the need to determine and issue new interest assumptions promptly so that the assumptions can reflect current market conditions as accurately as possible.

Because of the need to provide immediate guidance for the payment of benefits under plans with valuation dates during February 2017, PBGC finds that good cause exists for making the assumptions set forth in this amendment effective less than 30 days after publication.

PBGC has determined that this action is not a “significant regulatory action” under the criteria set forth in Executive Order 12866.

Because no general notice of proposed rulemaking is required for this amendment, the Regulatory Flexibility Act of 1980 does not apply. See 5 U.S.C. 601(2).

In consideration of the foregoing, 29 CFR part 4022 is amended as follows:

Approximately one third of private-sector employees in the United States lack access to a retirement savings plan through their employers.1 To fill this gap, several states are establishing or considering establishing programs that will encourage employees to save for their retirement, including through individual retirement accounts into which employees are automatically enrolled and through other approaches (collectively referred to here as Auto-IRAs, whether or not they use automatic enrollment).2 Under an Auto-IRA program, employee contributions are deposited into an IRA and invested in accordance with the design of the Auto-IRA program and the wishes of the participant. Generally, it is expected that an Auto-IRA program will offer a safe and low-cost investment option as an alternative to a risk-bearing diversified investment, such as a target date fund. In order to assist states in offering savers the option of a principal-protected investment, Fiscal Service will offer retirement savings bonds to state Auto-IRA programs. Fiscal Service reserves the right, however, to decline to issue retirement savings bonds to state Auto-IRA programs on a case-by-case basis, based on considerations such as the structure and reasonableness of associated fees, plans to control fees and expenses, whether participants have reasonable access to their funds, and oversight of providers designated to operate state Auto-IRA programs.

Section 347.0 Offering of securities. This section is amended to offer retirement savings bonds to Auto-IRA custodians for certain state retirement savings programs.

Section 347.1 Applicability. This section is amended to include the Auto-IRA custodians for state retirement savings programs under this part.

Section 347.2 Official agencies. This section clarifies that Fiscal Service is responsible for issuing retirement savings bonds to the Auto-IRA custodians and that states are responsible for administering their own Auto-IRA retirement savings programs.

Section 347.3 Definitions. Several new definitions, including “Auto-IRA,” “state Auto-IRA program,” “IRA,” “Custodian,” “State,” and “Auto-IRA custodian” have been added for ease of reference in Subpart C—Auto-IRA Programs and minor changes have been made to some existing definitions.

Miscellaneous changes have been made to the sections pertaining to retirement savings bonds issued to the custodian of Treasury's retirement savings program, myRA®, which are held in participants' Roth IRAs. These changes, which were made to accommodate revised definitions and other minor or technical revisions, do not affect the terms of these bonds. See, e.g., §§ 347.10 through 347.16.

Section 347.30 Plan requirements for State Auto-IRA programs. Subsection (a) of this new section specifies that retirement savings bonds will be issued to Auto-IRA custodians for certain state Auto-IRA programs, and that no other registrations under Subpart C are permitted. As defined in § 347.3, an Auto-IRA custodian is “an entity designated by a state (including, for the purpose of these regulations, certain political subdivisions of states) to act as the trustee or custodian for Auto-IRAs, in the form of Roth IRAs or traditional IRAs, for or opened on behalf of participants in a state Auto-IRA program.” Subsection (b) lists topics that must be addressed by documentation that programs are required to provide and certify to Fiscal Service annually. The documentation must address: (1) Administration of retirement savings bonds, (2) account monitoring, (3) ability to transfer proceeds, (4) IRA withdrawals, (5) consumer protection, (6) state Auto-IRA program costs of administration, (7) oversight of Auto-IRA custodian, (8) pooling prohibitions, (9) default investments, and (10) consumer education. The Commissioner of the Fiscal Service may use the documentation, among other purposes, in exercising any of the rights reserved under § 347.37, which includes the right to require information addressing additional topics. Subsection (c) provides for a successor Auto-IRA custodian, if needed.

Section 347.31 Crediting of retirement savings bond. This new section requires each bond issued to an Auto-IRA custodian to be credited to an individual's IRA under a state Auto-IRA program.

Section 347.32 Annual additions to retirement savings bond. This new section provides that the initial contribution and additions to a bond on behalf of a participant are subject to the annual contribution limits provided under the Internal Revenue Code and regulations, and that the total value of a retirement savings bond held by an Auto-IRA custodian in an IRA on behalf of any participant cannot exceed $15,000.00.

Section 347.33 Individual additions to retirement savings bond. This new section authorizes Fiscal Service to establish minimum amounts for initial and additional contributions to a retirement savings bond.

Section 347.34 Payment (redemption). Under this new section, an Auto-IRA custodian is responsible for making certain certifications as a condition of the issuance and redemption of a retirement savings bond. Subsection (a) explains how the Auto-IRA custodian will request that Fiscal Service make payment on matured retirement savings bonds as well as those that have been fully or partially redeemed. Under subsection (b), Fiscal Service will make payment on any bonds that it calls for redemption without the Auto-IRA custodian having to make a request. Under § 347.37(4), the Commissioner of the Fiscal Service may exercise discretion to call the bonds for redemption. This might occur for a variety of reasons, including, for example, in the event that a state Auto-IRA program changed significantly such that ongoing use of retirement savings bonds is no longer consistent with these regulations, or in the event that a state Auto-IRA program might have failed to comply with program instructions identified by Fiscal Service or might have failed to provide or comply with documentation required pursuant to § 347.30. Subsection (b) clarifies how bonds called for redemption will be paid, which is in the same manner as bonds submitted for redemption under subsection (a).

Section 347.35 Computation of interest. This new section provides that the interest rate on the retirement savings bonds will track the annual percentage rate on securities in the Government Securities Investment Fund (G Fund) in the Thrift Savings Plan for federal employees and that interest will cease at maturity or call.

Section 347.36 Maturity. This new section provides that the maturity dates for the retirement savings bonds may differ for each bond. The longest possible maturity is 30 years (an original maturity period of 20 years and an extended maturity period of 10 years). A bond will mature at the earlier of 30 years from the date the bond is first issued to the Auto-IRA custodian on behalf of the participant or when its value reaches $15,000.00.

Section 347.37 Reservation of rights. Under this new section, the Commissioner of the Fiscal Service reserves certain rights, including: (1) The right to require a senior official to certify program information to Fiscal Service before the retirement savings bonds are issued to an Auto-IRA custodian; (2) the right to refuse to issue retirement savings bonds to an Auto-IRA custodian in any particular case or class of cases; (3) the right to suspend or cease offering retirement savings bonds to an Auto-IRA custodian; (4) the right to call for redemption of any outstanding retirement savings bond (this might occur for a variety of reasons, including, for example, if a state Auto-IRA program has changed significantly such that ongoing use of retirement savings bonds is no longer consistent with these regulations, or if a state has failed to provide or comply with documentation required pursuant to § 347.30); or (5) the right to determine any appropriate remedy under this subpart.

Subpart D contains miscellaneous provisions (§§ 347.40 through 347.42) that apply to retirement savings bonds issued to the custodians, on behalf of participants, in Treasury's and the states' programs.

Because this rule relates to United States securities, which are contracts between Treasury and the owners of the securities, this rule falls within the contract exception to the Administrative Procedures Act (APA) at 5 U.S.C. 553(a)(2). As a result, the notice, public comment, and delayed effective date provisions of the APA are inapplicable to this rule.

This rule is not a major rule pursuant to the Congressional Review Act (CRA), 5 U.S.C. 801 et seq.

This final rule contains a new collection of information that is subject to the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq. Under the PRA, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid OMB control number. The collection of information contained in this final rulemaking has been submitted to the Office of Management and Budget for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)).

The provisions of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., do not apply to this rule because, pursuant to 5 U.S.C. 553(a)(2), it is not required to be issued with notice and opportunity for public comment.

This rule is not a significant regulatory action pursuant to Executive Order 12866.

For the reasons set forth in the preamble, we amend 31 CFR part 347 as follows:

The Federal Civil Penalties Inflation Adjustment Act of 1990, Public Law 101-410, 104 Stat. 890 (28 U.S.C. 2461, note), as amended by the Debt Collection Improvement Act of 1996, Public Law 104-134, April 26, 1996, and further amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Act), Public Law 114-74, November 2, 2015, required agencies to annually adjust the level of CMPs for inflation to improve their effectiveness and maintain their deterrent effect. The 2015 Act required that not later than July 1, 2016, and not later than January 15 of every year thereafter, the head of each agency must adjust each CMP within its jurisdiction by the inflation adjustment described in the 2015 Act. The inflation adjustment is determined by increasing the maximum CMP or the range of minimum and maximum CMPs, as applicable, for each CMP by the cost-of-living adjustment, rounded to the nearest multiple of $1. The cost-of-living adjustment is the percentage (if any) for each CMP by which the Consumer Price Index (CPI) for the month of October preceding the date of the adjustment (January 15), exceeds the CPI for the month of October in the previous calendar year.

The initial catch up adjustments for inflation to the Department of Defense's CMPs were published as an interim final rule in the Federal Register on May 26, 2016 (81 FR 33389-33391) and became effective on that date. The interim final rule was published as a final rule without change on September 12, 2016 (81 FR 62629-62631), effective that date. The revised methodology for agencies for 2017 and each year thereafter provides for the improvement of the effectiveness of CMPs and to maintain their deterrent effect. Effective 2017, agencies' annual adjustments for inflation to CMPs shall take effect not later than January 15. The Department of Defense is adjusting the level of all civil monetary penalties under its jurisdiction by the Office of Management and Budget (OMB) directed cost-of-living adjustment multiplier for 2017 of 1.01636 prescribed in OMB Memorandum M-17-11, “Implementation of the 2017 annual adjustment pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015,” dated December 16, 2016. The Department of Defense's 2017 adjustments for inflation to CMPs apply only to those CMPs, including those whose associated violation predated such adjustment, which are assessed by the Department of Defense after the effective date of the new CMP level.

Pursuant to 5 U.S.C. 553(b)B, there is good cause to issue this rule without prior public notice or opportunity for public comment because it would be impracticable and unnecessary. The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Section 701(b)) requires agencies, effective 2017, to make annual adjustments for inflation to CMPs notwithstanding section 553 of title 5, United States Code. Additionally, the methodology used, effective 2017, for adjusting CMPs for inflation is established in statute, with no discretion provided to agencies regarding the substance of the adjustments for inflation to CMPs. The Department of Defense is charged only with performing ministerial computations to determine the dollar amount of adjustments for inflation to CMPs.

Further, there are no significant costs associated with the regulatory revisions that would impose any mandates on the Department of Defense, Federal, State or local governments, or the private sector. Accordingly, prior public notice and an opportunity for public comment are not required for this rule. The benefit of this rule is the Department of Defense anticipates that civil monetary penalty collections may increase in the future due to new penalty authorities and other changes in this rule. However, it is difficult to accurately predict the extent of any increase, if any, due to a variety of factors, such as budget and staff resources, the number and quality of civil penalty referrals or leads, and the length of time needed to investigate and resolve a case.

Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distribute 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,” because it does not: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a section of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in these Executive Orders.

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532) requires agencies to assess anticipated costs and benefits before issuing any rule the mandates of which require spending in any year of $100 million in 1995 dollars, updated annually for inflation. In 2016, that threshold is approximately $146 million. This rule will not mandate any requirements for State, local, or tribal governments, nor will it affect private sector costs.

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

The Department of Defense determined that provisions of the Paperwork Reduction Act of 1995, Public Law 104-13, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR part 1320, do not apply to this rule because there are no new or revised recordkeeping or reporting requirements.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a rule that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. This final rule will not have a substantial effect on State and local governments.

Accordingly, 32 CFR part 269 is amended as follows.

I. Table of Abbreviations COTP Captain of the Port DHS Department of Homeland Security FR Federal Register LIS Long Island Sound NPRM Notice of Proposed Rulemaking NAD 83 North American Datum 1983 II. Background Information and Regulatory History

This rulemaking establishes a safety zone for the waters around Pleasure Beach Bridge, Bridgeport, CT. Corresponding regulatory history is discussed below.

The Coast Guard was made aware on December 9, 2015, of damage to Pleasure Beach Bridge, the result of which created a hazard to navigation. On December 22, 2015, the Coast Guard published a temporary final rule entitled, “Safety Zone; Pleasure Beach Bridge, Bridgeport, CT” in the Federal Register (80 FR 79480). On June 23, 2016, the Coast Guard published a second temporary final rule entitled, “Safety Zone; Pleasure Beach Bridge, Bridgeport, CT” in the Federal Register (81 FR 40814). On July 25, 2016, the Coast Guard published a third temporary final rule entitled, “Safety Zone; Pleasure Beach Bridge, Bridgeport, CT” in the Federal Register (81 FR 48329). The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM with respect to this rule because doing so would be impracticable and contrary to the public interest. A solution to remedy the safety hazards associated with this bridge was initially projected to be completed prior to the expiration of the current safety zone, but has been delayed. It would be impracticable and contrary to the public interest to delay promulgating this rule, as it is necessary to protect the safety of waterway users.

We are issuing this rule, and under 5 U.S.C. 553(d)(3), and for the same reasons stated in the preceding paragraph, the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register.

The legal basis for this temporary rule is 33 U.S.C. 1231.

On December 09, 2015, the Coast Guard was made aware of damage sustained to Pleasure Beach Bridge, Bridgeport, CT that has created a hazard to navigation. After further analysis of the bridge structure, the Coast Guard concluded that the overall condition of the structure created a continued hazard to navigation. The COTP Sector LIS has determined that the safety zone established by this temporary final rule is necessary to provide for the safety of life on navigable waterways.

The safety zone established by this rule will cover all navigable waters of the entrance channel to Johnsons Creek in the vicinity of Pleasure Beach Bridge, Bridgeport, CT. This safety zone will be bound inside an area that starts at a point on land at position 41-10.2 N., 073-10.7 W. and then east along the shoreline to a point on land at position 41-9.57 N., 073-9.54 W. and then south across the channel to a point on land at position 41-9.52 N., 073-9.58 W. and then west along the shoreline to a point on land at position 41-9.52 N., 073-10.5 W. and then north across the channel back to the point of origin.

This rule prohibits vessels from entering, transiting, mooring, or anchoring within the area specifically designated as a safety zone during the period of enforcement unless authorized by the COTP or designated representative.

The Coast Guard will notify the public and local mariners of this safety zone through appropriate means, which may include, but are not limited to, publication in the Federal Register, the Local Notice to Mariners, and Broadcast Notice to Mariners.

We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on these statutes and executive orders and we discuss First Amendment rights of protestors.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, it has not been reviewed by the Office of Management and Budget. The Coast Guard determined that this rulemaking is not a significant regulatory action for the following reasons: (1) Persons or vessels desiring to enter the safety zone may do so with permission from the COTP Sector LIS or a designated representative; and (2) the Coast Guard will notify the public of the enforcement of this rule via appropriate means, such as via Local Notice to Mariners and Broadcast Notice to Mariners to increase public awareness of this safety zone.

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

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

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

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

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

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

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section above.

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This temporary rule involves the establishment of a safety zone. It is categorically excluded from further review under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. An environmental analysis checklist supporting this determination, a Categorical Exclusion Determination, and EA Checklist, will be in the docket for review. We seek any comments or information that may lead to the discovery of a significant environmental impact from this rule.

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

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

FERPA, 20 U.S.C. 1232g(g), requires the Secretary to establish or designate an office within the Department of Education (Department) for the purpose of investigating, processing, reviewing, and adjudicating violations and complaints. As part of an expansion of student privacy operations at the Department, the designated office will change from the Family Policy Compliance Office to the Office of the Chief Privacy Officer. This change will not directly impact the public. This change is being made:

1. To allow the Department to more effectively make use of new resources dedicated to student privacy;

2. To permit efficiencies relating to specialization of work; and

3. To clarify responsibilities within the Department.

Under Executive Order 12866, the Secretary must determine whether this regulatory action is “significant” and, therefore, subject to the requirements of the Executive order and subject to review by the Office of Management and Budget (OMB). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action likely to result in a rule that may—

(1) Have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities in a material way (also referred to as an “economically significant” rule);

(2) Create serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) Materially alter the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles stated in the Executive order.

This final regulatory action is not a significant regulatory action subject to review by OMB under section 3(f) of Executive Order 12866.

We have also reviewed these regulations under Executive Order 13563, which supplements and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, Executive Order 13563 requires that an agency—

(1) Propose or adopt regulations only on a reasoned determination that their benefits justify their costs (recognizing that some benefits and costs are difficult to quantify);

(2) Tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives and taking into account—among other things and to the extent practicable—the costs of cumulative regulations;

(3) In choosing among alternative regulatory approaches, select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity);

(4) To the extent feasible, specify performance objectives, rather than the behavior or manner of compliance a regulated entity must adopt; and

(5) Identify and assess available alternatives to direct regulation, including economic incentives—such as user fees or marketable permits—to encourage the desired behavior, or provide information that enables the public to make choices.

Executive Order 13563 also requires an agency “to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.” The Office of Information and Regulatory Affairs of OMB has emphasized that these techniques may include “identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes.”

We are issuing these final regulations only on a reasoned determination that their benefits justify their costs. In choosing among alternative regulatory approaches, we selected those approaches that maximize net benefits. Based on the analysis that follows, the Department believes that these final regulations are consistent with the principles in Executive Order 13563.

We also have determined that this regulatory action does not unduly interfere with State, local, and tribal governments in the exercise of their governmental functions.

In accordance with both Executive orders, the Department has assessed the potential costs and benefits, both quantitative and qualitative, of this regulatory action. The potential costs associated with this regulatory action are those resulting from statutory requirements and those we have determined as necessary for administering the Department's programs and activities.

Upon review of the cost, we have determined there is no financial or resource burden associated with these changes.

Under the Administrative Procedure Act (5 U.S.C. 553), the Department generally offers interested parties the opportunity to comment on proposed regulations. However, these amendments merely reflect changes in internal organization and procedure. The changes do not establish or affect substantive policy. Therefore, under 5 U.S.C. 553(b)(B), the Secretary has determined that proposed regulations are unnecessary and contrary to the public interest.

The Secretary certifies that these regulations will not have a significant economic impact on a substantial number of small entities. These regulations contain technical changes to current regulations. The changes will not have a significant economic impact on any of the entities affected because the regulations do not impose excessive burdens or require unnecessary Federal supervision.

These regulations do not contain any information collection requirements.

This program is not subject to Executive Order 12372 and the regulations in 34 CFR part 79.

Accessible Format: Individuals with disabilities may obtain this document in an alternative format (e.g., braille, large print, audiotape, or compact disc) on request to the contact person listed under FOR FURTHER INFORMATION CONTACT.

Electronic Access to This Document: The official version of this document is the document published in the Federal Register. Free Internet access to the official edition of the Federal Register and the Code of Federal Regulations is available via the Federal Digital System at: www.thefederalregister.org/fdsys. At this site you can view this document, as well as all other documents of this Department published in the Federal Register, in text or Portable Document Format (PDF). To use PDF you must have Adobe Acrobat Reader, which is available free at the site.

You may also access documents of the Department published in the Federal Register by using the article search feature at: www.federalregister.gov. Specifically, through the advanced search feature at this site, you can limit your search to documents published by the Department.

For the reasons discussed in the preamble, the Secretary amends title 34 of the Code of Federal Regulations as follows:

Invitation To Comment

As discussed below, these regulations do not establish substantive policy, but instead establish procedures that must be followed. As procedural regulations, there is no requirement for a comment period. Although these regulations are final regulations, we are interested in whether you think we should make any changes in these regulations and thus we are inviting your comments. We will consider these comments in determining whether to revise the regulations. To ensure that your comments have maximum effect, we urge you to identify clearly the specific section or sections of the regulations that each of your comments addresses and to arrange your comments in the same order as the regulations. See ADDRESSES for instructions on how to submit comments.

We invite you to assist us in complying with the specific requirements of Executive Orders 12866 and 13563 and their overall requirements of reducing regulatory burden that might result from these regulations. Please let us know of any further ways we could reduce potential costs or increase potential benefits while preserving the effective and efficient administration of the Department's programs and activities.

During and after the comment period, you may inspect all public comments about these regulations by accessing Regulations.gov. You may also inspect the comments in person in room 6W245, 400 Maryland Avenue SW., Washington, DC, between the hours of 8:30 a.m. and 4:00 p.m., Eastern time, Monday through Friday of each week except Federal holidays. If you want to schedule time to inspect comments, please contact the person listed under FOR FURTHER INFORMATION CONTACT.

On request, we will supply an appropriate accommodation or auxiliary aid to an individual with a disability who needs assistance to review the comments or other documents in the public rulemaking record for these regulations. If you want to schedule an appointment for this type of accommodation or auxiliary aid, please contact the person listed under FOR FURTHER INFORMATION CONTACT.

On November 1, 2016, the Department of Education promulgated new regulations governing the William D. Ford Federal Direct Loan Program to establish a new Federal standard and a process for determining whether a borrower has a defense to repayment on a loan based on an act or omission of a school (the borrower defense regulations). If the Department determines that a borrower is eligible for relief under the borrower defense regulations, it has the authority to recover losses stemming from such borrower relief from the institution whose conduct gave rise to the borrower defense. These regulations establish the procedural rules that would govern such borrower defense and institutional recovery proceedings, and are designed to ensure that institutions are afforded a full and fair opportunity to defend themselves in such proceedings.

These regulations amend the Department's existing regulations governing proceedings to assess a fine, limitation, suspension, or termination against an institution by adding procedures for a recovery proceeding under the borrower defense regulations. Such a proceeding may be used when pursuing an action under either the Department's new borrower defense regulation at 34 CFR 685.222 or its precursor at 34 CFR 685.206. These regulations are designed to balance important interests by ensuring that institutions are protected by due process of law prior to the imposition of any monetary liability under the borrower defense regulations, while also ensuring that determinations of the validity of borrower defense claims asserted against institutions are resolved fairly, efficiently, and expeditiously for all parties. In addition, these regulations clarify and update the procedural provisions more broadly applicable to fine, limitation, suspension, and termination proceedings.

Under the borrower defense regulations at 34 CFR 685.222, effective July 1, 2017, the applicable process for filing and reviewing claims will depend on whether a borrower's application is considered by the Department as an individual claim or if the Department identifies the application as factually similar to other applications such that the Department identifies a group of borrowers (potentially including borrowers who have not submitted applications) with similar claims. The process will also depend on whether the relevant institution is “open” or “closed”, as those terms are described in the regulations. See 34 CFR 685.222(g)through(h).

The Department has the authority to pursue claims for recovery for losses that the Department has already incurred in granting individual borrower relief, either as stand-alone actions or in combination with group proceedings where those individual claims presented the same facts and circumstances as the group claims. In those instances, the determination of the validity of the individual's discharge claim does not depend on the hearing official's decision, and the Department does not rescind a discharge already granted to an individual if the Department does not succeed in proving the validity of that claim in this proceeding.

Beginning July 1, 2017, the Department will use these procedural regulations both to determine the validity of borrower claims the Department asserts on behalf of borrowers in group claims against “open” institutions, and to hold the institutions liable for losses on those claims in accordance with 34 CFR 685.222(h). In these instances, the hearing official determines the validity of the borrower claims and, correspondingly, whether relief will be granted to these group borrowers. Borrowers may opt out of the group process. When the Department seeks to recover for losses for claims approved under current authority and before July 1, 2017, the Department will use the procedures in these regulations to pursue recovery from the institution. As with any other proceedings to recover on claims already approved, the outcome of a proceeding brought to recover for claims already approved prior to July 1, 2017 will not affect relief already granted to borrowers, but only the accountability of the institution. At its discretion, the Department may also use these regulations to bring actions against “closed” institutions, as defined in 34 CFR 685.222(g), in order to establish an institution's liability for damages due to the Department as a result of individual or group borrower defense relief.

The Department bears the burden of proof in any recovery action against an institution for all claims the Department asserts. The Department must therefore prove the merit of the claims it asserts for members of the group. A hearing official will determine the merit of the claims, the relief for members of the group, and the liability of the institution. The Department must also prove in the hearing process the merit of claims it asserts for losses on discharges it has already approved as individual claims, although, as previously indicated, individual discharges already granted by the Department will not be affected if the Department is not successful in proving the claim in this proceeding against the institution.

These regulations are only applicable to actions initiated by the Department to fine an institution, to limit, suspend, or terminate the eligibility of an institution or servicer, or to recover from an institution for losses from borrower defense claims, and do not encompass the process by which the Department evaluates individual borrower claims or claims for which the Department does not seek to obtain a recovery. That process is set forth in the borrower defense regulations at 34 CFR 685.222(e). In addition, the Department plans to issue a borrower guide before the borrower defense regulations go into effect to ensure borrowers understand the application process and criteria for seeking debt relief.

Under the Administrative Procedure Act (5 U.S.C. 553), the Department generally offers interested parties the opportunity to comment on proposed regulations. These regulations only govern the procedures for initiating an action against an institution and the hearing rules applicable to such a proceeding. As such, these regulations make procedural changes only and do not establish substantive policy. The regulations are therefore rules of agency practice and procedure, and exempt from notice and comment rulemaking under 5 U.S.C. 553(b)(A). However, the Department is providing a 60-day comment period and invites interested persons to participate in this rulemaking by submitting written comments. The Department may consider the comments received and may conduct additional rulemaking based on the comments.

The APA also generally requires that regulations be published at least 30 days before their effective date, unless the agency has good cause to implement its regulations sooner (5 U.S.C. 553(d)(3)). Again, because these final regulations are merely rules of agency practice and procedure, there is good cause to make them effective on the day they are published. For the same reasons, the Secretary has determined, under section 492(b)(2) of the HEA, 20 U.S.C. 1098a(b)(2), that these regulations should not be subject to negotiated rulemaking.

Under Executive Order 12866, the Secretary must determine whether this regulatory action is “significant” and, therefore, subject to the requirements of the Executive order and subject to review by the Office of Management and Budget (OMB). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action likely to result in a rule that may—

(1) Have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities in a material way (also referred to as an “economically significant” rule);

(2) Create serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) Materially alter the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles stated in the Executive order.

This final regulatory action is not a significant regulatory action subject to review by OMB under section 3(f) of Executive Order 12866.

We have also reviewed these regulations under Executive Order 13563, which supplements and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, Executive Order 13563 requires that an agency—

(1) Propose or adopt regulations only on a reasoned determination that their benefits justify their costs (recognizing that some benefits and costs are difficult to quantify);

(2) Tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives and taking into account—among other things and to the extent practicable—the costs of cumulative regulations;

(3) In choosing among alternative regulatory approaches, select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity);

(4) To the extent feasible, specify performance objectives, rather than the behavior or manner of compliance a regulated entity must adopt; and

(5) Identify and assess available alternatives to direct regulation, including economic incentives—such as user fees or marketable permits—to encourage the desired behavior, or provide information that enables the public to make choices.

Executive Order 13563 also requires an agency “to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.” The Office of Information and Regulatory Affairs of OMB has emphasized that these techniques may include “identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes.”

We are issuing these final regulations only on a reasoned determination that their benefits justify their costs. In choosing among alternative regulatory approaches, we selected those approaches that maximize net benefits. Based on the analysis that follows, the Department believes that these final regulations are consistent with the principles in Executive Order 13563.

We also have determined that this regulatory action does not unduly interfere with State, local, and tribal governments in the exercise of their governmental functions.

In accordance with both Executive orders, the Department has assessed the potential costs and benefits, both quantitative and qualitative, of this regulatory action. The potential costs associated with this regulatory action are those resulting from statutory requirements and those we have determined as necessary for administering the Department's programs and activities. There are no costs additional to those described under Regulatory Impact Analysis in the notice of final regulations for the borrower defense regulations published in the Federal Register on November 1, 2016 (81 FR 75926). These regulations will benefit institutions by ensuring that, in any action to fine an institution, to limit, suspend, or terminate the eligibility of an institution to participate in the title IV, HEA programs, or to determine the validity of claims against the institution, there are established procedures that provide both due process as well as an efficient process for the timely resolution of claims.

Executive Order 12866 and the Presidential memorandum “Plain Language in Government Writing” require each agency to write regulations that are easy to understand.

The Secretary invites comments on how to make these regulations easier to understand, including answers to questions such as the following:

• Are the requirements in the regulations clearly stated?

• Do the regulations contain technical terms or other wording that interferes with their clarity?

• Does the format of the regulations (grouping and order of sections, use of headings, paragraphing, etc.) aid or reduce their clarity?

• Would the regulations be easier to understand if we divided them into more (but shorter) sections? (A “section” is preceded by the symbol “§ ” and a numbered heading; for example, § 668.81.)

• Could the description of the regulations in the SUPPLEMENTARY INFORMATION section of this preamble be more helpful in making the regulations easier to understand? If so, how?

• What else could we do to make the regulations easier to understand?

To send any comments that concern how the Department could make these regulations easier to understand, see the instructions in the ADDRESSES section.

The Secretary certifies that these regulations will not have a significant economic impact on a substantial number of small entities. The small entities that are affected by these regulations are small postsecondary institutions. These regulations do not have a significant economic impact on these entities because all substantive rules that govern determinations of liability have already been established in the Department's borrower defense regulations promulgated November 1, 2016.

The Paperwork Reduction Act of 1995 does not require you to respond to a collection of information unless it displays a valid OMB control number. We display the valid OMB control number assigned to a collection of information in final regulations at the end of the affected section of the regulations.

This program is not subject to Executive Order 12372 and the regulations in 34 CFR part 79.

The Secretary particularly requests comments on whether these regulations require transmission of information that any other agency or authority of the United States gathers or makes available.

Accessible Format: Individuals with disabilities can obtain this document in an accessible format (e.g., braille, large print, audiotape, or compact disc) on request to the program contact person listed under FOR FURTHER INFORMATION CONTACT.

Electronic Access to This Document: The official version of this document is the document published in the Federal Register. Free Internet access to the official edition of the Federal Register and the Code of Federal Regulations is available via the Federal Digital System at: www.thefederalregister.org/fdsys. At this site you can view this document, as well as all other documents of this Department published in the Federal Register, in text or PDF. To use PDF you must have Adobe Acrobat Reader, which is available free at the site.

You may also access documents of the Department published in the Federal Register by using the article search feature at: www.federalregister.gov. Specifically, through the advanced search feature at this site, you can limit your search to documents published by the Department.

For the reasons discussed, the Secretary amends part 668 of title 34 of the Code of Federal Regulations as follows:

Purpose: The USPTO revises the rules in parts 2 and 7 of title 37 of the Code of Federal Regulations to allow the USPTO, during the examination of affidavits or declarations of continued use or excusable nonuse filed pursuant to section 8 of the Trademark Act, 15 U.S.C. 1058, or affidavits or declarations of use in commerce or excusable nonuse filed pursuant to section 71 of the Trademark Act, 15 U.S.C. 1141k (section 8 or section 71 affidavits), to require the submission of such information, exhibits, affidavits or declarations, and such additional specimens of use as may be reasonably necessary for the USPTO to verify the accuracy of claims that a trademark is in use in commerce in connection with the goods/services listed in the registration.

This will benefit the public because it will facilitate the USPTO's ability to assess and promote the integrity of the trademark register by encouraging accuracy in the identification of goods/services for which use in commerce or continued use is claimed. The accuracy of the trademark register as a reflection of marks that are actually in use in commerce in the United States for the goods/services identified in the registrations listed therein serves an important purpose for the public. The public relies on the register to determine whether a chosen mark is available for use or registration. Where a party's search of the register discloses a potentially confusingly similar mark, that party may incur a variety of resulting costs and burdens, such as those associated with investigating the actual use of the disclosed mark to assess any conflict, proceedings to cancel the registration or oppose the application of the disclosed mark, civil litigation to resolve a dispute over the mark, or changing plans to avoid use of the party's chosen mark. If a registered mark is not actually in use in commerce in the United States, or is not in use in commerce in connection with all the goods/services identified in the registration, these costs and burdens may be incurred unnecessarily. An accurate and reliable trademark register helps avoid such needless costs and burdens.

The amended rules also facilitate the cancellation of registrations for marks that were never in use in commerce or are no longer in use, and for which acceptable claims of excusable nonuse were not submitted, in connection with the identified goods/services. The statutory requirements in sections 8 and 71 exist to enable the USPTO to clear the register of deadwood by cancelling, in whole or in part, registrations for marks that are not in use in commerce for all or some of the goods/services identified in the registration. The rules enacted herein further this statutory purpose.

Post Registration Proof-of-Use Pilot Program: A final rule was published in the Federal Register on May 22, 2012 (77 FR 30197), in which the USPTO announced a two-year pilot program to assess and promote the accuracy and integrity of the trademark register. The USPTO randomly selected 500 registrations for which section 8 and section 71 affidavits were filed to participate in the pilot program to determine the actual use in commerce of the marks in connection with the goods/services identified in the registrations. As part of the pilot program, the selected trademark owners were required to submit proof of use of their marks for additional goods/services per class, in addition to the one specimen per class submitted with their affidavits, and to verify use of the additional goods/services during the statutory filing period.

In 51% of the registrations selected for the pilot, the trademark owners failed to supply additional verified proof of use on specific goods/services for which use in commerce was initially claimed. Of this 51%, in 35% of the registrations, the owner requested that some goods/services that were initially claimed to be in use in commerce be deleted, and the remaining 16% of the registrations were cancelled because the trademark owners failed to respond to the requirements for additional proof or to other issues raised during examination of the section 8 or section 71 affidavit. Ultimately, the section 8 and section 71 affidavits were accepted for 84.4%, or 422 registrations, which included acceptances issued after goods/services queried under the pilot were deleted.

The status reports issued throughout the course of the pilot all supported the need for ongoing efforts aimed at ensuring the accuracy and integrity of the trademark register as to the actual use in commerce of marks in connection with the goods/services identified in the registrations. To that end, the USPTO held a roundtable discussion on December 12, 2014, for various stakeholder groups, requested written comments from interested parties to further explore the topic, and discussed the topic at several other outreach sessions. During the roundtable discussion and outreach sessions, one suggestion that received widespread support was to establish a permanent program similar to the proof-of-use pilot. The USPTO considered this recommendation in proposing the permanent program set forth in the notice of proposed rulemaking published in the Federal Register on June 22, 2016, at 81 FR 40589. As discussed below, the Office considered all public comments received during the comment period in the development of this final rule.

The USPTO published a proposed rule on June 22, 2016, soliciting comments on the proposed amendments. In response, the USPTO received comments from six organizations and eight individual commenters representing law firms, corporations, and individuals. The Office received comments both generally supporting and objecting to the proposed requirements. The commenters who supported the goal of promoting the integrity of the register by encouraging accuracy in the listing of goods/services for which use in commerce is claimed agreed that the rules will facilitate the cancellation of registrations of marks that were never in use in commerce or are no longer in use. In addition, several of those commenters expressed suggestions or concerns regarding the audit program. Similar comments have been grouped together and summarized below, followed by the USPTO's responses. All comments are posted on the USPTO's Web site at https://www.uspto.gov/trademark/trademark-updates-and-announcements/comments-changes-requirements-affidavits-or.

Comment 1: One commenter suggested that costs imposed on trademark owners will likely be minimal because owners will only be randomly selected and not routinely or repeatedly subject to audits and another commenter noted that the information sought is within the knowledge of the trademark owner and should be simple to produce if there is indeed use. Another commenter stated that the proposed procedure would add an additional cost in terms of time and legal expense, but that the cost is generally offset by the public-policy benefit.

Response: The USPTO appreciates the commenters' support of the rule changes and concurs that the rule changes create minimal burdens on trademark owners. The USPTO also notes that as trademark owners are already required to ascertain whether a mark is currently in use in commerce with all the goods/services in connection with the filing of a section 8 or section 71 affidavit, any additional requirement to provide proof of such use with select goods/services should not be unduly burdensome or costly. Although approximately one-third of section 8 and section 71 affidavits are filed pro se, the USPTO assumes that an attorney is representing the registrant, and estimates it will take approximately one hour to comply.

Comment 2: One commenter noted that the proposed rule did not address the issue of the “abuse” encouraged by the Madrid Protocol system where there is no pre-registration use requirement for Madrid Protocol applications. Another commenter suggested that the proposed changes could be a model for changes to the process for affidavits or declarations of incontestability under section 15 of the Trademark Act, 15 U.S.C. 1065, by expanding the audit procedure to a percentage of section 15 affidavits. The commenter expressed concern that the cost of a faulty section 15 affidavit is high, given the ability of a registrant to use incontestability as leverage in disputes.

Response: The USPTO appreciates the commenters' concerns, but notes that the Madrid Protocol is an international treaty that became effective in the United States on November 2, 2003. Addressing any concerns related to the Madrid Protocol or its regulations is beyond the scope of this rulemaking, as is any expansion in the audit procedure to a percentage of section 15 affidavits.

Comment 3: One commenter requested that the USPTO consider some form of concession for registrants who are audited and successfully comply with audit requirements, such as an immediate fee reduction in the cost of a section 8 or section 71 affidavit or a future fee offset. Another commenter suggested that the USPTO offer registrants the option to elect out of the random audit by checking a box on the electronic form and voluntarily providing evidence of use for each good/service in a class. A third commenter recommended that the USPTO address abusive practices by: requiring specimens for all goods/services; requiring automatic audits of lengthy identifications of goods and services; allowing applicants whose mark is the subject of a likelihood-of-confusion refusal to petition the Office to audit a registration; providing an item-by-item checklist of all goods/services claimed and requiring registrants to specifically declare use for each good/service; shortening the initial period for filing a section 8 or section 71 affidavit; implementing a penalty system to incentivize renewal only for goods/services that are actually being used; and making more data available to the public concerning the marks on the register, the number of applications and renewals filed, and the number of refusals and amendments filed.

Response: The USPTO notes that although registrants are required to submit only one specimen of use in commerce per class with a section 8 or section 71 affidavit, they are not prevented from voluntarily providing evidence of use in commerce for each good/service listed in the registration. If a registrant does so, it would diminish the likelihood that additional proof of use would be required if the registration is selected for audit. However, any proposal to reduce the fees for section 8 or section 71 affidavits, to create a tiered fee structure, to implement a monetary penalty, to require specimens for all goods/services, or to allow a third party to petition the Office to audit a registration would require separate rulemakings. Moreover, shortening the initial filing period for a section 8 or section 71 affidavit would require Congressional action to amend the Trademark Act. Even if the statute was amended, such proposals would also require substantial changes to the Trademark electronic filing system, as would modifying the forms to require, or allow the owner to elect to provide, proof of use for each good/service listed on the registration. Regarding the request to make data available to the public, the USPTO notes that information about application filings, active registrations, and new registrations by fiscal year is available on the USPTO Web site at https://www.uspto.gov/dashboards/trademarks/main.dashxml. The USPTO will consider making the other requested data available at a future date.

Comment 4: One commenter stated that cancelling the entire registration for failure to respond to an Office action is overly harsh if the specimen(s) originally submitted with the section 8 or section 71 affidavit are acceptable. In such cases, the commenter recommends that the USPTO cancel only those goods/services that are not supported by the specimen(s) submitted with the relevant affidavit.

Response: As in the pilot program, owners of the registrations selected will be afforded the usual post-registration response period to the Office action requiring additional information and are subject to the same consequences for failure to respond. In general, Office actions issued in relation to section 8 and section 71 affidavits are governed by the Trademark Act and rules. 15 U.S.C. 1058(c), (e), 1141k(c), (e); 37 CFR 2.163, 7.39. A response to a post-registration Office action must be filed within six months of the date of issuance of the Office action, or before the end of the filing period set forth in section 8(a) or section 71(a) of the Act, whichever is later. 37 CFR 2.163(b), 7.39(a). Failure to respond within the prescribed time periods results in cancellation of the registration, unless time remains in the grace period for filing a new affidavit. 37 CFR 2.163(c), 7.39(b). If no time remains in the grace period, trademark owners may file a petition to the Director under 37 CFR 2.146(a)(5) and 2.148 to waive 37 CFR 2.163(b) so that a late response to the Office action may be accepted. However, the Director will waive a rule only in an extraordinary situation, where justice requires, and no other party is injured. 37 CFR 2.146(a)(5), 2.148.

Comment 5: One commenter expressed concern that the proposed amendments were vague, unnecessarily open ended, and insufficiently described to properly assess the likely impact and effectiveness of the audit program. Another commenter requested that the USPTO have further discussions with stakeholder groups prior to implementation of the program.

Response: The USPTO appreciates the commenters' concerns and notes that the expected impact and effectiveness of the audit program can be initially assessed in relation to the results of the pilot program, which supported the need for ongoing efforts aimed at ensuring the accuracy and integrity of the trademark register as to the actual use in commerce of marks in connection with the goods/services identified in the registrations. In addition, the widespread support among stakeholders to establish a permanent program is attributable to the results of the pilot program. An overview of the audit program enacted herein, which is similar to the pilot, is described in the section entitled Overview of the Audit Program of this final rule. As noted in that section, section 8 and section 71 affidavits in which the mark is registered for more than one good or service per class are subject to audit. The additional information or specimens required will be reviewed according to the generally accepted standards for use in commerce. The USPTO notes that there is a uniform standard for determining what constitutes an acceptable specimen both prior to and post registration and finds no basis to establish a different standard for use of the mark in commerce in the context of the audit program. The USPTO believes such a distinction would be a disservice to the public. Not only would a new standard for determining what constitutes acceptable use in commerce increase public confusion, but it would also call into question whether a mark is actually used with particular goods or services. The USPTO also intends to discuss with stakeholder groups the procedures that it will employ to carry out the program to obtain feedback regarding the procedures. These procedures will ultimately be available to the public and internal and external customers in the Trademark Manual of Examining Procedure.

Comment 6: Two commenters objected to any changes, as they believed the current rule is clear and the present practice is appropriate. One suggested that the existing rule is less susceptible to discriminatory application and that the proposed rule is not capable of being applied equally to all “applicants.” The other commenter stated that it is not the role of the Office to police registrations and if a registrant is not using a mark in connection with all goods/services in the registration, the registration may be challenged in a cancellation proceeding before the Trademark Trial and Appeal Board (TTAB).

Response: The USPTO appreciates the commenters' concerns regarding equal application of the rules, and notes that registrants, rather than applicants, would be subject to any requirements under the rules. The USPTO does not anticipate that the final rule will have a disproportionate impact upon any particular class of registrant and has determined that its objective of ensuring the accuracy and integrity of the register can be fairly reached by randomly selecting the registrations subject to audit based on the procedures discussed below. Any entity that has a registered trademark in which the mark is registered for more than one good or service per class could potentially be impacted by the rules.

The USPTO agrees that cancellation proceedings before the TTAB provide an avenue for third parties to seek removal of registrations for marks that are not in use in commerce for some or all of the goods/services identified in the registration. However, as discussed above, the accuracy of the trademark register as a reflection of marks that are actually in use in commerce in the United States for the goods/services identified in the registrations listed therein serves an important purpose for the public, which relies on the register to determine whether a chosen mark is available for use or registration. For example, when a party's search of the register discloses a potentially confusingly similar mark, that party may incur a variety of resulting costs and burdens, such as those associated with proceedings to cancel the registration. If a registered mark is not actually in use in commerce in the United States, or is not in use in commerce in connection with all the goods/services identified in the registration, the cost of undertaking a cancellation proceeding may be incurred unnecessarily. In addition, the results of the pilot audit program supported the need for ongoing efforts aimed at ensuring the accuracy and integrity of the trademark register as to the actual use in commerce of marks in connection with the goods/services identified in live registrations. Further, outreach to stakeholder groups and interested parties in the aftermath of the pilot yielded widespread support for establishing a permanent proof-of-use program similar to the pilot. Therefore, the USPTO believes that establishing a permanent program for auditing registrations that include multiple goods/services furthers the public policy of ensuring the accuracy of the trademark register.

The USPTO herein enacts a permanent audit program whereby it will conduct random audits of the combined total of section 8 and section 71 affidavits filed each year in which the mark is registered for more than one good or service per class. The USPTO anticipates that upon initial implementation it would conduct random audits of up to approximately 10% of such affidavits and may increase the percentage going forward, depending on results and as resources allow. As part of the review of the selected affidavits, in addition to the one specimen of use per class currently required, owners will be required to provide additional proof of use in the nature of information, exhibits, affidavits or declarations, and specimens showing use in commerce.

In a selected case, the USPTO will issue an Office action specifying the goods/services for which additional proof of use is required. Upon implementation, the USPTO anticipates requesting proof of use for two additional goods/services per class in the initial Office action. Thereafter, the owner may be required to submit proof of use in commerce for additional goods/services. If there is only one good/service in a class, additional proof of use will be required if the specimen submitted with the section 8 or section 71 affidavit would not also be acceptable to show actual use in commerce. The Office action will also advise trademark owners to delete those goods/services for which they are unable to provide the requested proof of use. It will further advise owners to delete all goods/services not in use in commerce because the Office may issue subsequent actions requiring proof of use on some, or all, remaining goods/services.

As in the pilot program, trademark owners will be afforded the usual response period to the Office action, that is, a response would be due within six months of the issuance date of the Office action, or before the end of the statutory filing period for the section 8 or section 71 affidavit, whichever is later. 37 CFR 2.163(b), 7.39(a). If the trademark owner responds, but is ultimately unable to provide the requested information, exhibits, affidavits or declarations, and specimens, the USPTO would deem the section 8 or section 71 affidavit unacceptable as to the goods/services to which the requirement pertained and will cancel such goods/services from the registration. If no response to the Office action is filed within six months of the issuance date of the Office action, or before the end of the statutory filing period for the section 8 or section 71 affidavit, whichever is later, the USPTO will cancel the entire registration, unless time remains in the grace period under section 8(a)(3) or section 71(a)(3) of the Act. 15 U.S.C. 1058(a)(3), 1141k(a)(3); 37 CFR 2.163, 7.39. If time remains in the grace period, the owner may file a complete new section 8 or section 71 affidavit, with a new fee and grace-period surcharge. 37 CFR 2.161(d)(2), 7.36(b)(3). The USPTO further clarifies that trademark owners may also file a petition to the Director under 37 CFR 2.146(a)(5) and 2.148 to waive 37 CFR 2.163(b) so that a late response to an Office action may be accepted. However, the Director will waive a rule only in an extraordinary situation, where justice requires, and no other party is injured. 37 CFR 2.146(a)(5), 2.148.

Costs and Benefits: This rulemaking is not considered to be economically significant under Executive Order 12866 (Sept. 30, 1993).

The USPTO amends 37 CFR 2.161 and 7.37 to provide that the USPTO may require such information, exhibits, affidavits or declarations, and such additional specimens of use as may be reasonably necessary for the USPTO to assess and promote the accuracy and integrity of the register. The current rules mandate the submission of only one specimen per class in connection with a section 8 or section 71 affidavit unless additional information, exhibits, affidavits or declarations, or specimens are necessary for proper examination of the affidavit itself. 37 CFR 2.161(g), (h), 7.37(g), (h). This final rule will allow the USPTO to require additional proof of use of a mark not only to facilitate proper examination of a section 8 or section 71 affidavit, but also to verify the accuracy of claims that a trademark is in use on or in connection with the goods/services identified in the registration

The USPTO revises § 2.161(h) to add the phrase “or for the Office to assess and promote the accuracy and integrity of the register” at the end of the paragraph.

The USPTO revises § 7.37(h) to add the phrase “or for the Office to assess and promote the accuracy and integrity of the register” at the end of the paragraph.

Administrative Procedure Act: The changes in this rulemaking involve rules of agency practice and procedure, and/or interpretive rules. See Perez v. Mortg. Bankers Ass'n, 135 S. Ct. 1199, 1204 (2015) (interpretive rules “advise the public of the agency's construction of the statutes and rules which it administers”) (citation and internal quotation marks omitted); Nat'l Org. of Veterans' Advocates v. Sec'y of Veterans Affairs, 260 F.3d 1365, 1375 (Fed. Cir. 2001) (rule that clarifies interpretation of a statute is interpretive); Bachow Commc'ns Inc. v. FCC, 237 F.3d 683, 690 (D.C. Cir. 2001) (rules governing an application process are procedural under the Administrative Procedure Act); Inova Alexandria Hosp. v. Shalala, 244 F.3d 342, 350 (4th Cir. 2001) (rules for handling appeals were procedural where they did not change the substantive standard for reviewing claims).

Accordingly, prior notice and opportunity for public comment for the changes in this rulemaking are not required pursuant to 5 U.S.C. 553(b) or (c), or any other law. See Perez, 135 S. Ct. at 1206 (notice-and-comment procedures are required neither when an agency “issue[s] an initial interpretive rule” nor “when it amends or repeals that interpretive rule”); Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1336-37 (Fed. Cir. 2008) (stating that 5 U.S.C. 553, and thus 35 U.S.C. 2(b)(2)(B), does not require notice and comment rulemaking for “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice,” quoting 5 U.S.C. 553(b)(A)). However, the USPTO has chosen to seek public comment before implementing the rule.

The USPTO publishes this Final Regulatory Flexibility Analysis (FRFA) as required by the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) to examine the impact of the Office's post-registration audit program on small entities. Under the RFA, whenever an agency is required by 5 U.S.C. 553 (or any other law) to publish a notice of proposed rulemaking (NPRM), the agency must prepare and make available for public comment a FRFA, unless the agency certifies under 5 U.S.C. 605(b) that the proposed rule, if implemented, will not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 603, 605. The USPTO published an Initial Flexibility Analysis (IRFA), along with the NPRM, on June 22, 2016 (81 FR 40589). The USPTO received no comments from the public directly applicable to the IFRA, as stated below in Item 2.

Items 1-6 below discuss the six items specified in 5 U.S.C. 604(a)(1)-(6) to be addressed in a FRFA. Item 6 below discusses alternatives considered by the Office.

The USPTO amends its rules to require any information, exhibits, affidavits or declarations, and such additional specimens deemed reasonably necessary to assess and promote the accuracy and integrity of the trademark register in connection with the examination of a section 8 or section 71 affidavit. Post registration affidavits under section 8 or section 71, and their accompanying specimens of use, demonstrate a registration owner's continued use of its mark in commerce for the goods/services identified in the registration. The revisions enacted herein will facilitate the USPTO's ability to ensure that the register accurately reflects marks that are in use in commerce that may be regulated by the U.S. Congress for the goods/services identified therein.

The objective of the rulemaking is to allow the USPTO to assess and promote the integrity of the trademark register. The Trademark Act gives the Director discretion regarding the number of specimens to require. 15 U.S.C. 1051(a)(1), (d)(1), 1058(b)(1)(C), 1141k(b)(1)(C). The current rules mandate the submission of only one specimen per class in connection with a section 8 or section 71 affidavit unless additional information, exhibits, affidavits or declarations, or specimens are necessary for proper examination of the affidavit itself. 37 CFR 2.161(g), (h), 7.37(g), (h). However, these rules do not currently allow the Office to require additional specimens or other information or exhibits in order to verify that the mark is in use on additional goods/services listed in the registration. The final rule will allow the USPTO to properly examine the nature and veracity of allegations of use made in connection with the submission of a section 8 or section 71 affidavit, and thereby assess and promote the integrity of the register by verifying that the register accurately reflects the goods/services for which use is claimed for a given registered mark.

The USPTO did not receive any public comments in response to the IRFA. However, the Office received comments about the audit program in general, which are further discussed in the preamble.

The USPTO did not receive any comments filed by the Chief Counsel for Advocacy of the Small Business Administration in response to the proposed rule.

The USPTO does not collect or maintain statistics in trademark cases on small- versus large-entity registrants, and this information would be required in order to estimate the number of small entities that would be affected by the final rule. However, the USPTO believes that the overall impact of the regulations enacted herein on registrants will be relatively minimal.

After registration, trademark owners must make periodic filings with the USPTO to maintain their registrations. A section 8 or section 71 affidavit is a sworn statement in which the registrant specifies the goods/services/collective membership organization for which the mark is in use in commerce and/or the goods/services/collective membership organization for which excusable nonuse is claimed. 15 U.S.C. 1058, 1141k. The purpose of the section 8 and section 71 affidavits is to facilitate the cancellation, by the Director, of registrations of marks no longer in use in connection with the goods/services/collective membership organization identified in the registrations. The final rule applies to any entity filing a section 8 or section 71 affidavit, but only a subset of trademark owners would be required to provide more than one specimen or additional information, exhibits, or specimens in connection with the audit. The USPTO is unable to estimate the subset of trademark owners who are small entities that are impacted by the proposed rules. In Fiscal Year 2016, approximately 150,000 section 8 affidavits and 9,100 section 71 affidavits were filed.

The final rule imposes no new recordkeeping requirements on trademark registrants.

Regarding compliance with this final rule, as an initial matter, the USPTO does not anticipate the rules to have a disproportionate impact upon any particular class of small or large entities. Any entity that has a registered trademark in which the mark is registered for more than one good or service per class could potentially be impacted by the final rule.

The USPTO enacts herein a permanent program where it would conduct random audits of section 8 and section 71 affidavits that are filed in which the mark is registered for more than one good or service per class. The USPTO anticipates that upon initial implementation it would conduct random audits of up to approximately 10% of such affidavits and may increase the percentage going forward, depending on results and as resources allow. In those post registration cases where an initial requirement for additional information, exhibits, affidavits or declarations, and specimens is issued in an Office action, although approximately one-third of section 8 and section 71 affidavits are filed pro se, the USPTO assumes that an attorney is representing the registrant, and estimates it will take approximately one hour to comply. To that end, the USPTO provides an online electronic form for responding to Office actions.

Similar to the submission necessary for the statutorily required section 8 and section 71 affidavits, a response to an Office action issued in connection with these affidavits will generally necessitate gathering and submitting one or more specimens of use and an accompanying declaration. Therefore, under the final rule, the type of fact gathering and review of the nature and extent of the use of the mark that underlies a section 8 or section 71 affidavit will already have occurred. Compliance with the requirements enacted herein will only necessitate gathering and submitting the additional evidence to demonstrate and support what has previously been assessed.

Assuming the mark is in use as claimed, the compliance time involves the length of time to secure additional information, exhibits, affidavits or declarations, or specimens and accompanying declaration, plus any time it takes an attorney to communicate with the client in order to obtain what is required and make the necessary filing with the USPTO. As noted above, approximately one-third of section 8 and section 71 affidavits are filed pro se. Trademark owners selected for review are likely to have a shorter compliance time than what the USPTO has estimated, which assumes the involvement of an attorney. The final rule does not mandate the use of legal counsel.

The USPTO has considered whether and how it is appropriate to reduce any burden on small businesses through increased flexibility. The following alternatives were considered, but rejected, by the USPTO.

The USPTO considered an alternative where it would not require additional information, exhibits, affidavits or declarations, and specimens in connection with section 8 or section 71 affidavits, or where it would exempt small entities from such requirements. This alternative would have a lesser economic impact on small entities, but was rejected because it would not accomplish the stated objective of assessing and promoting the integrity of the trademark register by verifying that marks are in use for the goods/services identified in the registration. As noted above, the results of the post registration proof-of-use pilot supported the need for ongoing efforts aimed at assessing and promoting the accuracy and integrity of the register as to the actual use of marks in connection with the goods/services identified in the registrations. Subsequent outreach efforts revealed widespread support for continuing the pilot program on a permanent basis. Exempting small entities would prevent consideration of all section 8 and section 71 affidavits and not achieve the stated objective of assessing and promoting the accuracy and integrity of the register.

The stated objective of the final rule also facilitates the cancellation of registrations for marks that are no longer in use or that were never used, and for which acceptable claims of excusable nonuse were not submitted, in connection with the identified goods/services. The statutory requirements in sections 8 and 71 exist to enable the USPTO to clear the register of deadwood by cancelling, in whole or in part, registrations for marks that are not in use for all or some of the goods/services identified in the registration. The final rule furthers this statutory purpose. Exempting small entities from possible scrutiny regarding use allegations would fail to address marks not used by them, thereby not achieving the objective.

The USPTO considered a second alternative that would extend the time period for compliance by small entities. However, this was rejected because there appears to be no reason that meeting the requirements of the final rule would be more time consuming for small entities. The USPTO's standard six-month time period for responding to Office actions allows sufficient time regardless of small-entity status.

Finally, the USPTO considered an alternative that would streamline or simplify the compliance mechanism for small entities, but it was deemed unnecessary given the ease of responding electronically to Office actions using the Trademark Electronic Application System Response to Post Registration Office Action form. Thus, under the final rule, compliance will be as streamlined and simplified as possible for all affected entities. Moreover, where the objective is to verify the accuracy of a claim of use in a section 8 or section 71 affidavit, the requirements for additional information, exhibits, affidavits or declarations, and specimens demonstrating the manner of use of the mark in connection with the specified goods/services are the least burdensome and most efficient means of achieving the objective of assessing and promoting the accuracy and integrity of the register by verifying allegations of use.

Use of performance rather than design standards is not applicable to the final rulemaking because the USPTO is not issuing any sort of standard. This final rule will require registrants to furnish evidence of use, rather than comply with a performance or design standard.

Executive Order 12866 (Regulatory Planning and Review): This rulemaking has been determined to be not significant for purposes of Executive Order 12866 (Sept. 30, 1993).

Executive Order 13563 (Improving Regulation and Regulatory Review): The USPTO has complied with Executive Order 13563 (Jan. 18, 2011). Specifically, the USPTO has, to the extent feasible and applicable: (1) Made a reasoned determination that the benefits justify the costs of the rule changes; (2) tailored the rules to impose the least burden on society consistent with obtaining the regulatory objectives; (3) selected a regulatory approach that maximizes net benefits; (4) specified performance objectives; (5) identified and assessed available alternatives; (6) provided the public with a meaningful opportunity to participate in the regulatory process, including soliciting the views of those likely affected prior to issuing a notice of proposed rulemaking, and provided on-line access to the rulemaking docket; (7) attempted to promote coordination, simplification, and harmonization across government agencies and identified goals designed to promote innovation; (8) considered approaches that reduce burdens and maintain flexibility and freedom of choice for the public; and (9) ensured the objectivity of scientific and technological information and processes, to the extent applicable.

Executive Order 13132 (Federalism): This rulemaking does not contain policies with federalism implications sufficient to warrant preparation of a Federalism Assessment under Executive Order 13132 (Aug. 4, 1999).

Congressional Review Act: Under the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.), prior to issuing any final rule, the USPTO will submit a report containing the final rule and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the Government Accountability Office. The changes in this notice are not expected to result in an annual effect on the economy of 100 million dollars or more, a major increase in costs or prices, or significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. Therefore, this notice is not expected to result in a “major rule” as defined in 5 U.S.C. 804(2).

Unfunded Mandates Reform Act of 1995: The changes set forth in this rulemaking do not involve a Federal intergovernmental mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, of 100 million dollars (as adjusted) or more in any one year, or a Federal private sector mandate that will result in the expenditure by the private sector of 100 million dollars (as adjusted) or more in any one year, and will not significantly or uniquely affect small governments. Therefore, no actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995. See 2 U.S.C. 1501 et seq.

Paperwork Reduction Act: This rulemaking involves information collection requirements that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). The collection of information involved in this rulemaking has been reviewed and previously approved by OMB under control numbers 0651-0051 and 0651-0055.

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

For the reasons stated in the preamble and under the authority contained in 15 U.S.C. 1123 and 35 U.S.C. 2, as amended, the USPTO amends parts 2 and 7 of title 37 as follows:

On July 20, 2016, VA issued a proposed rule to amend part 14 of title 38, Code of Federal Regulations, to provide for the recognition of tribal organizations that are established and funded by tribal governments so that representatives of the organizations may assist Native American veterans and their families in the preparation, presentation, and prosecution of their VA benefit claims. 81 FR 47087-47094. VA proposed to allow a tribal organization that is established and funded by one or more tribal governments to be recognized for the purpose of providing assistance on VA benefit claims. Id. In addition, VA proposed to allow an employee of a tribal government to become accredited through a recognized State organization in a similar manner as a CVSO may become accredited through a recognized State organization and to extend office space opportunities already granted to certain employees of State organizations to employees of tribal organizations. Id.

VA received 17 comments on the proposed rule. Overall, the comments were supportive of the proposed rule. A couple of commenters stated that they currently meet or will be able to meet the accreditation requirements for recognition as a tribal organization. The actual requests for recognition of specific tribal organizations are outside the scope of this rulemaking. However, VA invites all interested organizations or applicants to consider requesting recognition after this rulemaking takes effect. Please see VA's accreditation Web site for more information on how to request recognition of an organization and how to apply to become accredited as a representative through a recognized organization or as an attorney or agent, http://www.va.gov/ogc/accreditation.asp. No change is warranted to this rulemaking based on these comments.

A few commenters misinterpreted the proposed rule as meaning that VA intended to propose that VA's recognition of a tribal organization would be tied to VA's recognition of the corresponding State organization. VA is not tying VA recognition of a tribal organization to a State. Recognition of a tribal organization will stand on its own. After a tribal organization becomes recognized by VA, that organization will be able to request to have its own representatives accredited under 38 CFR 14.629. Therefore, VA declines to make any changes based on these comments.

One commenter stated that there is no need to restrict a tribal government employee to being accredited by either a tribal organization or State organization. Although in the proposed rule, we focused much of our discussion on how a tribal government employee may be accredited through a tribal organization or a State organization, we do not intend for this rulemaking to limit the availability of other avenues to achieve VA accreditation. There are several ways that individuals, including tribal members, tribal government employees, and others who work within and serve tribal or Native American communities, may be accredited by VA to represent claimants. If an individual does not wish to be accredited through a tribal or State organization, the individual may seek accreditation through a National or Regional or Local organization or seek accreditation in his or her individual capacity as either an agent or an attorney under the standards set forth in § 14.629(b). Therefore, VA declines to make any changes based on this comment.

One commenter asked whether a tribal veterans' service representative who worked in multiple states would be required to get approval from all of the States in which they work. If the representative is accredited through the tribal organization and representing claimants on behalf of that organization, then the representative would not need to seek any additional accreditation through a State organization. If the representative is a tribal veterans service officer (TVSO) and the representative's sole accreditation status is through a State organization, the representative should confer with that State organization to see if the State has placed any geographical limits on its accredited representatives. VA does not place any geographical or residency restrictions or limitations on State or tribal organizations as to who may be served by the organization. Therefore, no change is warranted to this rulemaking based on this comment.

A couple of commenters recommended that a tribal organization should have the ability to accredit representatives of State organizations through the tribal organization as well. A VA-recognized tribal organization is welcome to put forth any representatives of its choosing for VA accreditation so long as the organization is able to certify that the potential representative is of good character and reputation, has demonstrated an ability to represent claimants, and is a paid employee working no less than 1,000 hours annually. A recognized tribal organization may also recommend a potential representative for accreditation through the tribal organization by certifying that the individual is accredited and functioning as a representative of another recognized organization, this is commonly referred to as “cross-accreditation.” See 38 CFR 14.627(j) and 14.629(a). Because we do not view this rulemaking as prohibiting State organization representatives from being accredited through a tribal organization as well, we do not believe that a change is warranted to this rulemaking based on these comments.

One commenter asked if it would be possible for a tribal government to have their employees accredited by a tribal organization and State organization concurrently. VA does not limit an accredited representative to one method of accreditation. Therefore, no change is warranted to this rulemaking based on this comment.

Several commenters appeared to interpret the proposed rule as limiting tribal organizations to representation of only veterans who are Native American and not their dependents or survivors who may not be Native American. It is not VA's intention to limit the type of claimants for VA benefits that any accredited organization, attorney, or agent may represent. The requirements for accreditation require an applying organization to state the number of veterans, survivors, and dependents that will be served by the organization. 38 CFR 14.628(d)(1)(ii)(D). VA makes no changes based on these comments.

Several commenters also expressed concern over the requirements for recognition in § 14.628(d). Specifically, the commenters expressed concern that many tribal organizations may not be able to satisfy the requirement of having a primary purpose of serving veterans, the requirement of a substantial service commitment to veterans as shown either by a sizable organizational membership or by performance of veterans' services to a sizable number of veterans, or requirements concerning funding and training, to include providing the required supporting documentation. As stated in the proposed rule, VA must ensure that VA accredited organizations can provide long-term, competent representation and has found that the § 14.628(d) requirements further that objective. These requirements apply to all organizations seeking VA recognition. Exempting tribal organizations from meeting the § 14.628(d) requirements would not be consistent with the purpose of VA recognition to ensure that veterans are receiving qualified, competent representation on their VA benefit claims. VA has provided additional means to achieve VA recognition or accreditation for those tribal governments that may have difficulty establishing a tribal organization capable of meeting the § 14.628(d) requirements, to include the ability for one or more tribal governments to establish and fund a tribal organization and the ability of an employee of a tribal government to become accredited as a tribal veterans' service officer through a recognized State organization. Therefore, VA makes no changes based on these comments.

Several commenters requested that VA further define or quantify what would constitute adequate funding and a substantial service commitment to veterans either by showing a sizeable organizational membership or by showing performance of veterans' services to a sizeable number of veterans. VA's purpose is to ensure that VA claimants have responsible, qualified representation and the above noted requirements serve as an indicator that the organization is stable. VA makes these determinations on a case-by-case basis taking into consideration all of the evidence of record. VA's goal is to ensure that VA claimants have access to the representation that they may need, and in order to provide such access, VA needs flexibility to make accreditation determinations based on the totality of the circumstances. Therefore, VA declines to make any changes based on these comments.

Several commenters requested that funding be made available to establish tribal organizations. Section 5902, of title 38, United State Code, which is the law that authorizes VA to recognize organizations for the purpose of providing assistance on VA benefit claims, does not provide for the funding of such organizations to train and maintain representatives. Pursuant to § 14.628(d)(iii)(B), organizations are not precluded from seeking and receiving other sources of State and Federal grant funding so long as the organization's funding is not subject to limitations imposed under any Federal grant or law which would prevent it from representing claimants before VA. Therefore, VA declines to make any changes based on these comments.

Several commenters suggested further outreach and collaboration. On March 3 and 10, 2016, respectively, VA issued letters to tribal leaders and a Federal Register notice, 81 FR 12626, seeking comment on VA's consideration of issuing a proposed rule that would amend part 14 of title 38, Code of Federal Regulations, to expressly provide for the recognition of tribal organizations so that representatives of the organizations may assist Native American claimants in the preparation, presentation, and prosecution of their VA benefit claims. Those interested in providing comment were given 30 days to respond. Based on requests from commenters, VA expanded the comment period an additional 15 days to April 26, 2016. VA received comments from 36 commenters. In the proposed rule, VA addressed the comments received from the tribal consultation and provided an additional 60-day comment period. 81 FR 47091-47093, July 20, 2016. Therefore, VA finds that it has complied with the notice and consultation requirements of the governing Executive Orders. See Exec. Order No. 13175, 65 FR 67249-67252, Nov. 9, 2000; Exec. Order 12866 sec. 6(a), 58 FR 51735, Sept. 30, 1993; Exec. Order 13563 sec. 2(b), 76 FR 3821, 3821-22, Jan. 18, 2011.

One commenter asked VA to include the veterans departments within the tribal governments as eligible for VA recognition. A Veterans Affairs office or department that is established and funded by a tribal government is included in the definition of tribal organization and may apply for recognition under the rule. Another commenter requested that tribal government be included in the definition of tribal organization. A tribal government would not fit the definition of a tribal organization because the primary purpose of a tribal government is generally much broader than serving the needs of Native American veterans. However, the definition of tribal organization allows for a tribal government to establish such an organization that will be for that specific purpose. In this same way, VA recognizes State organizations rather than the State governments themselves. Therefore, no change to this rulemaking is warranted based on these comments.

Another commenter stated that, due to the geographic size of their tribal government, it would make sense for it to become its own regional council. If the commenter is asserting its intention to apply to become a VA accredited organization, VA welcomes all organizations to apply once this rulemaking becomes effective. No change is warranted to this rulemaking based on this comment.

One commenter recommended that, regarding tribal government approval for tribal organization representation, the approval be recognized with a single resolution or other document on behalf of member tribal nations. The commenter stated that obtaining resolutions from each nation would be administratively burdensome. Pursuant to § 14.628, the organization requesting VA accreditation must certify to VA that the organization meets the § 14.628(d) requirements for recognition. As long as VA receives certification from each tribal government approving the tribal organization, VA has no objection to the format of the certification being contained in a single resolution or document. An example may be that the establishment of the tribal organization is contained in one resolution and that resolution is signed, or certified, by all of the appropriate officials. VA makes no changes based on this comment.

One commenter asked that VA provide recognition for urban Indian organizations or urban Indian health programs. The comment is unclear on whether such an organization would be able to apply for VA recognition as a tribal organization. VA declines to add an additional organization category at this time. In addition to the amendments discussed in this rulemaking, an organization may still utilize other avenues to apply for VA recognition such as requesting VA recognition as a regional or local organization. To be recognized as a regional or local organization, an organization must meet the requirements of § 14.628(c) and (d).

The same commenter asked that employees of urban Indian organizations or urban Indian health programs be recognized as accredited representatives. An individual may apply for accreditation as a representative through a VA-recognized organization under standards set forth in § 14.629(a). Alternatively, an individual may also seek accreditation in an individual capacity as either an agent or an attorney under the standards set forth in § 14.629(b). The commenter also asked that the requirement for tribal veterans' service officers to work 1,000 hours annually be eliminated or lowered. The same hour requirements apply to county veterans' service officers being recommended for accreditation by a State and will, under this rule, apply to tribal veterans' service officers being accredited by a State. As explained in the proposed rule, VA prescribed these criteria in order to ensure adequate training and fitness to serve as a VA accredited representative. VA declines to make any changes based on these comments.

One commenter asked VA to require culturally sensitive training for TVSOs. Section 14.628(d)(1)(v)(B) requires that a request for recognition of an organization include a plan for recruiting and training the organization's representatives. In addition, with regard to TVSOs, the organization's certifying official must certify that the TVSO is a paid employee of the tribal government working no less than 1,000 hours annually, has successfully completed a course of training and examination approved by VA, and that the TVSO will receive regular supervision or annual training to assure the TVSO continues to be qualified to represent claimants. 38 CFR 14.629(a)(2)(i)-(iii). The testing or training for TVSOs may include topics such as cultural sensitivity training at the discretion of the organization. VA declines to add a cultural sensitivity training requirement as we believe each organization would be the best judge of the need for cultural sensitivity training for its own representatives. In addition, such an addition would not be a logical outgrowth of the proposed rule. Therefore, VA makes no changes based on this comment.

One commenter stated that, with regard to the Paperwork Reduction Act (PRA) requirements, VA had underestimated the number of applicants/respondents that would apply to become an accredited tribal organization. However, the commenter did not provide a number of how many applicants/respondents they thought VA would receive. VA notified the Office of Management and Budget (OMB) of the commenter's concern and amended its PRA submission to double the number of applicants/respondents from 5 to 10 per year.

One commenter asked to what extent OMB was involved in the formulation of this rule. Executive Order 12866, 58 FR 51735, requires that OMB, specifically the Office of Information and Regulatory Affairs, review regulations before they are submitted for publication in the Federal Register. VA submitted the proposed rule and required supporting documents prior to the publication of the proposed rule and will comply with the requirements of the Executive Order in issuing this final rule. No change to this rulemaking is warranted based on this comment.

One commenter asked to what extent VA believes that all States would support this rulemaking. VA has not received any adverse comments from States on this rulemaking. As previously stated, recognition of a tribal organization is not tied to a State organization. No change to this rulemaking is warranted based on this comment.

One commenter asked what support VA could provide to tribes that do not have enough veterans per capita to participate in the process outlined to coordinate their activities with States or county veterans' service organizations while respecting a tribe's sovereign authority. It is unclear whether the commenter is requesting that VA waive certain accreditation requirements. As previously discussed, VA cannot waive the requirements for accreditation for any organization. A tribe that is unable to establish an organization that is capable of meeting the requirements to be recognized as a tribal organization may be able to have its members apply to become accredited in their individual capacity as claims agents or attorneys or as representatives through another VA-recognized organization. VA makes no changes based on this comment.

One commenter said that educational benefits should be allowed to be used at tribal colleges and universities. This comment is outside the scope of this rulemaking. Therefore, no change is warranted based on this comment.

Finally, VA is correcting a grammatical error in proposed § 14.628(b)(2). In the third sentence, VA mistakenly referred to “tgovernment” when the correct reference should have been to “tribal government.” VA is correcting this error in this rulemaking.

The Paperwork Reduction Act of 1995 (at 44 U.S.C. 3507) requires that VA consider the impact of paperwork and other information collection burdens imposed on the public. Under 44 U.S.C. 3507(a), an agency may not collect or sponsor the collection of information, nor may it impose an information collection requirement unless it displays a currently valid OMB control number. See also 5 CFR 1320.8(b)(3)(vi).

This final rule will impose the following new information collection requirements. The collection of information in 38 CFR 14.628 requires organizations seeking VA accreditation under § 14.628 to submit certain documentation to certify that the organization meets the requirements for VA accreditation. Pursuant to § 14.628(d), an organization requesting recognition must have as a primary purpose serving veterans. In establishing that it meets this requirement, an organization requesting recognition shall submit a statement establishing the purpose of the organization and that veterans would benefit by recognition of the organization.

The organization must also demonstrate a substantial service commitment to veterans either by showing a sizable organizational membership or by showing performance of veterans' services to a sizable number of veterans. In establishing that it meets this requirement, an organization requesting recognition shall submit: The number of members and number of posts, chapters, or offices and their addresses; a copy of the articles of incorporation, constitution, charter, and bylaws of the organization, as appropriate; a description of the services performed or to be performed in connection with programs administered by VA, with an approximation of the number of veterans, survivors, and dependents served or to be served by the organization in each type of service designated; and a description of the type of services, if any, performed in connection with other Federal and State programs which are designed to assist former Armed Forces personnel and their dependents, with an approximation of the number of veterans, survivors, and dependents served by the organization under each program designated.

An organization requesting recognition must commit a significant portion of its assets to veterans' services and have adequate funding to properly perform those services. In establishing that it meets this requirement, an organization requesting recognition shall submit: A copy of the last financial statement of the organization indicating the amount of funds allocated for conducting particular veterans' services (VA may, in cases where it deems necessary, require an audited financial statement); and a statement indicating that use of the organization's funding is not subject to limitations imposed under any Federal grant or law which would prevent it from representing claimants before VA.

An organization requesting recognition must maintain a policy and capability of providing complete claims service to each claimant requesting representation or give written notice of any limitation in its claims service with advice concerning the availability of alternative sources of claims service. In establishing that it meets this requirement, an organization requesting recognition shall submit evidence of its capability to represent claimants before VA regional offices and before the Board of Veterans' Appeals. If an organization does not intend to represent claimants before the Board of Veterans' Appeals, the organization shall submit evidence of an association or agreement with a recognized service organization for the purpose of representation before the Board of Veterans' Appeals, or the proposed method of informing claimants of the limitations in service that can be provided, with advice concerning the availability of alternative sources of claims service. If an organization does not intend to represent each claimant requesting assistance, the organization shall submit a statement of its policy concerning the selection of claimants and the proposed method of informing claimants of this policy, with advice concerning the availability of alternative sources of claims service.

An organization requesting recognition must take affirmative action, including training and monitoring of accredited representatives, to ensure proper handling of claims. In establishing that it meets this requirement, an organization requesting recognition shall submit: A statement of the skills, training, and other qualifications of current paid or volunteer staff personnel for handling veterans' claims; and a plan for recruiting and training qualified claim representatives, including the number of hours of formal classroom instruction, the subjects to be taught, the period of on-the-job training, a schedule or timetable for training, the projected number of trainees for the first year, and the name(s) and qualifications of the individual(s) primarily responsible for the training.

In addition, the organization requesting recognition shall supply: A statement that neither the organization nor its accredited representatives will charge or accept a fee or gratuity for service to a claimant and that the organization will not represent to the public that VA recognition of the organization is for any purpose other than claimant representation; and the names, titles, and addresses of officers and the official(s) authorized to certify representatives.

As required by the Paperwork Reduction Act of 1995 (at 44 U.S.C. 3507(d)), VA has submitted this information collection to OMB for its review. OMB approved these new information collection requirements associated with the final rule and assigned OMB control number 2900-0850.

The Secretary hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. It does not require any action on the part of any entity but merely provides a new opportunity for tribal organizations to become recognized by VA for the purpose of assisting VA claimants in the preparation, presentation, and prosecution of claims for VA benefits. Therefore, pursuant to 5 U.S.C. 605(b), this rulemaking is exempt from the final regulatory flexibility analysis requirements of section 604.

Executive Order 13175 provides that Federal agencies may not issue a regulation that has tribal implications, that imposes substantial direct compliance costs on tribal governments, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by the tribal governments or the Federal agency consults with tribal officials early in the process of developing the proposed regulation, develops and publishes in the Federal Register a tribal summary impact statement, and provides to the Director of OMB any written communications submitted to the agency by the tribal officials.

On March 3 and 10, 2016, respectively, VA issued letters to tribal leaders and a Federal Register notice, 81 FR 12626, seeking comment on VA's consideration of issuing a proposed rule that would amend part 14 of title 38, Code of Federal Regulations, to expressly provide for the recognition of tribal organizations so that representatives of the organizations may assist Native American claimants in the preparation, presentation, and prosecution of their VA benefit claims. Those interested in providing comment were given 30-days to respond. Based on requests from commenters, VA expanded the comment period an additional 15 days to April 26, 2016. VA received comments from a total of 37 commenters. VA addressed 36 of those comments in the proposed rule. 81 FR 47087, 47091-47093. During the drafting of the final rule, VA discovered one additional comment submitted in response to the tribal consultation. Therefore, VA is addressing the additional comment and republishing VA's responses to the other comments in this final rule.

One commenter asked if tribal organizations, since they are sovereign nations, would work with their local VA regional offices to include submitting claims through their respective regional offices. VA-recognized tribal organizations will be responsible for providing representation on behalf of their clients in the same manner as all other VA-recognized organizations, which often includes filing claims and evidence in support of their client's claims with the appropriate regional office. For TVSO's whose sole accreditation is through a State organization, VA defers to the State organization on their procedures for submitting claims and evidence to VA. No change is warranted to this rulemaking based on this comment.

The same commenter asked if tribal organizations will “commit to annual/routine training [for their] veterans service officers.” Part of the § 14.628(d) requirements is that an organization seeking accreditation must “[t]ake affirmative action, including training and monitoring of accredited representatives, to ensure proper handling of claims.” 38 CFR 14.628(d)(1)(v). When an organization applies for VA accreditation, the organization must include a plan for recruiting and training the organization's representatives. 38 CFR 14.628(d)(1)(v)(B). No change is warranted to this rulemaking based on this comment.

One commenter wrote that, currently, their tribal representatives are being accredited through their State as well as other national organizations and was curious as to the “road blocks” other tribal organizations were facing. This commenter did not provide any suggestions, and therefore, no change to this rulemaking is warranted.

Several commenters noted that currently Native American veterans face many roadblocks to obtaining representation. One commenter noted that geography, economic, and culture barriers prevent Native American veterans from utilizing currently available representation. These comments were offered in support of the rulemaking, and therefore, no change is warranted.

A few commenters misinterpreted the language provided in the consultation and notice as meaning that VA intended that VA's recognition of a tribal organization would be tied to VA's recognition of the corresponding State organization. One commenter stated that VA should recognize a tribal organization as “equal to” a State organization. VA is not tying VA recognition of a tribal organization to a State and is choosing not to make value judgements as to the importance of the recognition granted to State organizations and Tribal organizations. Recognition of a tribal organization will stand on its own. VA has chosen to use the term similar rather than the term equal in this rule because there are some differences in the requirements for VA recognition of a tribal organization and the requirements for State organizations. Specifically, the rule will allow a single tribal government, or multiple tribal governments to join together to establish and fund a tribal organization, but such allowance is not permitted for State governments.

A few commenters misinterpreted the language provided in the consultation and notice as limiting recognition of a tribal veterans' service officer through a State. One commenter asked for clarification on what type of employees would be eligible to become accredited by VA. The commenter stated that employees of a tribal nation as well as a tribal organization should be eligible. We agree, and the final rule allows for both avenues to attain VA accreditation depending on the tribal government's size, relationships with other tribal governments, relationships with States, and the needs of Native American veterans in their area. After a tribal organization becomes recognized by VA, that organization will be able to request to have its own representatives accredited under 38 CFR 14.629. In addition to recognizing tribal organizations and accredit their representatives, VA provides an additional means by which VA may recognize an employee of a tribal government as a tribal veterans' service officer through a State organization. This accreditation is akin to accreditation given to county veterans' service officers through State organizations and is only meant to provide an additional path to VA accreditation. The requirements for a tribal veterans' service officer to become accredited as a representative through a State organization be the same as the requirements for a county veterans' service officer. Therefore, VA makes no changes based on these comments.

One commenter asked what happens to the accreditation of a tribal organization if the Director is relinquished. It seems this comment stems from the misinterpretation previously discussed regarding the accreditation of a tribal organization and the corresponding State organization. The commenter also asked what happens if the State refuses to sponsor the replacement officer. As discussed above, once a tribal organization becomes recognized by VA, that organization can request to have its own representatives accredited under § 14.629. The tribal organization can file with VA to have a replacement officer accredited. Therefore, VA makes no changes based on this comment.

Several commenters also expressed concern over the requirements for recognition in § 14.628(d). Specifically, the commenters expressed concern that many tribal organizations may not be able to satisfy the primary purpose, size, funding, and training requirements, to include providing the required, supporting documentation. One commenter suggested that VA provide the funding for tribes “to engage in this work.” Another commenter suggested including Indian Health Services for funding assistance. A few commenters expressed concern about the requirement that the organization must maintain a policy of either providing complete claims representation or provide “written notice of any limitation in its claims service with advice concerning the availability of alternative sources of claims service.” 38 CFR 14.628(d)(1)(iv). One commenter seemed to believe VA was questioning the level of competence of tribal representatives. VA must ensure that VA accredited organizations can provide long-term, competent representation and has found that the § 14.628(d) requirements are protective of that mission. These requirements apply to all organizations seeking VA recognition. Exempting tribal organizations from meeting the § 14.628(d) requirements is not consistent with the purpose of VA recognition to ensure that veterans are receiving qualified, competent representation on their VA benefit claims. As previously discussed, VA has provided additional means to achieve VA recognition or accreditation for those tribal governments that may have difficulty establishing a tribal organization capable of meeting the § 14.628(d) requirements, to include the ability for one or more tribal governments to establish and fund a tribal organization and the ability of an employee of a tribal government to become accredited as a tribal veterans' service officer through a recognized State organization. Therefore, VA makes no changes based on these comments.

One commenter suggested that VA grant accreditation to tribes through a Memorandum of Understanding and included their tribe's Memorandum of Understanding with their State. The commenter also questioned the role of VA in the accreditation and monitoring process. The laws governing VA accreditation are set out at 38 U.S.C. 5902 and 5904 and 38 CFR 14.626-14.637. These laws apply to all organizations, agents, and attorneys seeking VA accreditation. Pursuant to § 14.628, the organization requesting VA accreditation must certify to VA that the organization meets the § 14.628(d) requirements for recognition. Therefore, a Memorandum of Understanding between VA and a tribe is not sufficient for applying for VA accreditation. Furthermore, VA does monitor its accredited organizations, agents, and attorneys and handles disciplinary matters as they arise. Therefore, VA makes no changes based on this comment.

One commenter suggested that VA engage in additional consultation with Tribes that would be “interested in becoming recognized veterans['] service organizations, but are unable to meet the requirements.” In this rule, VA offers alternative avenues for VA recognition and accreditation for tribal governments that may not be capable of establishing an organization that can meet the VA recognition requirements in the rule on their own. VA declines to make any changes based on this comment.

One commenter also recommended that “VA enter into Memorandums of Understanding with [F]ederally-recognized tribes and tribal organizations for [v]eterans' [s]ervice [o]fficer training and service reimbursement, on individual bases.” Another commenter objected to the fact that there was “no mention of funding to train and maintain such a position.” Section 5902, of title 38, United State Code, which is the law that authorizes VA to recognize organizations for the purpose of providing assistance on VA benefit claims, does not provide for the funding of such organizations to train and maintain representatives. Pursuant to § 14.628(d)(iii)(B), organizations are not precluded from seeking and receiving other sources of State and Federal grant funding so long as the organization's funding is not subject to limitations imposed under any Federal grant or law which would prevent it from representing claimants before VA. Therefore, VA declines to make any changes based on these comments.

One commenter wrote that VA “. . . should include [F]ederally-recognized tribes, not just tribal organizations funded by tribal governments, as an entity from which applications will be considered to be recognized for . . .” VA accreditation. Another commenter suggested adding “[F]ederally recognized tribes” or “[F]ederally recognized tribal governments” as part of the definition for tribal organizations. Another commenter suggested adding tribal communities. For the purposes of the regulations pertaining to the representation of VA claimants, VA defines a tribal government to mean “the Federally recognized governing body of any Indian tribe, band, nation, or other organized group or community. . .”. VA finds this definition to be inclusive of the comments, and therefore, no change is warranted.

One commenter suggested a legislative amendment to the definition of State in 38 U.S.C. 101(20) to include “[F]ederally recognized tribal governments.” Amending the statutory language is something that only Congress can accomplish. Since VA is defining the term “tribal government” in regulation and providing an avenue for VA recognition of a tribal organization separate from a State organization, VA does not find such a legislative amendment necessary. Therefore, no change is warranted based on this comment.

Several commenters wrote that “[s]pecial attention must be paid to what specifically is meant by a `[t]ribal [o]rganization' ” and that VA should offer a clear definition of the term. The commenters did not offer any suggestions for such definition. As previously discussed, VA is defining this term for the purposes of this rulemaking. Therefore, VA does not make any changes based on this comment.

Several commenters asked VA to clarify whether tribal governments, including veterans departments within these governments, would be eligible for VA recognition. A Department of Veterans Affairs or a Veterans Affairs office that is established and funded by a tribal government is included in the definition of tribal organization. Therefore, no change to this rulemaking is warranted based on these comments.

One commenter asked that VA provide recognition for urban Indian organizations. The comment is unclear on whether such an organization would be able to apply for VA recognition as a tribal organization. VA declines to add an additional organization category at this time. In addition to the amendments discussed in this rulemaking, an organization may still utilize other avenues to apply for VA recognition such as requesting VA recognition as a regional or local organization. To be recognized as a regional or local organization, an organization must meet the requirements of § 14.628(c) and (d).

Further, there are several ways that individuals, including tribal members, tribal government employees, and others who work within and serve tribal or Native American communities, may be accredited by VA to represent claimants. An individual may apply for accreditation as a representative through an existing VA-recognized organization under standards set forth in § 14.629(a). Alternatively, an individual may also seek accreditation in an individual capacity as either an agent or an attorney under the standards set forth in § 14.629(b). Therefore, VA declines to make any changes based on this comment.

A couple of commenters submitted statements certifying that their organization would meet the requirements for accreditation for a tribal organization. Applications for accreditation are outside the scope of this rulemaking. Therefore, no change is warranted based on these comments.

One commenter asked whether accredited tribal representatives would be granted access to software programs containing a veteran's claims file information and whether that access would be on tribal grounds. This issue is outside the scope of this rulemaking. Therefore, no change is warranted based on this comment.

One commenter expressed support for VA recognizing tribal organizations in an equal manner as VA recognizes State organizations but suggested that VA authorize a field office close to tribal administration locations and fund one or two veterans service officer positions. The tribal consultation and this rulemaking are limited in scope to recognition for purposes of VA claims representation. The commenter's suggestion of adding a field office is beyond the scope, and therefore, VA declines to make any changes based on this comment. VA also declines to make any changes to the commenter's suggestion of funding job positions for veterans service officers. Part of the § 14.628(d) requirements is that an organization seeking accreditation must commit a significant portion of its assets to veterans' services and have adequate funding to properly perform those services. 38 CFR 14.628(d)(1)(iii).

A few commenters expressed concern that the rulemaking is limiting VA recognition for the preparation, presentation, and prosecution of claims for VA benefits. One commenter seemed to think VA is depriving veterans from other title 38 benefits. The commenters did not specify what other accreditation they are seeking. As previously discussed, the relevant regulations in 38 CFR part 14 are to recognizing organizations and accrediting individuals to assist in the preparation, presentation, and prosecution of VA benefit claims. Pursuant to section 5902, VA accreditation may not be granted for any other purpose. This rulemaking in no way deprives any veteran of any title 38 benefits. Therefore, no change is warranted based on these comments.

One commenter suggested that office space opportunities should be available to tribal governments and organizations in the same manner as they are available to State organizations. As previously discussed, this rule will, under § 14.635, allow the Secretary to furnish office space and facilities, when available, to both State and tribal organization employees who are also accredited to national organizations for the purpose of assisting claimants in the preparation, presentation, and prosecution of claims for benefits. VA will be furnishing office space to tribal organizations in the same manner as it furnishes such space to State organizations. Therefore, no change is warranted based on this comment.

One commenter noted that VA should allow a tribal government employee to become accredited through an accredited body of their choice. VA in no way is limiting how a particular individual may apply to become an accredited VA representative. As previously discussed, VA is merely providing additional paths to VA accreditation than currently exist. Therefore, VA declines to make any changes to this rulemaking based on this comment.

Several commenters suggested further outreach and collaboration. One commenter suggested that VA form a tribal workgroup to allow representatives from tribal organizations to collaborate on implementing the new program. One commenter provided VA with their tribal consultation policy. Other commenters suggested that VA engage in additional consultation with experts in Indian law and hold an all-tribes call to gather additional input for this rulemaking. VA appreciates this information. As previously noted, VA extended the comment period for an additional 15 days to ensure that all interested parties had an appropriate time to provide input. Therefore, VA finds that it has complied with the requirements of Executive Order 13175. VA also provided an additional 60-day comment period for the proposed rule.

One commenter asked for the projected implementation date of this rulemaking. The dates section of this final rule contains the effective date of the rulemaking.

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

The economic, interagency, budgetary, legal, and policy implications of this regulatory action have been examined, and it has been determined not to be a significant regulatory action under Executive Order 12866. VA's impact analysis can be found as a supporting document at http://www.regulations.gov, usually within 48 hours after the rulemaking document is published. Additionally, a copy of this rulemaking and its impact analysis are available on VA's Web site at http://www.va.gov/orpm/, by following the link for “VA Regulations Published From FY 2004 Through Fiscal Year to Date.”

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

There are no Catalog of Federal Domestic Assistance programs numbers and titles associated with this final rule.

For the reasons set out in the preamble, the Department of Veterans Affairs amends 38 CFR part 14 as follows:

The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Gina S. Farrisee, Deputy Chief of Staff, Department of Veterans Affairs, approved this document on January 11, 2017, for publication.

Section 260 of the Continuing Appropriations and Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2017, and Zika Response and Preparedness Act (Public Law 114-223) states that VA may use appropriated funds available to VA for the Medical Services account to provide fertility counseling and treatment using assisted reproductive technology (ART) to a covered veteran or the spouse of a covered veteran, or adoption reimbursement to a covered veteran. This rulemaking expands the types of ART treatment available to certain veterans and makes fertility counseling and treatment including ART treatment available to spouses of those veterans, consistent with this statutory authority. Reimbursement of adoption expenses will be the subject of a separate rulemaking.

According to this law, Veterans who will receive this benefit are those with a service-connected disability that results in the inability of the veteran to procreate without the use of fertility treatment. The ART treatments referred to in this law are those relating to reproductive assistance provided to a member of the Armed Forces who incurs a serious injury or illness on active duty pursuant to title 10 of the United States Code (U.S.C.) section 1074(c)(4)(A), as described in a policy memorandum issued by the Assistant Secretary of Defense for Health Affairs on April 3, 2012, titled “Policy for Assisted Reproductive Services for the Benefit of Seriously or Severely Ill/Injured (Category II or III) Active Duty Service Members,” and the guidance issued to implement such policy, including any limitations on the amount of such benefits available to such a member. See Public Law 114-223, section 260(b)(2) and (3). The implementing guidance is contained in a document attached to the policy memorandum. We will refer to the April 3, 2012, policy memorandum and guidance issued by the Department of Defense (DoD) to implement that policy collectively as DoD policy guidance. DoD has established a system for categorizing injured servicemembers for purposes of coordinating care. Those in Category II have a serious injury or illness, are unlikely to return to duty within a time specified by their Military Department, and may be medically separated from the military. Servicemembers in Category III have a severe or catastrophic injury or illness, are highly unlikely to return to duty, and will most likely be medically separated from the military.

ART is defined at Public Law 114-223, section 260(b)(3) to mean the benefits relating to reproductive assistance in DoD policy guidance, including any limitations on the amount of such benefits in that policy. DoD policy guidance addresses assisted reproductive services available to servicemembers, providing specific guidance on the availability of IVF, as well as a wide range of services that VA considers as fertility treatment. Under this statute, VA is authorized to provide ART benefits, consistent with DoD policy guidance, to a veteran with a service-connected disability that results in the inability of the veteran to procreate without the use of fertility treatment, as well as the spouse of that veteran. The conference report accompanying this legislation makes clear that the implementing guidance developed by the Secretary shall not be materially different from, and in no way more expansive than, DoD's policy. Joint Explanatory Statement. 162 Congressional Record at S6011 (2016).

The Veterans' Health Care Eligibility Reform Act of 1996, Public Law 104-262, mandated that VA implement a national enrollment system to manage the delivery of healthcare services. A key component of managing delivery of healthcare services to eligible veterans is identifying the medical services provided by VA. The medical benefits package, defining the medical services provided to all enrolled veterans by VA, is found at 38 CFR 17.38. VA may provide services under the medical benefits package that are determined by appropriate healthcare professionals to be needed to promote, preserve, or restore the health of the individual and to be in accord with generally accepted standards of medical practice.

As part of the medical benefits package, VA provides many different types of fertility treatments and procedures to veterans. These include infertility counseling, laboratory blood testing, surgical correction of structural pathology, reversal of a vasectomy or tubal ligation, medication, and various other diagnostic studies or treatments and procedures. This list is not all-inclusive. Most of the ART evaluation and treatment modalities offered by VA are consistent with DoD policy guidance. The exception is IVF. DoD offers IVF to servicemembers who have sustained serious or severe illness/injury while on active duty that led to the loss of their natural procreative ability, while IVF is excluded from VA's medical benefits package under § 17.38(c)(2). IVF is the process of fertilization by manually fertilizing an egg, and then transferring the embryo to the uterus. IVF is a common and medically accepted procedure for addressing infertility that cannot be overcome with other types of infertility treatment. Although we are not revising the medical benefits package itself, we are revising paragraph (c)(2) to add a note referencing the benefit available in § 17.380, as discussed below. We believe that this clarification will help veterans better understand the benefits available from VA.