Federal Register Vol. 82, No.150,

The OCC gives notice that it is seeking the public's input to assist in determining how the final rule implementing section 13 of the Bank Holding Company Act 1 (the “final rule”) should be revised to better accomplish the purposes of the statute. The OCC also solicits comments suggesting improvements in the ways the final rule has been applied and administered to date. The request for information published here also is available on the OCC's Web site.

As this request for information describes, there is broad recognition that the final rule should be improved both in design and in application. A report recently issued by the Department of the Treasury 2 (“Treasury Report”) identifies problems with the design of the final rule—the inclusion of a “purpose” test for defining proprietary trading, for example. The report also contains recommendations for revisions to the final rule. The OCC's objective in issuing this request for information is to gather additional, more specific information that could provide focused support for any reconsideration of the final rule that the rulewriting agencies may undertake and contribute to the development of the bases for particular changes that may be proposed.

The information that the OCC is soliciting could support the revisions to the final rule advanced in the Treasury Report and elsewhere; it also may support additional revisions that are consistent with the spirit of the Treasury Report. In any case, the OCC and the other Volcker rulewriting agencies will need to explain the basis for any changes to the current rule that may be proposed. The OCC recognizes that revisions to the current rule must be undertaken jointly by the OCC, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation and in consultation and coordination with the Securities and Exchange Commission and the Commodity Futures Trading Commission. The OCC anticipates that the information solicited here—that is, information and data describing with specificity any burdens or inefficiencies resulting from the current rule and explaining how particular revisions would alleviate those burdens or inefficiencies—would be useful to inform the drafting of a proposed rule.

Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) created a new section 13 of the Bank Holding Company Act (“BHC Act”), which generally prohibits “banking entities” (e.g., insured depository institutions, companies that control an insured depository institution, and their affiliates and subsidiaries) from engaging in proprietary trading and from holding an ownership interest in, sponsoring, or having certain relationships with hedge fund and private equity funds.3 Section 13 of the BHC Act authorized the Office of the Comptroller of the Currency (“OCC”), Board of Governors of the Federal Reserve System (the “Board”), Federal Deposit Insurance Corporation (“FDIC”), Commodity Futures Trading Commission (“CFTC”), and Securities and Exchange Commission (“SEC”) (together, the “Agencies”) to issue implementing regulations.4 The Agencies issued final regulations implementing section 13 in December 2013, with an effective date of April 1, 2014.5 Banking entities were generally required to conform their proprietary trading activities and investments to the requirements of section 13 and the final rule (together, the “Volcker Rule”) by July 21, 2015.6

The final rule's proprietary trading provisions generally prohibit banking entities from engaging, as principal, in short-term trading of certain securities, derivatives, commodity futures and options on these instruments.7 The final rule's covered funds provisions generally prohibit banking entities from acquiring or retaining an ownership interest in, sponsoring, or having certain relationships with a hedge fund or private equity fund (“covered fund”). The final rule defines the term covered fund to include any issuer that would be an investment company under the Investment Company Act of 1940 if it were not otherwise excluded by sections 3(c)(1) or 3(c)(7) of that Act, as well as certain foreign funds and commodity pools.8 The proprietary trading prohibition and the covered funds prohibition are subject to a number of exclusions and exemptions. Banking entities of all sizes are subject to the Volcker Rule and are generally required to establish an internal compliance program reasonably designed to ensure and monitor compliance with the Volcker Rule.9

The Volcker Rule was intended to promote the safety and soundness of banking entities and prevent taxpayer bailouts by minimizing bank exposure to certain proprietary trading and fund activities that could involve undue risk. At the same time, the Volcker Rule was designed to permit banking entities to continue providing client-oriented financial services that are critical to capital generation and that facilitate liquid markets.10 Some have asserted that the Volcker Rule has succeeded in accomplishing these goals in some respects.11 However, others have identified difficulties in interpreting and applying some of the final rule's provisions.12 Many have argued that the final rule is overly complex and vague.13 Banking entities in particular have suggested that, despite their best efforts, they sometimes are not able to distinguish permissible from prohibited activities.14 Banking entities also have suggested that the Volcker Rule is overbroad and restricts a number of essential financial functions, potentially restricting activities that could spur economic growth. In particular, firms have suggested that they have been forced to curtail economically useful market-making, hedging, and asset-liability management to avoid violating the proprietary trading prohibition. 15 The covered funds prohibition has also been criticized for capturing investment vehicles that facilitate lending activity and capital formation, even though they may not be equivalent to traditional private equity funds or hedge funds.16

The OCC is seeking the public's input on whether aspects of the final rule and its implementation should be revised to better accomplish the purposes of section 13 of the BHC Act while decreasing the compliance burden on banking entities and fostering economic growth. In particular, the OCC is inviting input on ways to tailor further the rule's requirements and clarify key provisions that define prohibited and permissible activities. The OCC is also inviting input on how the existing rule could be implemented more effectively without revising the regulation. The OCC encourages the public to submit data addressing the effectiveness of the rule and its implementation, the current compliance burden, and any need for additional guidance and/or proposed revisions to the rule.

The OCC recognizes that any revisions to the final rule would need to be undertaken together with the other Agencies. Revisions would require the Agencies to articulate a reasoned basis for the changes, so it is especially important for those commenting to provide evidence demonstrating the nature and scope of the problems they identify and the likely efficacy of any solutions they propose. The OCC believes the information gathered in response to this request for information would be helpful in that regard.

This request for information identifies four broad areas for the public's consideration: (1) The scope of entities to which the final rule applies; (2) the proprietary trading restrictions; (3) the covered fund restrictions; and (4) the compliance program and metrics reporting requirements. However, the OCC is inviting comments on all aspects of the final rule and its administration. The request for information is limited to regulatory actions that may be undertaken to better accomplish the purpose of the statute and improve the way the final rule has been applied and administered to date. The OCC is not requesting comment on changes to the underlying Volcker statute. Regulatory actions that may be undertaken to achieve these objectives will be subject to the constraints of the statute. For instance, activity the Agencies may permit under the market-making or risk mitigating hedging exceptions to the general proprietary trading prohibition are subject to statutory safety and soundness and financial stability backstops, as well as other conditions.

The OCC is particularly interested in receiving comments and supporting data on the following topics and questions: 17

The Volcker Rule's statutory prohibition applies to any “banking entity,” 18 a term that is defined to include any insured depository institution, any company that controls an insured depository institution, or that is treated as a bank holding company for purposes of section 8 of the International Banking Act of 1978, and any affiliate or subsidiary of such entity.19 The Agencies adopted this definition in the final rule and provided a limited number of specific exclusions.20

As a result of this definition, the Volcker Rule prohibitions and compliance program requirements apply to many entities that may not pose systemic risk concerns, such as small community banks engaged primarily in traditional banking activities and other banks that do not engage in the type of activities, or in activities that present the type of risk, that the Volcker Rule was designed to restrict. For example, banks with minimal or no proprietary trading activities are subject to the final rule. Many of these institutions have reported experiencing a significant regulatory burden. The final rule's tailored compliance program requirements were intended to reduce the Volcker Rule's economic impact on small banking entities,21 but even determining whether an entity is eligible for the simplified program can pose a significant burden for small banks.22 In addition, certain activities of small banks have been caught up in the proprietary trading prohibition. Exempting small banking entities and other banking entities without substantial trading activities would enable them to reduce their compliance costs and devote more resources to local lending without materially increasing risk to the financial system.23

The banking entity definition also extends to foreign subsidiaries of foreign banking organizations acting outside of the United States. In particular, foreign banking organizations have raised questions regarding non-U.S. entities that are not covered funds under section 10(b)(iii) of the final rule (“foreign excluded funds”) and whether such funds may become banking entities if they are “controlled” by a banking entity.24 Foreign banking entities that sponsor foreign non-covered funds in some foreign jurisdictions may, by virtue of typical corporate governance structures for funds in these jurisdictions, be deemed to “control” a foreign non-covered fund for purposes of the BHC Act.25 These corporate governance structures have raised questions regarding whether foreign non-covered funds that are sponsored by foreign banking entities and offered solely outside the U.S. and in accordance with foreign laws are banking entities under the final rule. The OCC, Board, and FDIC, in consultation with the SEC and CFTC, issued a statement of policy on July 21, 2017, announcing that the three Federal banking agencies are coordinating review of the treatment of these funds under the final rule and providing that they would not propose to take action with respect to such foreign funds during the one-year period prior to July 21, 2018, if they meet the criteria specified in the statement of policy.

1. What evidence is there that the scope of the final rule is too broad?

2. How could the final rule be revised to appropriately narrow its scope of application and reduce any unnecessary compliance burden? What criteria could be used to determine the types of entities or activities that should be excluded? Please provide supporting data or other appropriate information.

3. How would an exemption for the activities of these banking entities be consistent with the purposes of the Volcker Rule and not compromise safety and soundness and financial stability? Please include supporting data or other appropriate information.

4. How could the rule provide a carve-out from the banking entity definition for certain controlled foreign excluded funds? How could the rule be tailored further to focus on activities with a U.S. nexus?

5. Are there other issues related to the scope of the final rule's application that could be addressed by regulatory action?

The final rule, like the statute, defines proprietary trading as engaging as principal for the trading account of the banking entity in any purchase or sale of one or more financial instruments. Building upon the statutory definition,26 the final rule adopted a three pronged definition of “trading account.” The first prong includes within the definition any account used by a banking entity to purchase or sell one or more financial instruments principally for the purpose of (a) short-term resale, (b) benefitting from short-term price movements, (c) realizing short-term arbitrage profits or (d) hedging any of the foregoing.27 Banking entities and commentators have asserted that this prong of the definition imposes a significant compliance burden because it requires determining the intent associated with each trade.

In addition, the final rule provides that the purchase or sale of a financial instrument will be presumed to be for the trading account under the first prong of the trading account definition if the banking entity holds the financial instrument for fewer than 60 days or substantially transfers the risk of the position within 60 days.28 If a banking entity sells or transfers the risk of a position within 60 days, it must be able to demonstrate that it did not purchase or sell the instrument for short-term trading purposes. Some banking entities have said that many transactions are presumed to be proprietary trading as a result of this provision, including transactions that were not the intended target of the proprietary trading restriction.

The Volcker statute and the final rule provide several exclusions and exemptions from the proprietary trading prohibition.29 However, banking entities have reported that complying with these exclusions and exemptions is unduly burdensome and the final rule's requirements may result in banking entities underutilizing them. In particular, industry groups, members of Congress, and others have argued that the rule does not provide sufficient latitude for banking entities to engage in market-making, which they have argued may have a negative impact on some measures of market liquidity.30

1. What evidence is there that the proprietary trading prohibition has been effective or ineffective in limiting banking entities' risk-taking and reducing the likelihood of taxpayer bailouts? What evidence is there that the proprietary trading prohibition does or does not have a negative impact on market liquidity?

2. What type of objective factors could be used to define proprietary trading?

3. Should the rebuttable presumption provision be revised, whether by elimination, narrowing, or introduction of a reverse presumption that presumes activities are not proprietary trading? Are there activities for which rebuttal should not be available? Should rebuttal be available for specified categories of activity? Could the rebuttable presumption provision be implemented in a way that decreases the compliance burden for banking entities?

4. What additional activities, if any, should be permitted under the proprietary trading provisions? Please provide a description of the activity and discuss why it would be appropriate to permit the activity, including supporting data or other appropriate information.

5. How could the existing exclusions and exemptions from the proprietary trading prohibition—including the requirements for permissible market-making and risk mitigating hedging activities—be streamlined and simplified? For example, does the distinction between “market-maker inventory” and “financial exposure” help ensure that trading desks using the market-making exemption are providing liquidity or otherwise functioning as market makers?

6. How could additional guidance or adjusted implementation of the existing proprietary trading provisions help to distinguish more clearly between permissible and impermissible activities?

7. Are there any other issues related to the proprietary trading prohibition that should be addressed by regulatory action?

Section 13 of the BHC Act generally prohibits banking entities from acquiring or holding an ownership in or sponsoring any private equity fund or hedge fund.31 Section 13 defines a hedge fund or private equity fund as an issuer that would be an investment company, as defined in the Investment Company Act of 1940 but for section 3(c)(1) or 3(c)(7) of that Act, or such similar funds as the Agencies may, by rule, determine. The Agencies adopted the definition referencing sections 3(c)(1) and 3(c)(7) of the Investment Company Act in the final rule and also included certain commodity pools and foreign funds in the covered fund definition.32 Recognizing that this definition may apply more broadly than necessary to achieve the Volcker Rule's purposes, the Agencies excluded several categories of issuers from the definition of covered fund in the final rule and established requirements for certain permitted covered fund activities, such as organizing and offering a covered fund,33 market making in covered fund interests,34 and covered fund activities and investments outside of the United States.35 Some have suggested that, notwithstanding the exclusions currently provided, the statutory definition referencing sections 3(c)(1) and 3(c)(7) of the Investment Company Act continues to include within its scope many issuers that were not intended to be covered by section 13.36

The final rule also implements section 13's restrictions on relationships with hedge funds and private equity funds.37 The so-called “Super 23A” provision prohibits a banking entity that serves as investment manager, adviser, or sponsor to a covered fund from entering into a transaction with the covered fund (or any other covered fund controlled by the covered fund) if the transaction would be a covered transaction as defined in section 23A of the Federal Reserve Act.38

1. What evidence is there that the final rule has been effective or ineffective in limiting banking entity exposure to private equity funds and hedge funds? What evidence is there that the covered fund definition is too broad in practice?

2. Would replacing the current covered fund definition that references sections 3(c)(1) and 3(c)(7) of the Investment Company Act of 1940 with a definition that references characteristics of the fund, such as investment strategy, fee structure, etc., reduce the compliance burden associated with the covered fund provisions? If so, what specific characteristics could be used to narrow the covered fund definition? Does data or other appropriate information support the use of a characteristics-based approach to fund investments?

3. What types of additional activities and investments, if any, should be permitted or excluded under the covered funds provisions? Please provide a description of the activity or investment and discuss why it would be appropriate to permit the activity or investment, including supporting data or other appropriate information.

4. Is section 14 of the final rule (the “Super 23A” provision) effective at limiting bank exposure to covered funds? Are there additional categories of transactions and relationships that should be permitted under this section?

5. How could additional guidance or adjusted implementation of the existing covered fund provisions help to distinguish more clearly between permissible and impermissible activities? For example, should the final rule be revised to clarify how the definition of “ownership interest” applies to securitizations?

6. Are there any other issues related to the covered funds prohibition that could be addressed by regulatory action?

The final rule adopted a tiered compliance program requirement based on the size, complexity, and type of activity conducted by each banking entity. Banking entities that do not engage in activities covered by the final rule other than trading in government obligations are not required to establish a compliance program unless they become engaged in covered activities.39 Banking entities with assets of $10 billion or less are eligible for a simplified compliance program.40 Nonetheless, banking entities have reported that the compliance program requirements in the final rule present a compliance burden, especially for small institutions that are not engaged in significant levels of proprietary trading and covered fund activities. Section 20 and Appendix A of the final rule require certain of the largest banking entities engaged in significant trading activities to collect, evaluate, and furnish data regarding covered trading activities as an indicator of areas meriting additional attention by the banking entity and relevant Agency.41

1. What evidence is there that the compliance program and metrics reporting requirements have facilitated banking entity compliance with the substantive provisions of the Volcker Rule? What evidence is there that the compliance program and metrics reporting requirements present a disproportionate or undue burden on banking entities?

2. How could the final rule be revised to reduce burden associated with the compliance program and reporting requirements? Responses should include supporting data or other appropriate information.

3. Are there categories of entities for which compliance program requirements should be reduced or eliminated? If so, please describe and include supporting data or other appropriate information.

4. How effective are the quantitative measurements currently required by the final rule? Are any of the measurements unnecessary to evaluate Volcker Rule compliance? Are there other measurements that would be more useful in evaluating Volcker Rule compliance?

5. How could additional guidance or adjusted implementation of the existing compliance program and metrics reporting provisions reduce the compliance burden? For example, should the rule permit banking entities to self-define their trading desks, subject to supervisory approval, so that banking entities report metrics on the most meaningful units of organization?

6. How could the final rule be revised to enable banking entities to incorporate technology-based systems when fulfilling their compliance obligations under the Volcker Rule? Could banking entities implement technology-based compliance systems that allow banking entities and regulators to more objectively evaluate compliance with the final rule? What are the advantages and disadvantages of using technology-based compliance systems when establishing and maintaining reasonably designed compliance programs?

7. What additional changes could be made to any other aspect of the final rule to provide additional clarity, remove unnecessary burden, or address any other issues?

Authority for This Rulemaking

The FAA's authority to issue rules with respect to aviation safety is found in Title 49, United States Code (49 U.S.C.). Sections 106(f), 40113(a), and 44701(a) authorize the FAA Administrator to prescribe regulations necessary for aviation safety. Under Section 40103(b), the FAA is charged with prescribing regulations to enhance the efficiency of the national airspace. This proposed rulemaking is within the scope of these authorities as it removes regulatory requirements that the FAA no longer finds necessary for safe operations in RVSM airspace and establishes requirements for the use of qualified ADS-B Out systems to facilitate operations in that airspace.

This proposal would permit an operator of an aircraft equipped with a qualified ADS-B Out system meeting altitude keeping equipment performance requirements for operations in RVSM airspace to operate in that airspace without requiring a specific authorization. Under this proposal the FAA would consider a qualified ADS-B Out system to be one that meets the requirements of § 91.227 of Title 14, Code of Federal Regulations (14 CFR).

The requirement for operators to obtain a specific RVSM authorization was first promulgated in 1997 when most aircraft required significant design changes to qualify for an authorization. At that time, operators lacked familiarity with RVSM operations and were required to submit a detailed application to the FAA for review to obtain an RVSM authorization. This application included information on the operator's compliance with RVSM equipment standards, a description of the operator's RVSM maintenance program, and evidence of initial and recurrent pilot training. Since then, operators have become more familiar with RVSM operations, requirements, and procedures. Additionally, the height-keeping performance of aircraft equipped with ADS-B Out systems can be continually monitored to confirm that these aircraft are meeting RVSM performance standards. Based on the technological advances provided by ADS-B Out systems, detailed applications and specific authorizations for operators of these aircraft to conduct operations in RVSM airspace is no longer required.

Accordingly, under this proposal, the requirement to submit applications for RVSM authorization would no longer be applied to operators of aircraft that are equipped with qualified ADS-B Out systems and meet altitude-keeping equipment performance requirements for operations in RVSM airspace. By eliminating this application requirement, the proposal would reduce both operators' costs and FAA workload, while maintaining the existing level of safety. Additionally, since RVSM airspace has been implemented worldwide, the proposal would also remove the detailed designations of where RVSM may be applied that are currently found in Appendix G of part 91.

This proposal would not impose any costs on regulated entities. The FAA estimates that the proposal would result in approximately $35 million (30.8 million of 7% present value) in cost savings during the first 5 years of the rule's implementation primarily resulting from the ability of operators to operate their aircraft at more fuel efficient RVSM altitudes. The FAA estimates that this proposed rulemaking would save each affected small entity operating aircraft equipped with qualified ADS-B Out systems under parts 91 and 135 a total of $1,630. Savings would result from the benefit of not having to apply for RVSM authorizations and from reduced fuel costs associated with not being restricted from RVSM operations while the authorization is processed.

The current process for obtaining RVSM authorizations was developed when RVSM airspace was initially implemented in 1997 (62 FR 17487; Apr. 9, 1997). At that time, most aircraft were not manufactured to comply with RVSM performance requirements and needed significant modifications to meet the altimetry system performance requirements necessary for flight in RVSM airspace. Since the reduced vertical separation standards employed in RVSM airspace were new to most pilots and air traffic controllers, validation of operational policies and procedures to operate in that airspace was necessary to ensure effective implementation of these reduced vertical separation standards. To assist in accomplishing this task, the FAA established systems to provide height-keeping performance monitoring with the overall goal to ensure that aircraft airworthiness, maintenance, and operational approval requirements resulted in the level of safety and system performance necessary to operate in this airspace on a continuing basis. The technology originally used to monitor an aircraft's performance was limited and capable of only a small number of aircraft observations during a flight.

Since that time, RVSM technology has matured and most aircraft manufactured today that are capable of operating in RVSM airspace are delivered from the manufacturer as RVSM compliant. RVSM airspace has been implemented worldwide, familiarity with operational policy and procedures has significantly increased, and the vast majority of the RVSM capable fleet demonstrates excellent altimetry system performance.1 Additionally, the increasing equipage of aircraft with ADS-B Out systems makes the current process of obtaining RVSM authorizations for operation of those aircraft in RVSM airspace unnecessary, as ADS-B Out enables continual monitoring of aircraft height-keeping performance and rapid notification of altimetry system error (ASE).

Vertical separation standards establish the minimum vertical distance between aircraft routes in the national airspace system. In the early 1970's, increasing air-traffic volume and fuel costs sparked an interest in reducing vertical separation standards for aircraft operating above Flight Level (FL)290.2 At the time, the FAA required aircraft operating above FL290 to maintain a minimum of 2,000 feet of vertical separation between routes. Use of these high-altitude routes was desirable because the diminished atmospheric drag at high altitudes results in a corresponding increase in aircraft fuel efficiency. Operators sought, and continue to seek, not only the most direct routes, but also the most efficient altitudes for their aircraft. Increased demand for these high-altitude routes, however, has resulted in greater aircraft congestion in this airspace.

In 1973, the Air Transport Association of America petitioned the FAA to reduce the vertical separation of high altitude routes from 2,000 feet to 1,000 feet. The FAA denied the petition in 1977, in part because the technology to meet these more rigorous separation standards was neither generally available nor proven. Deficiencies included insufficient aircraft altitude-keeping standards, lack of maintenance and operational standards, and limited altitude correction technology.

In mid-1981, the FAA initiated the Vertical Studies Program. This program, in conjunction with RTCA (formerly the Radio Technical Commission for Aeronautics) Special Committee (SC)-150 and the International Civil Aviation Organization (ICAO) Review of General Concept of Separation Panel (RGCSP), determined:

• RVSM is “technically feasible without imposing unreasonably demanding technical requirements on the equipment.”

• RVSM could provide “significant benefits in terms of economy and en-route airspace capacity.”

• Implementation of RVSM would require “sound operational judgment supported by an assessment of system performance based on: aircraft altitude-keeping capability, operational considerations, system performance monitoring, and risk assessment.”

Following these determinations, the FAA began a two-phase implementation process for RVSM operations for aircraft registered in the United States (U.S.). During the first phase in 1997, the FAA added § 91.706 (Operations within airspace designed as RVSM Airspace) and Appendix G (Operations in RVSM Airspace) to part 91 (62 FR 17487; Apr. 9, 1997). Section 91.706 permits operators of U.S.-registered aircraft to operate in RVSM airspace outside of the U.S. in accordance with the provisions of Appendix G. Appendix G contains a set of operational, design, maintenance, and other standards applicable to operators seeking to operate in RVSM airspace. It specifies a detailed application process that requires operators to provide evidence that the operator's aircraft design satisfies RVSM performance requirements and has policies and procedures for the safe conduct of RVSM operations. Until recently, it also required that the operator have a specific program for the maintenance of RVSM systems and equipment. The FAA reviews the applications and grants authorizations to operate in RVSM airspace after finding that the applicable requirements are met.

The second phase of RVSM implementation occurred in October 2003, with a second RVSM-related rulemaking action (68 FR 61304; Oct. 27, 2003). This rule introduced RVSM airspace in the U.S. and used the same authorization process previously established under Appendix G to part 91. As established in 2003, the FAA's RVSM program allows for 1,000 feet of vertical separation for aircraft between FL290 and FL410. Before this final rule, air traffic controllers could only assign aircraft operating under Instrument Flight Rules (IFR) flying at FL290 and above to FL290, 310, 330, 350, 370, 390, and 410 since the existing vertical separation standard was 2,000 feet. After the rule changes went into effect, IFR aircraft could also fly at FL300, 320, 340, 360, 380, and 400—nearly doubling capacity within this particular segment of airspace.

The FAA also implemented a performance monitoring program to support implementation of RVSM. This program includes Global Positioning System (GPS)-based height-keeping monitoring units (GMUs) capable of being deployed onboard aircraft during individual RVSM flights. Later, in 2005, the FAA deployed the first of five passive ground-based aircraft geometric height measurement element (AGHME) sites in the continental U.S. to conduct height-keeping performance monitoring of aircraft passing over each site. Other civil aviation authorities throughout the world have also developed similar height monitoring sites.

In 2008, the FAA reviewed its RVSM program and operator authorization policies. At that time, there were more than 7,000 active RVSM authorizations, covering in excess of 15,000 U.S.-registered aircraft. The FAA's evaluation found the existing processes ensured compliance with the RVSM operating requirements. At the same time however, FAA representatives began meeting with the National Business Aviation Association (NBAA) to develop ways to streamline the RVSM application process to lower the burden on operators to obtain RVSM authorizations and reduce the FAA's workload associated with processing and granting these authorizations. The parties formed the RVSM Process Enhancement Team (PET) within the Performance based Aviation Rulemaking Committee. The PET submitted its final recommendations to the FAA in 2013. As a result the FAA revised existing policies and guidance to facilitate more efficient processing of requests to change existing authorizations and created a job aid to assist inspectors in standardizing review of operator applications.

The FAA also completed rulemaking in 2016 to further reduce the burden on applicants by eliminating the requirement that RVSM applicants include an approved RVSM maintenance program as part of an application for an RVSM authorization. (81 FR 47009, Jul. 20, 2016)

This proposed rulemaking would permit operators of qualified ADS-B Out equipped aircraft to operate without submitting an application for an RVSM authorization when operating where the FAA has ADS-B coverage sufficient to confirm RVSM height-keeping performance. The proposal would eliminate this process for aircraft equipped with qualified ADS-B Out systems as a result of the agency's ability to effectively and continually monitor the height-keeping performance of these aircraft.

This proposal would add a new Section 9 (Aircraft Equipped with Automatic Dependent Surveillance-Broadcast Out) to Appendix G of part 91. The proposal would authorize operators of aircraft, equipped with qualified ADS-B Out systems, (i.e. systems that meet the requirements of 14 CFR 91.227) that can be monitored by the FAA to conduct RVSM operations without submitting an application for an authorization to operate in RVSM airspace. The height-keeping performance of these aircraft would be required to be equivalent to that achieved by individual aircraft approved under current provisions of Section 2 of Appendix G.

To be eligible for operations in RVSM airspace an operator's aircraft must meet strict height-keeping performance standards. Under this proposal, an operator would be authorized to conduct flight in airspace in which RVSM is applied when the operator's aircraft complies with the provisions proposed in Section 9. These operations would be conducted in airspace where the FAA has ADS-B coverage sufficient to confirm RVSM height-keeping performance.3 No specific authorization would be necessary. However, an operator could still operate with an authorization issued under the provisions of Section 3 of Appendix G if its aircraft are not equipped with a qualified ADS-B Out system. The FAA also notes that if a foreign country requires a specific authorization to operate in RVSM airspace an operator may need to seek authorization under the provisions of Section 3, even if it meets the provisions of proposed Section 9.

When RVSM was first established, the FAA and other international air traffic service organizations developed systems for monitoring aircraft altitude-keeping performance. The systems are used to measure Total Vertical Error (TVE), including ASE. The overall goal of height-keeping performance monitoring is to ensure that airworthiness, maintenance and operational approval requirements result in required system performance and level of safety in the flight environment on an ongoing basis. Aircraft equipped with qualified ADS-B Out systems continuously transmit aircraft geometric position information used to calculate their height-keeping performance.

Operators wishing to take advantage of proposed Section 9's provisions would be required to operate aircraft equipped with a qualified ADS-B Out system installed as specified in proposed Section 9(a)(5) which would allow the FAA to monitor the aircraft height-keeping performance in RVSM airspace where the FAA has ADS-B coverage. This monitoring capability enables the FAA to eliminate the application process for RVSM authorization. The ADS-B Out equipment requirement in proposed Section 9(a)(5) is necessary for aircraft height-keeping performance monitoring, but not for aircraft height-keeping capability. Accordingly, as proposed in Section 9(a)(5), an aircraft that the FAA has previously been found to be operating within required height-keeping performance parameters may be authorized to operate in RVSM airspace when ADS-B Out is inoperable for a specific flight.

The proposal also specifies, in Section 9(a), the essential aircraft equipment and capabilities, including altitude measurement systems; altitude control systems; and altitude alert systems, required to be operational for the aircraft to be eligible for RVSM. The proposed RVSM height-keeping equipment requirements in Section 9(a) are the same as those for non-ADS-B Out equipped aircraft in paragraph (c) of Section 2 of Appendix G. The FAA has determined the current fleet of RVSM approved aircraft consistently meet FAA established safety standards and accordingly has not proposed any changes to the current RVSM equipment standards for ADS-B Out equipped aircraft.4

The FAA notes that a Traffic Collision Avoidance Alert System (TCAS) is not specifically required for RVSM operations. Other FAA regulations specify when an aircraft must be equipped with a collision avoidance system. However, for operations in RVSM airspace, aircraft that are equipped with TCAS II must meet Technical Standards Order (TSO) C-119b and be modified to incorporate software Version 7.0, or a later version. This requirement is specified as an aircraft approval requirement in current paragraph (g) of Section 2 of Appendix G. The proposed requirement for operators of ADS-B Out equipped aircraft seeking to operate in RVSM airspace that are also equipped with TCAS II must meet TSO C-119b (Version 7.0), or later, is necessary because earlier TCAS software versions did not incorporate revised alert thresholds for traffic alerts (TA) and resolution advisories (RA) for FL300 through FL420 that are compatible with RVSM operations. These provisions for TCAS II equipped aircraft in paragraph (a)(4) of proposed Section 9 are identical to current provisions for existing RVSM aircraft approval under Section 2 of Appendix G.

Additionally, the FAA also proposes a single ASE containment requirement for aircraft equipped with ADS-B Out in proposed Section 9(b). This requirement corresponds to limits for ASE containment when RVSM was first established and is consistent with RVSM performance criteria used for aircraft approval in Section 2 of Appendix G. It allows performance monitoring to be applied to each aircraft without relying on aggregated data collected from many aircraft of the same RVSM monitoring group. For these operations, the FAA can rapidly detect when individual aircraft performance has deteriorated outside the proposed ASE tolerance. The proposal would require that aircraft continually meet this requirement to be eligible for RVSM operations under the provisions of this proposed section.

As discussed in the “Background” section of this document, RVSM was implemented regionally in a phased approach. Section 8 (Airspace Designation) of Appendix G was initially designed to be updated whenever regions added RVSM airspace. The inability to rapidly update these designations caused discrepancies between the airspace listed in Section 8 of Appendix G and the airspace in which RVSM had been applied. Today, however, RVSM has been established between FL290 and FL410 in all flight information regions (FIRs) 5 and requirements have been harmonized throughout ICAO member States. Accordingly, there is no longer a need to update the airspace designations listed in Section 8. The proposed amendment to this section acknowledges RVSM is now applied worldwide 6 and removes the detailed RVSM airspace designations from that section.

Additional amendments to Appendix G to part 91 are proposed to facilitate the addition of the approval requirements specified in Section 9 for ADS-B Out equipped aircraft.

The proposed changes to Section 1 (RVSM definition), recognize that RVSM is no longer a new concept and that RVSM operations have become a standard operation between FL290 and FL410. Accordingly, the proposed changes to this section would remove the “special qualification” designation for RVSM airspace and references referring to operator specific approvals. Since RVSM has now been implemented worldwide, a reference to RVSM airspace identified in Section 8 is no longer needed and would be removed.

The proposed changes in Section 2 (Aircraft Approval) and Section 3 (Operator Authorization) recognize that aircraft operators may either, use the current aircraft approval process specified in Section 2 and the operator authorization process specified in Section 3, or the authorization process proposed in new Section 9 for aircraft equipped with qualified ADS-B Out systems to obtain authorization to conduct RVSM operations.

Proposed changes to paragraphs (a), (b), and (c) in Section 3 (Operator Authorization) would not only allow for an operator to be authorized to conduct flight in airspace where RVSM is applied under the provisions of this section as is currently permitted but would also recognize that operators would be authorized to conduct RVSM operations under the provisions of proposed Section 9.

Additionally, under the provisions of current Section 3 (Operator Authorization), each operator must provide evidence that each of its pilots has adequate knowledge of RVSM requirements, policies, and procedures when applying for an RVSM authorization. To better clarify the intent of the rule, current Section (3)(c) would be revised to state that “each pilot has knowledge of RVSM requirements, policies, and procedures sufficient for the conduct operations in RVSM airspace”.

To ensure the pilots of aircraft of operators who have been authorized to conduct RVSM operations in accordance with proposed Section 9 have knowledge of the requirements, policies, and procedures sufficient for the conduct operations in RVSM airspace, proposed paragraph (b)(3) would be added to Section 4 (RVSM Operations). The new provision is identical to revised Section 3(c)(2). Knowledge sufficient to conduct RVSM operations includes, but is not limited to; RVSM FL protocols, flight planning requirements, inflight procedures, and contingency procedures for areas of intended operation. The FAA publishes applicable guidance material in the Aeronautical Information Manual (AIM), Aeronautical Information Publication (AIP), and Advisory Circular (AC) 91-85. Proposed Section 4 has also been revised to specify that an operator may be authorized to conduct RVSM operations under the provisions of Section 3 (as is currently stated) or under proposed Section 9.

Section 5 (Deviation Authority Approval) would be revised to eliminate the specific references to Section 3 since the Administrator may authorize deviations from the requirements in § 91.180 and § 91.706 for a specific flight in RVSM airspace for operators who may not meet the provisions of current Section 3 or proposed Section 9. This section would be revised to address the inclusion of proposed Section 9 in Appendix G.

Currently Section 7 (Removal or Amendment of Authority) states that the Administrator may revoke or restrict an RVSM authorization or RVSM letter of authorization. This section would be revised to eliminate specific references to the revocation or restriction of RVSM authorizations and letters of authorization and replace those provisions with a more general provision stating that the Administrator may prohibit or restrict operation in RVSM airspace if an operator fails to comply with certain specified provisions. This revision is necessary as the current section only addresses the removal or amendment of authority through operations specifications, management specifications, and letters of authorization. As the proposal would permit RVSM operations to be conducted without a specific authorization document issued by the Administrator, this section has been revised to indicate that the Administrator may prohibit or restrict an operator's ability to operate in RVSM airspace even if that authorization is not specified in operations specifications, management specifications, or a letter of authorization.

The FAA would perform height-keeping performance monitoring on ADS-B Out equipped flights operating at RVSM altitudes for all airspace defined in § 91.225. This monitoring capability is the result of the FAA having access to ADS-B data from flights in RVSM airspace which would be obtained during normal operations. ADS-B Out systems, meeting the performance requirements of § 91.227, transmit the necessary aircraft position information to allow the FAA to perform height-keeping performance monitoring on a continual basis. This level of monitoring was not previously available due to the limited number and range of AGHME systems or special effort required to fly with a GPS-based monitoring unit (GMU) on board an aircraft for an individual flight. The continual monitoring enabled by ADS-B Out provides increased height-keeping performance data on an individual aircraft basis and enables the FAA to identify poor ASE performance sooner, allowing quicker mitigation of any risk posed by poor performing aircraft. Additionally, in airspace where the U.S. performs ADS-B monitoring, operators of ADS-B Out aircraft would be able to begin RVSM operations immediately. This ability to operate immediately would lower costs and eliminate the delay caused during the processing of an application for authorization.

For operations outside U.S. airspace, where ADS-B height monitoring may not be available, an aircraft that has recently been monitored by the FAA and found to be operating normally could be safely operated outside of FAA-monitored airspace with a high degree of confidence that the performance requirements would continue to be met.

The FAA has developed and maintains guidance for operators, based on statistical performance analysis, on the time interval that aircraft should return to airspace with FAA ADS-B monitoring capability or obtain a traditional RVSM approval to ensure that the aircraft meets applicable performance requirements. Advisory Circular AC 91-85, Authorization of Aircraft and Operators for Flight in Reduced Vertical Separation Minimum (RVSM) Airspace, includes the initial criteria which would be revised with ongoing monitoring experience. The FAA may also expand the airspace in which we collect ADS-B data, through collaboration with other air navigation service providers or operators.

The FAA will maintain a database of aircraft that have been monitored and are performing within the required performance as specified in proposed Section 9. When a new aircraft is entered into service, the operator must have the initial flight in airspace that can be monitored by the FAA in order to take advantage of proposed Section 9. For a new aircraft that is entered into service and cannot be monitored by the FAA (such as manufactured and delivered outside the U.S.), the operator should obtain an approval in accordance with section 3 before operating in RVSM airspace.

In addition, the FAA intends to transition current approvals, issued under section 3, to monitored operations under the provisions of section 9, in order to reduce the operator and FAA administrative burden of maintaining the section 3 approval. Once an operator's fleet of aircraft have been monitored, the FAA intends to notify the operator that the section 3 approval will be terminated and their authority to operate in RVSM transferred to the provisions of section 9. The FAA will allow operators to maintain their section 3 approval if the operator notifies the FAA that a specific authorization is required for operations in another country.

The FAA also plans to share ADS-B performance concepts and monitoring techniques with ICAO, so that other States can perform their own RVSM performance monitoring.7 The FAA would publish guidance material addressing the frequency, durability, and coverage of our ADS-B monitoring that we find acceptable and work with ICAO to develop guidance applicable to RVSM capable aircraft equipped with ADS-B Out systems. The FAA would make aircraft performance summaries available to operators to assist them in assuring compliance with the RVSM performance requirements. The FAA believes that the implementing actions described in this proposal would reduce operator and FAA workload and expense, with no additional risk.

Changes to Federal regulations must undergo several economic analyses. First, Executive Order 12866 and Executive Order 13563 direct that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96-354) requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (Pub. L. 96-39) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, this Trade Act requires agencies to consider international standards and, where appropriate, that they be the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more annually (adjusted for inflation with base year of 1995; current value is $155 million). This portion of the preamble summarizes the FAA's analysis of the economic impacts of this proposed rule. We suggest readers seeking greater detail read the full regulatory evaluation, a copy of which we have placed in the docket for this rulemaking.

In conducting these analyses, the FAA has determined that this proposed rule: (1) Has benefits that justify its costs, (2) is not an economically “significant regulatory action” as defined in Section 3(f) of Executive Order 12866, (3) is “nonsignificant” as defined in DOT's Regulatory Policies and Procedures; (4) would not have a significant economic impact on small entities; (5) would not create unnecessary obstacles to the foreign commerce of the U.S.; and (6) would not impose an unfunded mandate on state, local, or tribal governments, or on the private sector by exceeding the threshold identified above. These analyses are summarized below.

All operators intending to conduct operations between FL290 and FL410 (RVSM designated Airspace) and have 1,000 feet vertical separation applied. This applies to operations conducted under parts 91, 91K, 121, 125, and 135.

• Present value estimates based on OMB guidance using a 7% discount rate.

• This proposed rule would become effective in 2018.

• The analysis period is 5 years from 2018 to 2022.

The average equipage rate of ADS-B Out in RVSM airspace will be 83% in 2018, 95% in 2019, and reach 100% on January 1, 2020.

The proposal would permit an operator of an aircraft meeting equipment requirements for operations in RVSM airspace and equipped with a qualified ADS-B Out system to operate in RVSM airspace without requiring application for a specific authorization. This rulemaking proposes to eliminate this application requirement, thereby reducing both operators' costs and FAA workload, while maintaining the existing level of safety. The biggest savings comes not from the paperwork savings but from fuel savings. Currently operators without RVSM approval must operate their airplane at lower altitudes.

Total savings during the first 5 years of the rule's implementation would be approximately $35.3 million ($30.8 million present value at 7%).

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

Agencies must perform a review to determine whether a rule would have a significant economic impact on a substantial number of small entities. If the agency determines that it would, the agency must prepare a regulatory flexibility analysis as described in the RFA.

However, if an agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities, Section 605(b) of the RFA provides that the head of the agency may so certify and a regulatory flexibility analysis is not required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear. The FAA estimates that this proposed rulemaking would save each affected small entity operating aircraft equipped with qualified ADS-B Out systems under Part 91 and Part 135 $1,630 8 from not having to apply for an RVSM authorization and from reduced fuel cost associated with not being restricted from RVSM operations while the authorization is processed. The FAA then compared this cost saving with a weighted average aircraft value of representative aircraft that would potentially be affected by this rule (See following table).

Owners of new turbojet or turboprop airplanes would receive a benefit of $1,630 per new airplane. But, for new turbojet or turboprop airplanes whose value exceeds $3 million, the cost savings of less than $2,000 is not economically significant. If an agency determines that a rulemaking will not result in a significant economic impact on a substantial number of small entities, the head of the agency may so certify under Section 605(b) of the RFA. Therefore, as provided in Section 605(b), the head of the FAA certifies that this rulemaking will not result in a significant economic impact on a substantial number of small entities.

The Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the Uruguay Round Agreements Act (Pub. L. 103-465), prohibits Federal agencies from establishing standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Pursuant to these Acts, the establishment of standards is not considered an unnecessary obstacle to the foreign commerce of the U.S., so long as the standard has a legitimate domestic objective, such as the protection of safety, and does not operate in a manner that excludes imports that meet this objective. The statute also requires consideration of international standards, and where appropriate, that they be the basis for U.S. standards. The FAA has assessed the potential effect of this proposed rule and determined that it would have the same impact on domestic and international entities and thus has a neutral trade impact.

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (in 1995 dollars) in any 1 year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.” The FAA currently uses an inflation-adjusted value of $155 million in lieu of $100 million. This proposed rule does not contain such a mandate; therefore, the requirements of Title II of the Act do not apply.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. The FAA has determined that there is no new requirement for information collection associated with this proposed rule.

In keeping with U.S. obligations under the Convention on International Civil Aviation, it is FAA policy to conform to ICAO Standards and Recommended Practices to the maximum extent practicable. The FAA has reviewed the corresponding ICAO Standards and Recommended Practices and has identified no differences with these proposed regulations.

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

Executive Order 13771 titled “Reducing Regulation and Controlling Regulatory Costs,” directs that, unless prohibited by law, whenever an executive department or agency publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed. In addition, any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs. Only those rules deemed significant under section 3(f) of Executive Order 12866, “Regulatory Planning and Review,” are subject to these requirements.

This proposed rule is expected to be an E.O. 13771 deregulatory action. Details on the estimated costs savings of this proposed rule can be found in the rule's economic analysis.

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

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

The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. The agency also invites comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.

The FAA will file in the docket all comments it receives, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, the FAA will consider all comments it receives on or before the closing date for comments. The FAA will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. The agency may change this proposal in light of the comments it receives.

Proprietary or Confidential Business Information: Commenters should not file proprietary or confidential business information in the docket. Such information must be sent or delivered directly to the person identified in the FOR FURTHER INFORMATION CONTACT section of this document, and marked as proprietary or confidential. If submitting information on a disk or CD ROM, mark the outside of the disk or CD ROM, and identify electronically within the disk or CD ROM the specific information that is proprietary or confidential.

An electronic copy of rulemaking documents may be obtained from the Internet by—

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

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

3. Accessing the Government Printing Office's Web page at http://www.thefederalregister.org/fdsys/.

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

All documents the FAA considered in developing this proposed rule, including economic analyses and technical reports, may be accessed from the Internet through the Federal eRulemaking Portal referenced in item (1) above.

In consideration of the foregoing, the FAA proposes to amend Chapter I of title 14, Code of Federal Regulations as follows:

The revisions and additions read as follows:

Reduced Vertical Separation Minimum (RVSM) Airspace. Within RVSM airspace, air traffic control (ATC) separates aircraft by a minimum of 1,000 feet vertically between FL 290 and FL 410 inclusive. Air-traffic control notifies operators of RVSM airspace by providing route planning information.

On July 1, 2015, the Commission received a petition requesting that the Commission initiate rulemaking under the FHSA to declare several categories of products containing additive organohalogen flame retardants to be “banned hazardous substances.” The petition was filed by Earthjustice and the Consumer Federation of America, which are joined by American Academy of Pediatrics, American Medical Women's Association, Consumers Union, Green Science Policy Institute, International Association of Fire Fighters, Kids in Danger, Philip Landrigan, M.D., M.P.H., League of United Latin American Citizens, Learning Disabilities Association of America, and Worksafe. CPSC staff has prepared a briefing package in response to the petition; the briefing package, which includes the petition in its entirety, is available at https://www.cpsc.gov/s3fs-public/PetitionHP15-1RequestingRulemakingonCertainProductsContainingOrganohalogenFlameRetardants.pdf?aTsa_sSaCiSMf1Z_2CfvISjMHFEdWKZ7.

The Commission is providing this forum for oral presentations concerning the petition. See the information under the headings DATES and ADDRESSES at the beginning of this notice for information on making requests to give oral presentations at the meeting.

Participants should limit their presentations to approximately 10 minutes, exclusive of any periods of questioning by the Commissioners. To prevent duplicative presentations, groups will be directed to designate a spokesperson. The Commission reserves the right to limit the time further for any presentation and impose restrictions to avoid excessive duplication of presentations.

On July 28, 2017, the Postal Service filed a petition pursuant to 39 CFR 3050.11 requesting that the Commission initiate an informal rulemaking proceeding to consider changes to an analytical method relating to periodic reports.1 The Petition identifies the proposed analytical method changes filed in this docket as Proposal Seven.

The Postal Service explains that for many years it has calculated the “USPS Marketing Mail” dropship passthroughs for flats and parcels rate categories only with reference to the per-pound price element above the piece-pound breakpoint. For greater accuracy it proposes to include the per-piece price element below the breakpoint in the calculation. Petition, Proposal Seven at 1.

Background. As currently calculated, the traditional passthrough for “USPS Marketing Mail” flats and parcels divides the discount by the avoided cost as shown in Table 1 attached to the Petition.2 The numerator is the per-pound discount above the breakpoint, for pieces above the breakpoint, versus origin-entered. The denominator is the average avoided cost per pound for all volume, both above and below the breakpoint, versus origin-entered. Petition, Proposal Seven at 1. The Postal Service states this has two shortcomings. The numerator does not include the other price element that varies by depth of entry, the per-piece price element below the breakpoint. Id. Second, the numerator and denominator are mismatched; the numerator represents volume above the breakpoint while the denominator represents volume both above and below the breakpoint. Id. at 1-2.

Proposal. The Postal Service proposes to calculate dropship passthroughs of “USPS Marketing Mail” flats and parcels rate categories to reflect both price elements that vary by depth of entry (per-pound above the breakpoint and per-piece below the breakpoint) as shown in column (i) of Table 1. Id. at 2. The Postal Service says this calculation now divides the entire value of the dropship discount, both per piece and per pound, by the total avoided cost. While the denominator can be expressed as either the total avoided cost per piece times the total number of pieces or the total avoided cost per pound times the total number of pounds, Table 1 opts for the former alternative, cost per piece times the total number of pieces [(f) × [(a) + (b)]]. Id.

Impacts. The Postal Service states that the proposed methodology could provide a more accurate representation of passthroughs to ensure discounts do not exceed the Postal Service cost avoided as a result of dropshipping. Id. Under the proposal, one passthrough reported in the FY 2016 Annual Compliance Report would have increased from 75.7 percent to 111.0 percent.3 If adopted, the Postal Service would seek to reset the passthrough at 100 percent or less in the next market dominant price adjustment proceeding or cite a statutory exception. Petition, Proposal Seven at 2-3.

The Commission establishes Docket No. RM2017-11 for consideration of matters raised by the Petition. More information on the Petition may be accessed via the Commission's Web site at http://www.prc.gov. Interested persons may submit comments on the Petition and Proposal Seven no later than September 15, 2017. Pursuant to 39 U.S.C. 505, Katalin K. Clendenin is designated as officer of the Commission (Public Representative) to represent the interests of the general public in this proceeding.

It is ordered:

1. The Commission establishes Docket No. RM2017-11 for consideration of the matters raised by the Petition of the United States Postal Service for the Initiation of a Proceeding to Consider Proposed Changes in Analytical Principles (Proposal Seven), filed July 28, 2017.

2. Comments by interested persons in this proceeding are due no later than September 15, 2017.

3. Pursuant to 39 U.S.C. 505, the Commission appoints Katalin K. Clendenin to serve as an officer of the Commission (Public Representative) to represent the interests of the general public in this docket.

4. The Secretary shall arrange for publication of this order in the Federal Register.

On July 28, 2017, the Postal Service filed a petition pursuant to 39 CFR 3050.11 requesting the Commission to initiate an informal rulemaking proceeding to consider proposed changes to an analytical method related to periodic reports.1 The Petition identifies the proposed analytical method changes filed in this docket as Proposal Six.

Background. In January 2016, the Postal Service removed the originating network distribution center and network distribution center presort price categories for Parcel Select and the return network distribution center price category for Parcel Return Service (PRS). Petition, Proposal Six at 1. The Postal Service states that “[d]uring the process of modifying these models to remove the portions of the cost studies related to the discontinued price categories, the Postal Service detected some minor errors that required correction.” Id. The Postal Service conducted a review of these models to “ensure that they reflected current processing methods” and determine if new data could be incorporated. Id.

Proposal. The Postal Service seeks to revise the mail processing and transportation cost models for Parcel Select and PRS mail. The proposed changes update the cost models, correct errors, incorporate new data, and re-evaluate some assumptions and methodologies.

Impact. The Postal Service estimates that its proposed changes will result in adjustments to both its mail processing and transportation models for Parcel Select and PRS mail.

For mail processing costs, the revisions will decrease Parcel Select Ground Machinable unit cost estimates by 3.4 percent. Petition, Proposal Six at 15, 18. The proposed changes will result in six adjustments to PRS mail processing costs, including a decrease of more than 30 percent in return delivery unit oversize costs. Id.

The transportation cost adjustments incorporate methodology changes approved by the Commission in Order No. 3973 2 with the cost model changes the Postal Service proposes in this docket. The resulting Parcel Select cost decreases range from 6.4 to 94.6 percent. Petition, Proposal Six at 15-16, 19. Additionally, the transportation cost for destination sectional center facility rates will increase by 193 percent. Id. at 16, 19. The PRS costs for return sectional center facility will decrease by almost 26 percent. Id.

The Commission establishes Docket No. RM2017-10 for consideration of matters raised by the Petition. More information on the Petition may be accessed via the Commission's Web site at http://www.prc.gov. Interested persons may submit comments on the Petition and Proposal Six no later than September 15, 2017. Pursuant to 39 U.S.C. 505, Lyudmila Y. Bzhilyanskaya is designated as officer of the Commission (Public Representative) to represent the interests of the general public in this proceeding.

It is ordered:

1. The Commission establishes Docket No. RM2017-10 for consideration of the matters raised by the Petition of the United States Postal Service for the Initiation of a Proceeding to Consider Proposed Changes in Analytical Principles (Proposal Six), filed July 28, 2017.

2. Comments by interested persons in this proceeding are due no later than September 15, 2017.

3. Pursuant to 39 U.S.C. 505, the Commission appoints Lyudmila Y. Bzhilyanskaya to serve as an officer of the Commission (Public Representative) to represent the interests of the general public in this docket.

4. The Secretary shall arrange for publication of this order in the Federal Register.

I. Background

States are required to submit a progress report in the form of a SIP revision that evaluates progress towards the RPGs for each mandatory Class I federal area 1 (Class I area) within the state and for each Class I area outside the state which may be affected by emissions from within the state. 40 CFR 51.308(g). In addition, the provisions of 40 CFR 51.308(h) require states to submit, at the same time as the 40 CFR 51.308(g) progress report, a determination of the adequacy of the state's existing regional haze plan. The progress report is due five years after submittal of the initial regional haze plan. Kentucky submitted its regional haze plan on June 25, 2008, as later amended in a SIP revision submitted on May 28, 2010.2

Like many other states subject to the Clean Air Interstate Rule (CAIR), Kentucky relied on CAIR in its regional haze plan to meet certain requirements of EPA's Regional Haze Rule, including best available retrofit technology (BART) requirements for emissions of sulfur dioxide (SO2) and nitrogen oxides (NOX) from certain electric generating units (EGUs) in the Commonwealth.3 This reliance was consistent with EPA's regulations at the time that Kentucky developed its regional haze plan. See 70 FR 39104 (July 6, 2005). However, in 2008, the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) remanded CAIR to EPA without vacatur to preserve the environmental benefits provided by CAIR. North Carolina v. EPA, 550 F.3d 1176, 1178 (D.C. Cir. 2008). On August 8, 2011 (76 FR 48208), acting on the D.C. Circuit's remand, EPA promulgated the Cross-State Air Pollution Rule (CSAPR) to replace CAIR and issued Federal Implementation Plans (FIPs) to implement the rule in CSAPR-subject states.4 Implementation of CSAPR was scheduled to begin on January 1, 2012, when CSAPR would have superseded the CAIR program. However, numerous parties filed petitions for review of CSAPR, and at the end of 2011, the D.C. Circuit issued an order staying CSAPR pending resolution of the petitions and directing EPA to continue to administer CAIR. Order of December 30, 2011, in EME Homer City Generation, L.P. v. EPA, D.C. Cir. No. 11-1302.

On March 30, 2012, EPA finalized a limited approval of Kentucky's regional haze plan as meeting some of the applicable regional haze requirements as set forth in sections 169A and 169B of the CAA and in 40 CFR 51.300-308. Also in this March 30, 2012, action, EPA finalized a limited disapproval of Kentucky's regional haze plan because of deficiencies arising from the Commonwealth's reliance on CAIR to satisfy certain regional haze requirements. See 77 FR 19098. On June 7, 2012, EPA promulgated FIPs to replace reliance on CAIR with reliance on CSAPR to address deficiencies in CAIR-dependent regional haze plans of several states, including Kentucky's regional haze plan. See 77 FR 33642. Following additional litigation and the lifting of the stay, EPA began implementation of CSAPR on January 1, 2015.

On September 17, 2014, Kentucky submitted its Progress Report which, among other things, detailed the progress made in the first period toward implementation of the long term strategy outlined in the Commonwealth's regional haze plan; the visibility improvement measured at Mammoth Cave National Park (Mammoth Cave), the only Class I area within Kentucky, and at Class I areas outside of the Commonwealth potentially impacted by emissions from Kentucky; and a determination of the adequacy of the Commonwealth's existing regional haze plan. EPA is proposing to approve Kentucky's September 17, 2014, Progress Report for the reasons discussed below.

This section includes EPA's analysis of Kentucky's Progress Report, and an explanation of the basis for the Agency's proposed approval.

In its Progress Report, Kentucky summarizes the status of the emissions reduction measures that were relied upon by Kentucky in its regional haze plan and included in the final iteration of the Visibility Improvement State and Tribal Association of the Southeast (VISTAS) regional haze emissions inventory and RPG modeling used by the Commonwealth in developing its regional haze plan. The measures include, among other things, applicable Federal programs (e.g., mobile source rules, Maximum Achievable Control Technology standards), Federal consent agreements, and Federal control strategies for EGUs. Kentucky also reviewed the status of BART requirements for the five BART-subject sources for particulate matter (PM) in the Commonwealth—American Electric Power (AEP) Big Sandy Plant, E.ON U.S Mill Creek Station, East Kentucky Power Cooperative (EKPC) Cooper Station, EKPC Spurlock Station, and Tennessee Valley Authority (TVA) Paradise Plant—and described the court decisions addressing CAIR and CSAPR at the time of progress report development.5

As discussed above, a number of states, including Kentucky, submitted regional haze SIPs that relied on CAIR to meet certain regional haze requirements. EPA finalized a limited disapproval of Kentucky's regional haze plan due to this reliance and promulgated a FIP to replace the Commonwealth's reliance on CAIR with reliance on CSAPR. Although a number of parties challenged the legality of CSAPR and the D.C. Circuit initially vacated and remanded CSAPR to EPA in EME Homer City Generation, L.P. v. EPA, 696 F.3d 7 (D.C. Cir. 2012), the United States Supreme Court reversed the D.C. Circuit's decision on April 29, 2014, and remanded the case to the D.C. Circuit to resolve remaining issues in accordance with the high court's ruling. EPA v. EME Homer City Generation, L.P., 134 S. Ct. 1584 (2014). On remand, the D.C. Circuit affirmed CSAPR in most respects, and CSAPR is now in effect. EME Homer City Generation, L.P. v. EPA, 795 F.3d 118 (D.C. Cir. 2015). Kentucky notes in its Progress Report that it has an EPA-approved CAIR SIP and that CAIR was in effect at the time of Progress Report submittal due to the 2011 CSAPR stay. Because CSAPR should result in greater emissions reductions of SO2 and NOX than CAIR throughout the affected region, EPA expects Kentucky to maintain and continue its progress towards its RPGs for 2018 through continued, and additional, SO2 and NOX reductions. See generally 76 FR 48208 (August 8, 2011).

The Commonwealth also discusses in its Progress Report the status of several measures that were not included in the final VISTAS emissions inventory and were not relied upon in the initial regional haze plan to meet RPGs. These measures include EPA's Mercury and Air Toxics Rule, three Federal consent decrees, and planned retirements and fuel switching at several EGUs in Kentucky. The Commonwealth notes that the emissions reductions from these measures will help ensure that Class I areas impacted by Kentucky sources achieve their RPGs.

In its regional haze plan and Progress Report, Kentucky focuses its assessment on SO2 emissions from EGUs because of VISTAS' findings that ammonium sulfate accounted for 69-87 percent of the visibility-impairing pollution in the VISTAS states and roughly 82 percent of the visibility-impairing pollution at Mammoth Cave National Park on the 20 percent worst visibility days. Although Kentucky determined in its regional haze plan that no additional controls for sources in the Commonwealth were needed to make reasonable progress for SO2 during the first implementation period,6 Kentucky's Progress Report identifies the control status of eight out-of-state EGUs, six from Indiana and two from Tennessee, located in the area of influence of Kentucky's Class I area using the Commonwealth's methodology for determining sources eligible for a reasonable progress control determination. Because these eight EGUs were subject to CAIR and Mammoth Cave National Park was projected to exceed the uniform rate of progress during the first implementation period, KDAQ opted not to request from Indiana and Tennessee any additional emissions reductions for reasonable progress for the first implementation period.7 Kentucky's Progress Report indicates that SO2 emissions from these eight out-of-state EGUs have decreased by nearly 50 percent from 2002 to 2012.

Docket. The EPA has established a docket for this rulemaking under Docket ID No. EPA-HQ-OAR-2012-0360. All documents in the docket are listed in the http://www.regulations.gov index. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy. Publicly available docket materials are available either electronically in http://www.regulations.gov or in hard copy at the EPA Docket Center, Room 3334, EPA WJC West Building, 1301 Constitution Avenue NW., Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the EPA Docket Center is (202) 566-1742.

Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-2012-0360. The EPA's policy is that all comments received will be included in the public docket without change and will be made available online at http://www.regulations.gov, including any personal information provided, unless the comment includes information claimed to be CBI or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through http://www.regulations.gov or email. Send or deliver information identified as CBI only to the following address: OAQPS Document Control Officer (C404-02), Office of Air Quality Planning and Standards, U.S. EPA, Research Triangle Park, North Carolina 27711, Attention Docket ID No. EPA-HQ-OAR-2012-0360. Clearly mark the part or all of the information that you claim to be CBI. For CBI information on a disk or CD-ROM that you mail to the EPA, mark the outside of the disk or CD-ROM as CBI and then identify electronically within the disk or CD-ROM the specific information you claim as CBI. In addition to one complete version of the comment that includes information claimed as CBI, you must submit a copy of the comment that does not contain the information claimed as CBI for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in the Code of Federal Regulations (CFR) at 40 CFR part 2.

The http://www.regulations.gov Web site is an “anonymous access” system, which means the EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an email comment directly to the EPA without going through http://www.regulations.gov, your email address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, the EPA recommends that you include your name and other contact information in the body of your comment and with any electronic storage media you submit. If the EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, the EPA may not be able to consider your comment. Electronic files should avoid the use of special characters or any form of encryption and be free of any defects or viruses. For additional information about the EPA's public docket, visit the EPA Docket Center homepage at http://www.epa.gov/dockets.

Preamble Acronyms and Abbreviations. Multiple acronyms and terms are used in this preamble. While this list may not be exhaustive, to ease the reading of this preamble and for reference purposes, the EPA defines the following terms and acronyms here:

Organization of this Document. The information in this preamble is organized as follows:

The statutory authority for this action is provided by sections 112 and 307(d)(7)(B) of the Clean Air Act (CAA) (42 U.S.C. 7412 and 7607(d)(7)(B)).

Categories and entities potentially regulated by this action include, but are not limited to, businesses or government agencies that operate any of the following: Hazardous waste treatment, treatment storage and disposal facilities (TSDF); Resource Conservation and Recovery Act (RCRA) exempt hazardous wastewater treatment facilities; nonhazardous wastewater treatment facilities other than publicly-owned treatment works; used solvent recovery plants; RCRA exempt hazardous waste recycling operations; and used oil re-refineries.

To determine whether your facility is affected, you should examine the applicability criteria in 40 CFR 63.680 of subpart DD. If you have any questions regarding the applicability of any aspect of these NESHAP, please contact the appropriate person listed in the preceding FOR FURTHER INFORMATION CONTACT section of this preamble.

In addition to being available in the docket, an electronic copy of this action is available on the Internet. A redline version of the regulatory language that incorporates the proposed changes in this action is available in the docket for this action (Docket ID No. EPA-HQ-OAR-2012-0360). Following signature by the EPA Administrator, the EPA will post a copy of this proposed action at https://www.epa.gov/stationary-sources-air-pollution/site-waste-and-recovery-operations-oswro-national-emission. Following publication in the Federal Register, the EPA will post the Federal Register version of the proposed action at this same Web site. Other key technical documents related to this proposal will be available in the docket when the Federal Register version of the proposal is posted to the docket. Only the version as published in the Federal Register will represent the official EPA proposal.

On March 18, 2015, the EPA promulgated a final rule amending the OSWRO NESHAP based on the RTR conducted for the OSWRO source category (80 FR 14248). In that final rule, the EPA amended the OSWRO NESHAP to revise provisions related to emissions during periods of startup, shutdown, and malfunction; to add requirements for electronic reporting of performance testing; to add monitoring requirements for PRDs; to revise routine maintenance provisions; to clarify provisions for open-ended valves and lines and for some performance test methods and procedures; and to make several minor clarifications and corrections. After publication of the final rule, the EPA received a petition for reconsideration submitted jointly by Eastman Chemical Company and the American Chemical Council (ACC) (dated May 18, 2015). This petition sought reconsideration of two of the amended provisions of the OSWRO NESHAP: (1) The equipment leak provisions for connectors, and (2) the requirement to monitor PRDs on containers. The EPA considered the petition and supporting information along with information contained in the OSWRO NESHAP amendment rulemaking docket (Docket ID No. EPA-HQ-OAR-2012-0360) in reaching a decision on the petition. The Agency granted reconsideration of the PRD monitoring requirement in letters to the petitioners dated February 8, 2016. In separate letters to the petitioners dated May 5, 2016, the Administrator denied reconsideration of the equipment leak provisions for connectors and explained the reasons for the denial in these letters. These letters are available in the OSWRO NESHAP amendment rulemaking docket. The EPA also published a Federal Register notice on May 16, 2016 (81 FR 30182), informing the public of these responses to the petition. On May 18, 2015, ACC filed a petition for judicial review of the OSWRO NESHAP RTR 1 challenging numerous provisions in the final rule, including the issues identified in the petition for administrative reconsideration. In 2016, the EPA and ACC reached an agreement to resolve that case. Specifically, the parties agreed to a settlement under which ACC agrees to dismiss its petition for review of the 2015 final rule if the EPA completes its reconsideration of certain PRD provisions in accordance with an agreed-upon schedule.2

As a result of our reconsideration, the Agency is proposing revised monitoring requirements for PRDs on containers. The EPA is requesting public comments on these proposed revisions.

In October 2016, two industry trade groups, ACC and the Environmental Technology Council (ETC), gathered and provided the EPA with data related to stationary process PRDs and PRDs on containers for 19 facilities owned by eight companies. The provided data cover calendar years 2013-2015 and include general PRD information, such as the number of PRDs at the facility, the PRDs' set pressure, and the type of equipment the PRDs are on (i.e., stationary equipment or containers). For containers, additional information was provided, including the type and size of the container and the average length of time the containers are onsite before they are emptied. The data also include PRD release information, such as the number of release events that occurred from 2013-2015 and the quantity of emissions from each release event. The companies also identified methods employed to monitor PRD releases, to prevent and control PRD releases, and the perceived effectiveness of these methods. Other data were also provided about the costs to control PRD releases, the impact of force majeure events on PRD releases, types of root cause analyses conducted after a PRD release occurs, PRD inspection frequency, and existing regulations that currently apply to PRDs at OSWRO facilities. The data provided to the EPA by ACC and ETC are available in the docket for this action.

The March 18, 2015, final amendments to the OSWRO NESHAP include requirements for facilities to monitor PRDs, and since the rule does not distinguish between PRDs on stationary process equipment and those on containers, the monitoring requirements apply to all PRDs. The rule requires a monitoring system capable of: (1) Identifying a pressure release, (2) recording the time and duration of each pressure release, and (3) immediately notifying operators that a pressure release is occurring. Containers used in OSWRO operations include small containers, such as pressurized cylinders and 55-gallon drums, and large containers, such as railcars and over-the-road tanker vehicles. The petition for reconsideration identified concerns regarding the monitoring requirements as they pertain to PRDs on containers and stated that, because containers are frequently moved around the facility and are received from many different off-site locations, it would be difficult, if not impossible, to design and implement a monitoring system for containers that would meet the 2015 rule requirements.

In reevaluating the PRD monitoring requirements in the 2015 rule as they pertain to containers, we considered what other requirements pertain to these containers and the PRDs on them and the data submitted by ACC and ETC. First, we reviewed the OSWRO NESHAP requirements for containers at 40 CFR 63.688. Depending on the size of the container, the vapor pressure of the container contents, and how the container is used (i.e., for temporary storage and/or transport of the material versus waste stabilization), the rule requires the OSWRO owners and operators to follow the requirements for either Container Level 1, 2, or 3 control requirements as specified in the Container NESHAP at 40 CFR part 63, subpart PP. Each control level specifies requirements to ensure the integrity of the container and its ability to contain its contents (e.g., requirements to meet U.S. Department of Transportation (DOT) regulations on packaging hazardous materials for transportation, or vapor tightness as determined by EPA Method 21, or no detectable leaks as determined by EPA Method 27); requirements for covers and closure devices (which include pressure relief valves as that term is defined in the Container NESHAP at 40 CFR 63.921); and inspection and monitoring requirements for containers and their covers and closure devices pursuant to the Container NESHAP at 40 CFR 63.926. The inspection and monitoring requirements for containers at 40 CFR 63.926, which are already incorporated into the OSWRO NESHAP by 40 CFR 63.688, require that unless the container is emptied within 24 hours of its receipt at the OSWRO facility, the OSWRO owner/operator is required on or before they sign the shipping manifest accepting a container to visually inspect the container and its cover and closure devices (which include PRDs). If a defect of the container, cover, or closure device is identified, the Container NESHAP specify the time period within which the container must be either emptied or repaired. The Container NESHAP require subsequent annual inspection of the container, its cover, and closure devices in the case where a container remains at the facility and has been unopened for a period of 1 year or more. Therefore, the PRD continuous monitoring requirements in the 2015 OSWRO NESHAP at 40 CFR 63.691(c)(3)(i) are in addition to PRD monitoring requirements (as closure devices) already in the OSWRO NESHAP per the Container requirements at 40 CFR 63.688, which incorporate the inspection and monitoring requirements of the subpart PP Container NESHAP. In addition, nearly all OSWRO containers are subject to DOT regulatory requirements to ensure their safe design, construction, and operation while in transport. The DOT regulations at 49 CFR part 178, Specifications for Packagings or 49 CFR part 179, Specifications for Tank Cars, prescribe specific design, manufacturing, and testing requirements for containers that will be transported by motor vehicles. In addition, 49 CFR part 180, Continuing Qualification and Maintenance of Packagings, requires periodic inspections, testing, and repair of containers, which would minimize the chance of an atmospheric release from a PRD.

Second, we reviewed the dataset provided by ACC and ETC for PRDs on containers includes information for 19 facilities. The types of containers identified in this dataset include pressurized cylinders, drums, tote-tanks, cargo tanks, isotainers, railcars, and tank vehicles, and the containers with PRDs onsite at any one time can be zero or several hundred. The data from ACC and ETC show that containers with PRDs can range in size from a few hundred gallons to up to 25,000 gallons for rail cars, with set pressures (i.e., the pressure at which the PRD is designed to open to relieve excess pressure in the container) varying between 2.5 and 100 pounds per square inch. For OSWRO, the information the EPA reviewed shows that containers remain onsite until the contents can be unloaded, which can vary depending on the operational activities at the facility, and based on the data provided by ACC and ETC, is generally less than 2 weeks. In addition, the data reviewed by the EPA indicate that OSWRO containers are constantly changing (i.e., moving in and out of inventory), and they are frequently moved around the site, depending on storage area capacity and the queue for offloading. Due to the transitory nature of these containers, it would be difficult to design and implement a system to monitor each individual container PRD. These facilities had an annual average of 229 containers with PRDs at the facility site for some period of time during the year. The 3 years of data we received show that there was only one PRD on a container that had an emissions release event. The relief event that occurred was while nitrogen pressure was being applied to a tank truck to off-load waste material. The leak resulted in approximately 40 pounds of volatile organic compounds, of which about 0.4 pounds was an OSWRO NESHAP Table 1, hazardous air pollutant (HAP), over a duration of about 8.5 hours.

Besides this one PRD release event, no other facilities reported a PRD release in the data provided to the EPA. The one reported release was due to pressure being applied to the tank during material off-loading. No facility reported releases that occurred during storage or transport of the container within the facility. All of these facilities are subject to the subpart PP Container NESHAP inspection requirements, as described above, and did not report detecting any PRD releases or defective conditions during these inspections. An open or defective PRD would be detected by the subpart PP inspection requirements. The EPA's understanding, based substantially on its review of the data provided by ACC and ETC, is that PRD releases from containers are rare, the emissions potential from PRDs on these containers is low, and the additional monitoring requirements for PRDs on the containers that would be required under the 2015 OSWRO NESHAP would be difficult. In addition, the costs for the continuous monitoring requirements in the 2015 rule for PRDs on containers would be very high relative to the low emissions potential. See section IV.C of this preamble for a discussion on the projected costs for a facility to comply with the PRD continuous monitoring requirements on containers in the 2015 OSWRO NESHAP.

Based on the above considerations, we have determined that the PRD inspection and monitoring requirements in the Container NESHAP that are already incorporated into the container requirements of the OSWRO NESHAP are effective and sufficient given the high cost and difficulty of conducting continuous monitoring as contemplated by 40 CFR 63.691(c)(3)(i) and the low emissions potential from containers at OSWRO facilities. Therefore, we are proposing that PRDs on OSWRO containers will not be subject to the monitoring requirements at 40 CFR 63.691(c)(3)(i), and we are soliciting comment on our assessment and proposal regarding these PRD monitoring requirements.

The EPA is also soliciting comment on whether to impose more frequent inspections for any filled or partially-filled OSWRO container that remains onsite longer than 60 days. Although the data reviewed show that typically most containers are onsite for less than 2 weeks, there may be instances when, due to facility operations, containers remain onsite and filled or partially-filled for a longer period of time. The EPA is soliciting comment on whether a container that remains onsite for a longer period of time should be required to be visually inspected at a set time, and on an established timeframe thereafter, as long as it remains filled, or partially-filled and onsite. Additionally, the EPA is accepting comment on whether any additional inspection requirements should apply to all containers or only apply to larger containers. Finally, the EPA is also accepting comment on whether to also incorporate the RCRA subpart BB (Air Emission Standards for Equipment Leaks) and subpart CC (Air Emission Standards for Tanks, Surface Impoundments, and Containers) of 40 CFR part 264 and 265 inspection requirements for RCRA permitted and interim status facilities, as these weekly inspections could help facilities identify leaking and or deteriorating containers or cover and closure devices and could help identify any PRD leaks. If the EPA incorporates additional inspection or monitoring requirements as outlined above, we are also soliciting comment on whether to require associated recordkeeping and reporting obligations.

We are not proposing any other amendments to the OSWRO NESHAP as it pertains to PRDs on containers. Specifically, we are not proposing to alter the requirement that PRDs on containers not release HAP emissions directly to the atmosphere. If a PRD release occurs as a result of a defect of the container, cover, or closure device (which includes PRDs), the owner or operator would be subject to the requirements in the Container NESHAP at 40 CFR 63.926(a)(3), as referenced from the OSWRO NESHAP at 63.688, that require emptying of the container or repair within a specified time period. Further, if a PRD fails to re-seat itself, this would also likely be considered a defect in the PRD and, therefore, would be subject to the same requirements in the Container NESHAP at 63.926(a)(3).

We are also not proposing any changes to the requirements for owners and operators to quantify the amount of Table 1 HAP emissions associated with a release from a PRD as those requirements at 40 CFR 63.691(c)(3)(ii) apply to PRDs on containers or to the requirements to report such releases at 63.697(b)(5). We are not proposing changes to these requirements since they allow calculations based on process knowledge, and do not require that calculations be based on monitoring conducted pursuant at 63.691(c)(3)(i).

We estimate that 49 existing sources would be affected by the revised monitoring requirements being proposed in this action.

We are proposing revised requirements for PRD monitoring on containers on the basis that the inspection and monitoring requirements in 40 CFR part 63, subpart PP incorporated into the OSWRO NESHAP are sufficient. We project that the proposed standard would not result in any change in emissions compared to the existing OSWRO NESHAP.

When the OSWRO NESHAP were finalized in 2015, the EPA was not aware of equipment meeting the definition of a PRD on containers in the OSWRO industry, and costs associated with the PRD release event prohibition and monitoring requirements were not estimated for this equipment. Therefore, the capital and annualized costs in the 2015 final rule were underestimated, as these costs were not included. To determine the impacts of the 2015 final rule, considering the monitoring requirements for PRDs on containers based on the data now available to the EPA from ACC and ETC, we have estimated the costs and the potential emission reductions associated with wireless PRD monitors for containers. Using vendor estimates for wireless PRD monitor costs, we estimate that the capital costs per facility with the average number of containers with PRDs would be approximately $570,000, and the capital costs for the industry (49 facilities) would be approximately $28 million. The total annualized costs per facility (assuming a 15-year equipment life and a 7- percent interest rate) are estimated to be approximately $85,000 and approximately $4.2 million for the industry. Therefore, by removing the requirement to monitor PRDs on containers, we estimate the impact of our proposal to be an annual reduction of $4.2 million. Cost information, including wireless PRD monitor costs, is available in the docket for this action.

We performed a national economic impact analysis for the 49 OSWRO facilities affected by this proposed rule. The updated national costs under this reconsideration, accounting for the data provided by ACC and the ETC, are $1.3 million in capital costs in 2018, or $200,000 in total annualized costs under a 7-percent interest rate ($170,000 million in total annualized costs under a 3-percent interest rate).3 After updating the baseline costs of the PRD monitoring requirements as written in the 2015 rule, in consideration of the data provided by ACC and the ETC, this reconsideration constitutes a $28 million reduction in the capital cost or a $4.2 million reduction in annualized costs assuming an interest rate of 7-percent ($3.4 million reduction in annualized costs assuming an interest rate of 3-percent). These costs can be seen in Table 1.

In terms of the present value of the costs, the reconsidered requirements compared to the re-estimated costs of the promulgated rule (the new baseline) constitute a decrease of $39 million under a 7-percent discount rate ($42 million under a 3-percent discount rate). In terms of the equivalent annualized values, this reconsideration constitutes $4.3 million dollars annually at a 7-percent discount rate ($3.5 million annually at a 3-percent discount rate) in reduced compliance costs compared to the new baseline estimation.4 These values can be seen in Table 2, below.

More information and details of this analysis, including the conclusions stated above, are provided in the technical document, “Economic Impact Analysis for the Proposed Reconsideration of the 2015 NESHAP: Off-Site Waste and Recovery Operations,” which is available in the rulemaking docket.

We project that the proposed standard would not result in any change in emissions compared to the existing OSWRO NESHAP.

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

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

This action does not impose any new information collection burden under the PRA. OMB has previously approved the information collection activities contained in the existing regulations at 40 CFR part 63, subpart DD under the provisions of the PRA, 44 U.S.C. 3501 et seq. and has assigned OMB control number 1717.11. The proposed amendments removed monitoring requirements for PRDs on containers, and these proposed amendments do not affect the estimated information collection burden of the existing rule. You can find a copy of the Information Collection Request in the docket at Docket ID No. EPA-HQ-OAR-2012-0360 for this rule.

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. In making this determination, the impact of concern is any significant adverse economic impact on small entities. An agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, has no net burden, or otherwise has a positive economic effect on the small entities subject to the rule. This rule relieves regulatory burden by reducing compliance costs associated with monitoring PRDs on containers. The Agency has determined that of the 28 firms that own the 49 facilities in the OSWRO source category, two firms, or 7 percent, can be classified as small firms. The cost to sales ratio of the reconsidered cost of the monitoring requirements for these two firms is significantly less than 1 percent. In addition, this action constitutes a burden reduction compared to the re-estimated costs of the 2015 rule as promulgated. We have, therefore, concluded that this action does not have a significant impact on a substantial number of small entities. For more information, see the “Economic Impact Analysis for the Proposed Reconsideration of the 2015 NESHAP: Off-Site Waste and Recovery Operations,” which is available in the rulemaking docket.

This action does not contain an unfunded mandate of $100 million or more as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. The action imposes no enforceable duty on any state, local, tribal governments, or the private sector.

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

This action does not have tribal implications as specified in Executive Order 13175. This action will not have substantial direct effects on tribal governments, on the relationship between the federal government and Indian tribes, or on the distribution of power and responsibilities between the federal government and Indian tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this action.

This action is not subject to Executive Order 13045 because it is not economically significant as defined in Executive Order 12866, and because the EPA does not believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. The EPA's risk assessments for the 2015 final rule (Docket ID No. EPA-HQ-OAR-2012-0360) demonstrate that the current regulations are associated with an acceptable level of risk and provide an ample margin of safety to protect public health and prevent adverse environmental effects. This proposed action would not alter those conclusions.

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

This rulemaking does not involve technical standards.

The EPA believes that this action does not have disproportionately high and adverse human health or environmental effects on minority populations, low-income populations, and/or indigenous peoples, as specified in Executive Order 12898 (59 FR 7629, February 16, 1994).

In the 2015 final rule, the EPA determined that the current health risks posed by emissions from this source category are acceptable and provide an ample margin of safety to protect public health and prevent adverse environmental effects. To gain a better understanding of the source category and near source populations, the EPA conducted a proximity analysis for OSWRO facilities prior to proposal in 2014 to identify any overrepresentation of minority, low income, or indigenous populations. This analysis gave an indication of the prevalence of sub-populations that might be exposed to air pollution from the sources. We revised this analysis to include four additional OSWRO facilities that the EPA learned about after proposal for the 2015 rule. The EPA determined that the final rule would not have disproportionately high and adverse human health or environmental effects on minority, low income, or indigenous populations. The revised proximity analysis results and the details concerning its development are presented in the memorandum titled, Updated Environmental Justice Review: Off-Site Waste and Recovery Operations RTR, available in the docket for this action (Docket Document ID No. EPA-HQ-OAR-2012-0360-0109). This proposed action would not alter the conclusions made in the 2015 final rule regarding this analysis.

For the reasons set forth in the preamble, title 40, chapter I of the Code of Federal Regulations is proposed to be amended as follows:

This NPRM is organized as follows:

If you submit a comment, please include the docket number for this NPRM (Docket No. FMCSA-2016-0341), indicate the specific section of this document to which each section of your comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online or by fax, mail, or hand delivery, but please use only one of these means. FMCSA recommends that you include your name and a mailing address, an email address, or a phone number in the body of your document so that FMCSA can contact you if there are questions regarding your submission.

To submit your comment online, go to http://www.regulations.gov, put the docket number, FMCSA-2016-0341, in the keyword box, and click “Search.” When the new screen appears, click on the “Comment Now!” button and type your comment into the text box on the following screen. Choose whether you are submitting your comment as an individual or on behalf of a third party and then submit.

If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 81/2 by 11 inches, suitable for copying and electronic filing. If you submit comments by mail and would like to know that they reached the facility, please enclose a stamped, self-addressed postcard or envelope.

FMCSA will consider all comments and material received during the comment period and may change this proposed rule based on your comments. FMCSA may issue a final rule at any time after the close of the comment period.

To view comments, as well as any documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov. Insert the docket number, FMCSA-2016-0341, in the keyword box, and click “Search.” Next, click the “Open Docket Folder” button and choose the document to review. If you do not have access to the Internet, you may view the docket online by visiting the Docket Management Facility in Room W12-140 on the ground floor of the DOT West Building, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenter provides, to www.regulations.gov, as described in the system of records notice (DOT/ALL-14 FDMS), which can be reviewed at www.dot.gov/privacy.

Under section 5202 of the FAST Act (Pub. L. 114-94, 129 Stat. 1312, 1534, December 4, 2015; 49 U.S.C. 31136(g)), if a proposed rule regarding commercial motor vehicle safety is likely to lead to the promulgation of a major rule, FMCSA is required to publish an advance notice of proposed rulemaking (ANPRM), or proceed with a negotiated rulemaking, unless the Agency finds good cause that both would be impracticable, unnecessary, or contrary to the public interest. As today's NPRM is not proposing any requirements regarding commercial motor vehicle safety and would not lead to promulgation of a major rule, FMCSA finds that publication of an ANPRM or proceeding with a negotiated rulemaking are unnecessary and contrary to the public interest in this case.

The FAST Act requires FMCSA to address its rulemaking and petitions procedures. Specifically, section 5202 provides requirements for the Agency to follow regarding the development of proposed rulemakings [49 U.S.C. 31136(f)-(h)]. Section 5204 also directs the Agency to be more transparent to the public regarding how FMCSA prioritizes and defines petitions.

The APA (5 U.S.C. 551-706) established procedures for all Federal agencies to use in developing rules and regulations. It also established the standards that allow the public to participate in a rulemaking as well as the opportunity to petition the Federal government for the issuance, amendment, or repeal or a rule. The APA authorizes those proposed changes to Part 389, beyond what is required by the FAST Act.

FMCSA proposes several changes to the regulatory procedural requirements found in 49 CFR part 389. These changes fall into the three general categories outlined below, and are explained in further detail in the section-by-section analysis.

FMCSA proposes new rulemaking provisions required by the FAST Act where the Agency must consider undertaking a negotiated rulemaking or an ANPRM for all major rules regarding commercial motor vehicle safety. However, the FAST Act allows the Administrator to waive this requirement in instances where those tools would be impracticable, unnecessary, or contrary to the public interest. Additionally, the NPRM proposes a definition of a “major rule” as defined in the Congressional Review Act (5 U.S.C. 801). FMCSA would use this definition to determine whether an ANPRM or negotiated rulemaking process is necessary.

Under the current FMSA regulations (49 CFR part 389) for submitting petitions, there is no regulatory definition of a petition. However, section 5204 of the FAST Act clearly defines the term “petition.” It includes requests for: A new regulation; a regulatory interpretation or clarification; or a determination by FMCSA that a regulation should be modified or eliminated for one of several enumerated reasons prescribed in section 5204. FMCSA proposes to include this definition in part 389.

Additionally, under this proposal, part 389 would be revised to include a new process for filing and addressing petitions. These changes are being proposed in order to clarify FMCSA's procedures for rulemaking, and to make editorial changes.

Finally, FMCSA proposes to define what “written or in writing” means to include electronic documentation.

Under FMCSA's current direct final rulemaking (DFR) procedures, if the Agency receives a notice of intent (NOI) to file an adverse comment, the DFR will be withdrawn, even if the comment that is eventually filed does not meet the definition of an adverse comment found in 49 CFR 389.39(b). FMCSA proposes to change this requirement. Upon receiving an NOI to file an adverse comment, the Agency would extend the comment period rather than withdraw the DFR, allowing the commenter additional time to file. Once FMCSA receives the comment, the Agency would determine whether it is adverse. If it is an adverse comment, FMCSA would withdraw the DFR; however, if it does not meet the definition in § 389.39(b), the Agency would move forward with the DFR. If the same or another commenter submits an NOI at the end of the extended comment period, FMCSA will determine, on a case-by-case basis, whether to extend the comment period again, withdraw the DFR, or proceed with the DFR using only the comments already received.

The FMCSRs, and any exceptions to the FMCSRs, apply only within the United States (and, in some cases, United States territories). Motor carriers and drivers are subject to the laws and regulations of the countries that they operate in, unless an international agreement states otherwise. Drivers and carriers should be aware of the regulatory differences amongst nations.

Throughout part 389, FMCSA would change the term “rule making” to “rulemaking” for consistency.

FMCSA would add new definitions of “major rule,” “petitions,” and “written or in writing” to § 389.3.

In § 389.13, FMCSA would redesignate the existing text into paragraph (a) and would add paragraphs (b)(1) through (b)(3).

Proposed paragraph (b) of section 389.13 and its subparagraphs include the advanced public participation requirements from section 5202 of the FAST Act.

The title of § 389.15 is changed by removing the space between “rule” and “making.”

FMCSA proposes revising § 389.21 to include direction on how comments should be submitted. The Agency would remove the text regarding incorporation by reference, as it is not relevant to the topic of comment submission. FMCSA also proposes renaming the section heading to “Submission of written comments” to reflect this change.

In § 389.29, FMCSA makes minor changes to the text to clarify the procedure followed when the Agency finalizes a rule.

In § 389.31(a) the word “repeal” would be replaced with “withdraw” to more accurately describe the removal of a regulation. In paragraph (b)(1) the word “duplicate” would be replaced with “writing” to make use of and follow the definition of this term, proposed in § 389.3. This proposed change would also reflect that the Agency no longer requires duplicate submissions.

In § 389.39, FMCSA would remove language regarding the withdrawal of a DFR if the Agency receives an NOI to submit an adverse comment. Upon receipt of an NOI, the Agency would extend the comment period to give the submitter additional time to file the comment. Once submitted, the comment would be reviewed to determine if it is an adverse comment, and proceed according to the results of that analysis (either to withdraw the DFR if the comment is adverse, or to move forward with the DFR if it is not).

This NPRM is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by E.O. 13563 (76 FR 3821, January 21, 2011), and is also not significant within the meaning of DOT regulatory policies and procedures (DOT Order 2100.5 dated May 22, 1980; 44 FR 11034, February 26, 1979) and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order.

This rule is procedural in nature, primarily impacting FMCSA's process for promulgation of regulations. As a result, there would be no costs associated with this NPRM.

The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) requires Federal agencies to consider the effects of the regulatory action on small business and other small entities and to minimize any significant economic impact. The term “small entities” comprises small businesses and 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 50,000.1 Accordingly, DOT policy requires an analysis of the impact of all regulations on small entities, and mandates that agencies strive to lessen any adverse effects on these businesses.

FMCSA does not expect this NPRM to have a significant economic impact on a substantial number of small entities. Consequently, I certify that the action would not have a significant economic impact on a substantial number of small entities. FMCSA invites comment from members of the public who believe there will be a significant impact either on small businesses or on governmental jurisdictions with a population of less than 50,000.

In accordance with section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996, FMCSA wants to assist small entities in understanding this NPRM so that they can better evaluate its effects on themselves and participate in the rulemaking initiative. If the NPRM will affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance; please consult the FMCSA point of contact, Mr. Bivan Patnaik, listed in the FOR FURTHER INFORMATION CONTACT section of this NPRM.

Small businesses may send comments on the actions of Federal employees who enforce or otherwise determine compliance with Federal regulations to the Small Business Administration's 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 FMCSA, call 1-888-REG-FAIR (1-888-734-3247). DOT has a policy regarding the rights of small entities to regulatory enforcement fairness and an explicit policy against retaliation for exercising these rights.

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 $156 million (which is the value equivalent of $100,000,000 in 1995, adjusted for inflation to 2015 levels) or more in any one year. As the proposed rule is procedural in nature and is not expected to result in any costs at the societal level, it would likewise not impose costs to State, local, or tribal governments.

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

A rule has implications for Federalism under Section 1(a) of Executive Order 13132 if it has “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” FMCSA has determined that this NPRM would not have substantial direct costs on or for States, nor would it limit the policymaking discretion of States. Nothing in this document preempts any State law or regulation. Therefore, this NPRM does not have sufficient Federalism implications to warrant the preparation of a Federalism Impact Statement.

This NPRM meets applicable standards in sections 3(a) and 3(b) (2) of E.O. 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

E.O. 13045, Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, Apr. 23, 1997), requires agencies issuing “economically significant” rules, if the regulation also concerns an environmental health or safety risk that an agency has reason to believe may disproportionately affect children, to include an evaluation of the regulation's environmental health and safety effects on children. The Agency determined this NPRM is not economically significant. Therefore, no analysis of the impacts on children is required. In any event, the Agency does not anticipate that this regulatory action would in any respect present an environmental or safety risk that could disproportionately affect children.

FMCSA reviewed this NPRM in accordance with E.O. 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights, and has determined it will not effect a taking of private property or otherwise have taking implications.

Section 522 of title I of division H of the Consolidated Appropriations Act, 2005, enacted December 8, 2004 (Pub. L. 108-447, 118 Stat. 2809, 3268, 5 U.S.C. 552a note), requires the Agency to conduct a privacy impact assessment (PIA) of a regulation that will affect the privacy of individuals. This NPRM does not require the collection of personally identifiable information (PII).

The Privacy Act (5 U.S.C. 552a) applies only to Federal agencies and any non-Federal agency which receives records contained in a system of records from a Federal agency for use in a matching program.

The E-Government Act of 2002, Public Law 107-347, 208, 116 Stat. 2899, 2921 (Dec. 17, 2002), requires Federal agencies to conduct PIA for new or substantially changed technology that collects, maintains, or disseminates information in an identifiable form.

No new or substantially changed technology would collect, maintain, or disseminate information as a result of this NPRM. As a result, FMCSA has not conducted a privacy impact assessment.

The regulations implementing E.O. 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this NPRM.

FMCSA has analyzed this NPRM under E.O. 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. The Agency has determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, it does not require a Statement of Energy Effects under E.O. 13211. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

This NPRM does not have tribal implications under E.O. 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.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through OMB, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) are standards that are developed or adopted by voluntary consensus standards bodies. This NPRM does not use technical standards. Therefore, FMCSA did not consider the use of voluntary consensus standards.

FMCSA analyzed this rule for the purpose of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and determined this action is categorically excluded from further analysis and documentation in an environmental assessment or environmental impact statement under FMCSA Order 5610.1 (69 FR 9680, March 1, 2004), Appendix 2, paragraph 6.x. The Categorical Exclusion (CE) in paragraph 6.x. addresses regulations implementing procedures for the issuance, amendment, revision and rescission of Federal motor carrier regulations (e.g., the establishment of procedural rules that would provide general guidance on how the agency manages its notice-and-comment rulemaking proceedings, including the handling of petitions for rulemakings, waivers, exemptions, and reconsiderations, and how it manages delegations of authority to carry out certain rulemaking functions.). The content in this rule is covered by this CE and the proposed action would not have any effect on the quality of the environment. The CE determination is available for inspection or copying in the Federal eRulemaking Portal: http://www.regulations.gov.

FMCSA also analyzed this rule under the Clean Air Act, as amended (CAA), section 176(c) (42 U.S.C. 7401 et seq.), and implementing regulations promulgated by the Environmental Protection Agency. Approval of this action is exempt from the CAA's general conformity requirement since it does not affect direct or indirect emissions of criteria pollutants.

Under E.O. 12898, each Federal agency must identify and address, as appropriate, “disproportionately high and adverse human health or environmental effects of its programs, policies, and activities on minority populations and low-income populations” in the United States, its possessions, and territories. FMCSA evaluated the environmental justice effects of this proposed rule in accordance with the E.O., and has determined that no environmental justice issue is associated with this proposed rule, nor is there any collective environmental impact that would result from its promulgation.

Background on the IATTC

The United States is a member of the IATTC, which was established under the 1949 Convention for the Establishment of an Inter-American Tropical Tuna Commission. In 2003, the IATTC adopted the Convention for the Strengthening of the IATTC Established by the 1949 Convention between the United States of America and the Republic of Costa Rica (Antigua Convention). The Antigua Convention entered into force in 2010. The United States acceded to the Antigua Convention on February 24, 2016. The full text of the Antigua Convention is available at: https://www.iattc.org/PDFFiles2/Antigua_Convention_Jun_2003.pdf.

The IATTC consists of 21 member nations and four cooperating non-member nations and facilitates scientific research into, as well as the conservation and management of, tuna and tuna-like species in the IATTC Convention Area. The IATTC Convention Area is defined as waters of the EPO within the area bounded by the west coast of the Americas and by 50° N. latitude, 150° W. longitude, and 50° S. latitude. The IATTC maintains a scientific research and fishery monitoring program and regularly assesses the status of tuna, shark, and billfish stocks in the EPO to determine appropriate catch limits and other measures deemed necessary to promote sustainable fisheries and prevent the overexploitation of these stocks.

As a Party to the Antigua Convention and a member of the IATTC, the United States is legally bound to implement certain decisions of the IATTC. The Tuna Conventions Act (16 U.S.C. 951 et seq.), as amended on November 5, 2015, by Title II of Public Law 114-81, directs that the Secretary of Commerce, in consultation with the Secretary of State and, with respect to enforcement measures, the Secretary of the Department of Homeland Security, may promulgate such regulations as may be necessary to carry out the United States' international obligations under the Antigua Convention, including recommendations and decisions adopted by the IATTC. The Secretary of Commerce's authority to promulgate such regulations has been delegated to NMFS.

The IATTC adopted Resolution C-16-05 by consensus at its 90th meeting in July 2016 in response to the IATTC scientific staff's conservation recommendations to adopt release requirements for sharks caught by purse seine vessels and to prohibit the use of shark lines by longline vessels. The main objective of Resolution C-16-05 is to promote the conservation of shark species in the EPO by reducing incidental catch mortalities in IATTC fisheries. Although U.S. commercial fishing vessels in the EPO do not target sharks, some are caught incidentally.

The resolution includes release requirements for sharks caught on purse seine vessels, which is expected to increase the chance of survival. Based on summarized catch data from the IATTC, silky shark (Carcharhinus falcifornmis) and hammerhead shark (Sphyrna spp.) are among the shark species most frequently caught by purse seine vessels fishing for tuna in the IATTC Convention Area. Global concern for these species of sharks has increased in recent years as evidenced by the listing of scalloped hammerhead shark (Sphyrna lewini) in Appendix II of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) in September 2014 and the future listing of silky shark in Appendix II in October 2017. In addition, NMFS designated the Eastern Pacific ocean distinct population segment of scalloped hammerhead shark as endangered under the Endangered Species Act (79 FR 38213; July 2014), and it is this population that is incidentally caught by tuna fishing vessels in the IATTC Convention Area.

Resolution C-16-05 includes two components that need to be implemented through rulemaking: (1) Release requirements for sharks caught by purse seine vessels, and (2) prohibiting the use of “shark lines” on longline vessels fishing in the IATTC Convention Area.

The first component of the Resolution calls for IATTC members and cooperating non-members (CPCs) to require purse seine vessels to follow requirements for the release of sharks caught in the IATTC Convention Area. Per the Resolution, any shark caught on a purse seine vessel in the IATTC Convention Area, whether live or dead, and that is not retained, must be promptly released unharmed, to the extent practicable, as soon as it is seen in the net or on the deck, without compromising the safety of any persons. If a shark is live when caught, the shark must be released out of the net by directly releasing it from the brailer into the ocean. Sharks that cannot be released without compromising the safety of persons or the sharks before being landed on deck must be returned to the water as soon as possible, either utilizing a ramp from the deck connecting to an opening on the side of the vessel, or through escape hatches. If ramps or escape hatches are not available, the sharks must be lowered with a sling or cargo net, using a crane or similar equipment, if available. The Resolution also includes provisions that prohibit the use of gaffs, hooks, or similar instruments in the handling of sharks, the lifting of sharks by the head, tail, gill slits, or spiracles, or by using bind wire against or inserted through the body, punching holes through the bodies of sharks (e.g., to pass a cable through for lifting the shark). In addition, the proposed rule would prohibit the towing of a whale shark (Rhincondon typus) out of a purse seine net (e.g., using towing ropes).

The second component of the Resolution prohibits longline vessels targeting tuna or swordfish in the IATTC Convention Area from using “shark lines.” Shark lines are a type of fishing gear used to target sharks and consist of an individual hooked line or hooked lines attached to the floatline, or directly to the floats of longline gear, and deployed in the water column at depths shallower than the mainline.

This proposed rule would implement the two provisions of Resolution C-16-05, as described above, for U.S. commercial fishing vessels fishing for tuna or tuna-like species in the IATTC Convention Area. In addition, this proposed rule would also revise related regulations for accuracy and clarification purposes.

NMFS regulations already include fishing restrictions for shark species in the IATTC Convention Area. For example, NMFS regulations already require U.S. purse seine vessels fishing for tuna or tuna-like species to release all sharks, except those being retained for consumption aboard the vessel, as soon as practicable after being identified on board the vessel during the brailing operation. In addition, regulations at 50 CFR 300.27 already require U.S. purse seine vessels to ensure reasonable steps are taken to ensure safe release of any whale shark that is encircled in a purse seine net in the IATTC Convention Area.

This proposed rule would revise regulations at 50 CFR 300.27 to include more specific release requirements for sharks on purse seine vessels. The proposed regulations would require that any shark caught on a purse seine vessel in the IATTC Convention Area, whether live or dead, be promptly released unharmed, to the extent practicable, as soon as it is seen in the net or on the deck, without compromising the safety of any persons. The proposed regulations also include specific requirements for the release of live sharks when caught in the IATTC, as described above.

In addition, this proposed rule would prohibit U.S. commercial longline vessels fishing for tuna or swordfish from using “shark lines” in the IATTC Convention Area. Shark lines are defined as a type of fishing gear consisting of an individual line or lines attached to the floatline or directly to the floats of longline gear and are typically used to target sharks. Although U.S. longline vessels do not use shark lines when fishing in the IATTC Convention Area, this provision of the Resolution was intended to prohibit this gear in the EPO for all IATTC CPCs.

The NMFS Assistant Administrator has preliminarily determined that this proposed rule is consistent with the Tuna Conventions Act and other applicable laws, subject to further consideration after public comment.

This proposed rule has been determined to be not significant for purposes of Executive Order 12866.

There are no new collection-of-information requirements associated with this action that are subject to the Paperwork Reduction Act (PRA), and existing collection-of-information requirements still apply under the following Control Numbers: 0648-0148, 0648-0214, and 0648-0593. 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 Office of Management and Budget control number.

Pursuant to the Regulatory Flexibility Act, 5 U.S.C. 605(b), the Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities. The rationale for the certification is provided in the following paragraphs.

As described previously in the SUPPLEMENTARY INFORMATION section, the proposed regulations would implement IATTC Resolution C-16-05, which would establish fishing restrictions on U.S. purse seine and longline vessels fishing in the IATTC Convention Area.

The United States Small Business Administration (SBA) defines a “small business” (or “small entity”) as one with annual revenue that meets or is below an established size standard. On December 29, 2015, NMFS issued a final rule establishing a small business size standard of $11 million in annual gross receipts for all businesses primarily engaged in the commercial fishing industry (NAICS 11411) for Regulatory Flexibility Act (RFA) compliance purposes only (80 FR 81194, December 29, 2015). The $11 million standard became effective on July 1, 2016, and is to be used in place of the U.S. SBA current standards of $20.5 million, $5.5 million, and $7.5 million for the finfish (NAICS 114111), shellfish (NAICS 114112), and other marine fishing (NAICS 114119) sectors of the U.S. commercial fishing industry in all NMFS rules subject to the RFA after July 1, 2016. Id. at 81194. The new standard results in fewer commercial finfish businesses being considered small.

NMFS prepared analyses for this regulatory action in light of the new size standard. All of the entities directly regulated by this regulatory action are commercial finfish fishing businesses. Under the new size standards, the action on purse seine restriction on sharks would affect both large and small businesses, but the affected longline vessels are all considered to be small businesses.

There are two components to the U.S. tuna purse seine fishery in the EPO: (1) Purse seine vessels with at least 363 metric tons (mt) of fish hold volume (size class 6 vessels) that typically have been based in the western and central Pacific Ocean (WCPO), and (2) coastal purse seine vessels with smaller fish hold volume that are based on the U.S. West Coast. Because this regulation would apply to purse seine vessels that catch shark, and there is no record of the coastal purse seine vessels catching shark, NMFS does not expect these regulations to impact the smaller coastal purse seine vessels.

As of May 4, 2017, there are 17 size class 6 purse seine vessels on the IATTC Regional Vessel Register. The number of size class 6 purse seine vessels on the IATTC Regional Vessel Register has increased substantially in the past three years, due in part to uncertainty regarding fishing access pursuant to the Treaty on Fisheries between the Governments of Certain Pacific Island States and the Government of the United States of America (aka the South Pacific Tuna Treaty), for which negotiations were concluded in 2016. Size class 6 purse seine vessels land most of the yellowfin, skipjack, and bigeye tuna catch in the EPO. Ex-vessel price information for class size 6 purse seine vessels that fished exclusively in the EPO in 2015 and 2016 specific to the individual vessels are not available to NMFS because these vessels did not land on the U.S. West Coast, and the cannery receipts are not available through the IATTC. However, estimates for large purse seine vessels based in the WCPO that fish in both the EPO and WCPO may be used as a proxy for U.S. large purse seine vessels. The number of these U.S. purse seine vessels is approximated by the number with Western and Central Pacific Fisheries Commission (WCPFC) Area Endorsements, which are the NMFS-issued authorizations required to fish commercially for highly migratory species (HMS) on the high seas in the WCPFC Convention Area. As of May 2017, the number of purse seine vessels with WCPFC Area Endorsements was 37. Neither gross receipts nor ex-vessel price information specific to individual fishing vessels are available to NMFS, so NMFS applied indicative regional cannery prices—as approximations of ex-vessel prices—to annual catches of individual vessels to estimate their annual receipts. Indicative regional cannery prices are available through 2014 (developed by the Pacific Islands Forum Fisheries Agency; available at https://www.ffa.int/node/425). Using this approach, NMFS estimates that among the affected vessels, the range in annual average receipts in 2012 through 2014 was $3 million to $20 million and the median was about $13 million.

U.S. purse seine vessels fishing in the IATTC Convention Area incidentally catch a relatively small number of sharks. Since at least 2005, the observer coverage rates in the EPO on class size 6 purse seine vessels have been at 100 percent. Logbook data from 2015 and 2016 recorded a total of 3,960 sharks incidentally caught by size class 6 purse seine vessels operating in the IATTC Convention Area, which were released alive or discarded. This resulted in an average of roughly 2.29 sharks per fishing set caught and discarded or released alive by size class 6 purse seine vessels operating in the IATTC Convention area in 2015 and 2016. The proposed regulations for shark release requirements on purse seine vessels may slow fishing operations of some purse seine vessels that incidentally catch sharks due to additional time burden for releasing them by implementing the release requirements. In addition to the additional time burden for releasing sharks, some tuna may be incidentally released when sharks are directly released out of the brailer into the ocean, if any tuna are also scooped up into the brailer along with sharks during the process. The amount of tuna incidentally released would vary depending on the position of the shark in the net in relation to the tuna, accuracy of the crew member in targeting the shark with the brailer, and how large a brailer is being used, among others factors. In addition, some large purse seine vessels may already be voluntarily following some of these release procedures, such as the best practices for release established by the International Seafood Sustainability Foundation, in the IATTC Convention Area.

U.S. West Coast vessels with deep-set longline gear primarily target tuna species with a small percentage of swordfish and other highly migratory species taken incidentally. U.S. West Coast-based longline vessels fish primarily in the EPO and are currently restricted to fishing with deep-set longline gear outside of the U.S. West Coast EEZ. Recently, the number of Hawaii-permitted longline vessels that have landed in U.S. West Coast ports has increased from one vessel in 2006 to 18 vessels in 2016. In 2016, 931 mt of highly migratory species were landed by Hawaii permitted longline vessels with an average ex-vessel revenue of approximately $303,287 per vessel. Since at least 2005, the observer coverage rates in the EPO on deep-set longline vessels have been a minimum of 20 percent. While some sharks are caught incidentally, U.S. commercial longline vessels do not use shark lines while fishing in the EPO. As such, this proposed rule is not expected to affect these small entities.

The proposed regulation is not expected to have a significant economic impact on a substantial number of small entities. Only some of the entities for which these proposed regulations would apply are considered small businesses; however, disproportional economic effects are not expected between affected small and large businesses. Regulations at 50 CFR 300.27 already require purse seine vessels to release all sharks, except those being retained for consumption aboard the vessel, as soon as practicable after being identified on board the vessel during the brailing operation. In addition, regulations at 50 CFR 300.27 already require purse seine vessels to ensure reasonable steps are taken to ensure safe release of any whale shark that is encircled in a purse seine net. This proposed rule would revise regulations at 50 CFR 300.27 to specify the release requirements for sharks. As stated above, U.S. longline vessels do not use shark lines while fishing for tuna or swordfish in the EPO. Therefore, the proposed regulation is not expected to impact these small entities.

The proposed actions are not expected to substantially change the typical fishing practices of affected vessels, and any impact to the income of U.S. vessels would be minor. As a result, an Initial Regulatory Flexibility Analysis is not required, and one was not prepared for this proposed rule.

For the reasons set out in the preamble, 50 CFR part 300 is proposed to be amended as follows: