Federal Register Vol. 82, No.159,

The SBIC Program is an SBA financing program authorized under Title III of the Small Business Investment Act of 1958, 15 U.S.C. 681 et seq. Congress created the Small Business Investment Company (SBIC) program to “stimulate and supplement the flow of private equity capital and long-term loan funds, which small-business concerns need for the sound financing of their business operations and for their growth, expansion, and modernization, and which are not available in adequate supply. . . .” 15 U.S.C. 661. Congress intended that the program “be carried out in such manner as to insure the maximum participation of private financing sources.” Id. In accordance with that policy, SBA does not invest directly in small businesses. Rather, through the SBIC Program, SBA licenses and provides debenture leverage (Leverage) to SBICs. SBICs are privately-owned and professionally managed for-profit investment funds that make loans to, and investments in, qualified small businesses using a combination of privately raised capital and Leverage guaranteed by SBA. SBA will guarantee the repayment of debentures issued by an SBIC up to a maximum of $150 million or three times the amount of the SBIC's qualifying private capital, whichever is less (although pursuant to SBA's regulations and credit policies, SBA rarely approves an SBIC to have a maximum amount of Leverage outstanding in excess of two times the amount of the SBIC's qualifying private capital).

SBICs are generally prohibited from investing in passive businesses under the Act. Prior to this final rule, the SBIC program regulations provided for the following two exceptions that allowed an SBIC to structure an investment utilizing a passive small business as a pass-through:

A. “Holding company exception”—§ 107.720(b)(2): This exception provides conditions under which an SBIC may structure an investment through up to two levels of passive entities to make an investment in a non-passive business that is a subsidiary of the passive business directly financed by the SBIC. The regulation defines a subsidiary company as one in which the financed passive business directly or indirectly owns at least 50% of the outstanding voting securities. As an example, this exception allows an SBIC to finance ABC Holdings 1, a passive small business, with the proceeds flowing through ABC Holdings 2, another passive small business, and then to ABC Manufacturing, a non-passive small business in which ABC Holdings 1 owns directly or indirectly at least 50% of the outstanding voting securities.

B. “Blocker corporation exception”—§ 107.720(b)(3): This exception enables a partnership SBIC, with SBA's prior approval, to provide financing to a small business through a passive, wholly-owned C corporation, but only if a direct financing would cause one or more of the SBIC's investors to incur Unrelated Business Taxable Income (UBTI). A passive C corporation formed under the second exception is commonly known as a blocker corporation.

On October 5, 2015, SBA published a proposed rule, Small Business Investment Companies: Passive Business Expansion and Technical Clarifications (80 FR 60077), to further expand the permitted use of passive businesses, provide clarification with regard to investments in such businesses, and make minor technical clarifications. SBA received three comments on the proposed rule, not including one comment that generally questioned the fairness of the Act as a whole and did not provide any specific comments on the rule. The three comments pertinent to the rule are addressed in Section II.

On December 28, 2016, SBA published a final rule regarding SBIC investments in passive businesses, 81 FR 95419, which had an effective date of January 27, 2017. On January 26, 2017, SBA published a notice in the Federal Register at 82 FR 8499, to delay the effective date of the final rule until March 21, 2017, and to re-open the rule for additional public comment in accordance with the memorandum dated January 20, 2017, from the Assistant to the President and Chief of Staff, entitled “Regulatory Freeze Pending Review.” SBA received one comment that supported the December 2016 final rule. On March 21, 2017, SBA published another notice to delay the effective date of the final rule until May 20, 2017, to give the new administration time to further consider the rule. 82 FR 14428. After completing its review, SBA issued another delay notice at 82 FR 20433 (May 2, 2017), which stated that SBA was considering removing a provision in the final rule published on December 28, 2016 that would allow SBICs to use a blocker corporation if an investor in an SBIC had elected to be taxed as a regulated investment company (RIC), and if a direct investment into the operating company would jeopardize the investor's RIC status. As part of this document, SBA asked for additional comments regarding the removal of this provision, and delayed the effective date of the December 28, 2016 final rule until August 18, 2017. SBA received one comment in response to its proposed change. This comment is addressed in Section II.

SBA is withdrawing the final rule published on December 28, 2016, and is replacing it with this final rule. This final rule expands permitted investments in passive businesses, provides further clarification with regard to investments in such businesses, and adds certain requirements to improve SBA's ability to monitor such investments. The rule also includes a conforming change to the regulations regarding the amount of Leverage available to SBICs under common control to be consistent with the Consolidated Appropriations Act, 2016, Public Law 114-113, 129 Stat. 2242 (December 22, 2015), which increased the maximum amount of such Leverage from $225 million to $350 million.

This section discusses the comments SBA received on the proposed rule dated October 5, 2017 (80 FR 60077), as well as the comment received in response to the notice published on May 2, 2017 (82 FR 20433).

1. Changes to Holding Company Exception § 107.720(b)(2): SBA proposed revisions to § 107.720(b)(2) to explicitly permit an SBIC to form and finance a passive business that will either pass the proceeds through to or use the proceeds to acquire all or part of a non-passive business. These changes were intended to codify SBA's existing interpretation of the regulations.

SBA received two comments on § 107.720(b)(2) indicating that the proposed changes would be more effective if the passive business directly financed was not required to own at least 50 percent of the underlying active business. Commenters also suggested that SBICs be allowed to structure investments using passive investment vehicles “irrespective of the number of parent entities involved so long as the parent entities in question directly or indirectly own or control at least 50 percent of the voting or economic interests of the active business.” SBA received similar comments as part of the rulemaking process when it last proposed expanding the permitted use of passive businesses on December 23, 2013 (78 FR 77377). SBA considered these comments a second time in developing this final rule; however, neither set of comments was adopted. SBA believes that complex investment structures involving passive entities require more protections, not fewer. Although the new § 107.720(b)(4) should help address some of SBA's credit concerns with respect to these structures, SBA believes that the subsidiary relationship between the financed passive business and the active company must be maintained to facilitate SBA's access to the information and records needed to effectively monitor these transactions and to aid in the recovery of assets in the event of a default. SBA also maintains its position that effective monitoring of transactions with unlimited levels of passive companies would require resources well beyond those available to the Agency. Proposed § 107.720(b)(2) is adopted without change.

2. Changes to Blocker Corporation Exception—§ 107.720(b)(3): The proposed rule included the following changes to § 107.720(b)(3):

a. Removing the requirement to obtain SBA's prior approval to form a blocker corporation;

b. Permitting an SBIC to form a blocker corporation to enable any foreign investors to avoid effectively connected income (ECI) under the Internal Revenue Code;

c. Permitting a blocker corporation to provide financing to a second passive small business that passes the proceeds through to a non-passive small business in which it owns at least 50 percent of the outstanding voting securities (effectively permitting an investment structured with two levels of passive companies, one of which is the blocker corporation); and

d. Removing outdated language indicating that an SBIC's ownership of a blocker corporation formed under § 107.720(b)(3) will not constitute a violation of § 107.865(a). This provision was rendered unnecessary by a rule change in 2002 (67 FR 64789) that revised § 107.865(a) to permit an SBIC to exercise control over a small business for up to seven years without SBA approval.

SBA received comments on proposed § 107.720(b)(3) as discussed below:

a. Regulated Investment Company (RIC) Exception. All three commenters asked that the regulations provide an additional exception for SBICs that are wholly owned subsidiaries of Business Development Companies (BDCs). A BDC typically elects to be taxed as a RIC pursuant to Subchapter M of the Internal Revenue Code of 1986. In general, a RIC is not subject to U.S. Federal income taxes on income and gains that it distributes to stockholders, provided that it satisfies certain minimum distribution requirements. To qualify as a RIC, a BDC must satisfy certain source of income and asset-diversification tests; among other things, a RIC must generally derive at least 90% of its gross income for each taxable year from certain types of investment. In particular, the commenters explained that equity interests in pass-through entities (such as an LLC or S corporation) generate operating income that, if received or deemed received directly by a BDC, could disqualify the BDC from maintaining RIC status, and therefore, such interests must often be held through a blocker corporation. The commenters requested that § 107.720(b)(3) be revised to permit an SBIC to form a blocker corporation to avoid adverse tax consequences to an investor (typically a parent BDC) that has elected to be taxed as a RIC.

The final rule published on December 28, 2016 (81 FR 95419) adopted this comment. However, in the delay notice published on May 2, 2017 (82 FR 20433), SBA stated that it was considering removing this provision and solicited comment from the public on that proposed action. The notice cited SBA's concern that, in light of the increased complexities involved in monitoring and examining investments structured through blocker entities, the expanded use of such entities could increase risk to the SBIC program unless SBA were to increase examination resources to monitor these complex transactions. The notice further explained that while SBA expects limited use of blocker entities for the purposes of avoiding UBTI and ECI (because these situations apply to only a few SBICs), SBA would expect significantly greater usage of blocker entities by SBICs that are subsidiaries of BDCs that have elected to be taxed as RICs. Currently, there are 31 SBICs with BDC investors (BDC-SBICs) that collectively account for over 23% of SBA's outstanding Leverage, and SBA expects that most of them would make use of blocker entities if the RIC exception were to be finalized.

SBA received one comment stating that not including the RIC exception would prevent BDC-SBICs from taking equity positions and benefiting from the upside afforded by equity investments. While the commenter strongly supported SBA's goal of protecting taxpayers, the commenter believed that this goal may be better served by including the RIC exception and thereby increasing a BDC-SBIC's potential for maximizing profits. The commenter further noted that the profits from a single successful equity investment can offset losses on other investments and that SBA's guarantee is protected by a BDC-SBIC's portfolio as a whole. The commenter suggested that SBA consider creating the RIC exception, but making the exception subject to SBA prior approval. SBA recognizes that not including the RIC exception for blocker corporations limits a BDC-SBIC's ability to execute some transactions; however, due to the large amount of outstanding Leverage held by BDC-SBICs, SBA remains concerned that these investments would unacceptably increase risk to SBA absent an increase in SBA's resources to monitor and examine such investments. Adding a requirement for SBA's prior approval of a blocker entity does not address this concern; SBA would still need to review and approve the transactions and examine each of the passive businesses used in the transaction. For this reason, this final rule does not include the RIC exception. SBA notes that BDC-SBICs may still take equity positions in small businesses not structured as pass through entities and also may invest using any passive structure permitted under § 107.720(b)(2).

b. Blocker Entity Form of Organization. At the proposed stage of this rule, SBA received two comments suggesting that non-corporate forms of organization should be permitted for blocker entities. The commenters explained that these structures are often “more streamlined in terms of corporate formalities than a C corporation” and suggested the regulations allow “any entity that elects to be taxed as a corporation for Federal income tax purposes.” SBA considered this suggestion to be overly broad, but partially adopted this suggestion in this final rule by allowing a blocker entity to be structured as an LLC that elects to be taxed as a corporation.

c. Two Level Holding Company Financing. Two commenters indicated that § 107.720(b)(3) should allow SBICs to structure a financing with a blocker entity coupled with two additional levels of passive holding companies as defined in § 107.720(b)(2). The commenters stated that the proposed rule puts an SBIC that requires a blocker entity to accommodate its investors at a disadvantage compared to other SBICs that do not require a blocker entity, since the blocker entity can only finance a single passive business entity that in turn makes an investment into an active business. For example, an SBIC with a foreign investor would not be able to participate in a financing that is structured as a two-level passive business financing under § 107.720(b)(2), if it also needed a separate passive business to serve as a blocker entity in order to avoid effectively connected income. If adopted, this suggestion would effectively permit up to three levels of passive businesses between the SBIC and the operating business. These additional levels of passive businesses impose a burden on SBA as regulator and increase the Agency's credit risk. SBA believes that two levels of passive businesses under either exception should provide SBICs with sufficient flexibility to operate successfully, and this final rule does not adopt the suggested change.

d. SBA did not receive any comments on the proposed change to § 107.720(b)(3) regarding the removal of outdated language. This rule adopts the change as proposed.

3. Additional Passive Business Guidance—§ 107.720(b)(4): The proposed rule identified SBA's concerns with regard to passive investments, including ensuring the financing dollars go to the eligible non-passive small business, fees being charged at each passive business level, and SBA's ability to access passive business financial records, especially in the case of a defaulting SBIC. To address these concerns, SBA proposed making the following changes in new § 107.720(b)(4), which would apply to any eligible passive investment made under § 107.720(b)(2) or (b)(3):

a. “Substantially All” Definition. Clarifying the meaning of “substantially all” in § 107.720(b)(2) and (b)(3) to mean 99 percent of the financing proceeds after deduction of actual application fees, closing fees, and expense reimbursements, which may not exceed those permitted under § 107.860.

b. Fee Requirements. Requiring fees charged by an SBIC or its Associate under §§ 107.860 and 107.900 to not exceed those permitted if the SBIC had directly financed the eligible Small Business and requiring any such fees received by an SBIC's Associate to be paid to the SBIC in cash within 30 days of receipt.

c. “Portfolio Concern” Clarification. Clarifying that both passive and non-passive businesses included in a financing are “Portfolio Concerns”; therefore, they are subject to record keeping and reporting obligations with respect to any “Portfolio Concern,” defined in § 107.50 as “a Small Business Assisted by a Licensee.”

SBA received 3 comments on proposed § 107.720(b)(4) as discussed below:

a. “Substantially All” Definition. Commenters suggested that the definition of “substantially all” be lowered to 95 percent of the proceeds instead of 99% of the proceeds because they were concerned that the 99 percent threshold “may be too limiting and pose issues in deal structuring.” SBA did not adopt this comment. The definition already excludes allowable fees and expense reimbursements permitted under §§ 107.860 and 107.900, and SBA believes that a 95 percent threshold could result in excessive expenses being charged by the passive businesses, effectively diverting proceeds from the intended operating business. Although this percentage may seem inconsequential, 4% of a $20 million financing represents $800,000 that could be diverted from the operating business.

b. Fee Requirements. Two commenters suggested removing the requirement that fees received by an Associate must be paid over in cash to the SBIC. They noted that SBIC program policy guidance known as TechNote 7a, which provides guidelines concerning allowable management expenses for leveraged SBICs (see www.sba.gov/sbicpolicy), already requires that 100% of fees collected under § 107.860 or § 107.900 must benefit the SBIC, either by being paid directly to the SBIC or (if paid to an Associate) through a corresponding reduction in the management fee paid by the SBIC, typically called a “management fee offset.” Commenters also indicated that management fee offsets have tax advantages relative to other approaches. Although SBA recognizes that management fee offsets can provide tax advantages, SBA did not adopt this suggestion because of the difficulty in monitoring investments utilizing passive businesses and identifying fees associated with each passive business in addition to those paid by the operating business.

c. “Portfolio Concern” Clarification. Two commenters indicated that the clarification of Portfolio Concern should be revised to apply only “for the purposes of this part 107.720” to avoid any unintended effects arising from the use of the term “Portfolio Concern” in other sections of the regulations. The commenters indicated that this adjustment would still allow SBA to retain the necessary information rights contemplated by the proposed rule. A search for the term “Portfolio Concern” within the regulations identified the following:

• § 107.50 defines “Portfolio Concern” as “a Small Business Assisted by a Licensee.”

• §§ 107.600-107.660 describe record keeping and information requirements, including those for a Portfolio Concern.

• § 107.730 discusses conflicts of interest with regards to Portfolio Concerns.

• § 107.760 discusses how a change in size or activity affect the Licensee with regard to a Portfolio Concern.

• § 107.850 discusses restrictions on redemption of Equity Securities of a Portfolio Concern.

4. Section 107.610 Required certifications for Loans and Investments. The proposed rule also added a certification requirement to § 107.610 to require an SBIC that finances a business under § 107.720(b)(3) to certify as to the qualifying basis for such financing. The certification replaces the requirement for SBA prior approval of the formation and financing of a blocker corporation.

As previously discussed under the changes to § 107.720(b)(3) paragraph, the December 2016 final rule, 81 FR 95419 (December 28, 2016), would have permitted the formation of a blocker entity by an SBIC with an investor that had elected to be taxed as a RIC. Since this final rule does not include the RIC exception, that portion of the certification requirement has been removed from § 107.610 in this final rule. The final § 107.610 adopts the proposed rule (80 FR 60077) language with respect to the formation of blocker entities to accommodate investors subject to UBTI or ECI with minor technical changes to clarify these two permitted exceptions.

SBA also proposed the following technical changes to the regulations:

1. Section 107.50 Definition of terms. Changing “Associates's” to “Associate's”.

2. Section 107.210 Minimum capital requirements for Licensees. Modifying paragraph (a) of § 107.210 to allow both Leverageable Capital and Regulatory Capital to fall below the stated minimums if the reductions are performed in accordance with an SBA-approved wind-up plan per § 107.590(c), to conform with SBA's current oversight practices.

3. Section 107.503 Licensee's adoption of an approved valuation policy. Changing the last sentence of § 107.503(a) to indicate that valuation guidelines for SBICs may be obtained from the SBIC program's public Web site, www.sba.gov/sbic.

4. Section 107.630 Requirement for Licensees to file financial statements with SBA (Form 468). Removing current § 107.630(d), which provides a mailing address for submission of SBA Form 468, and re-designating paragraph (e) as paragraph (d). These instructions are no longer necessary because SBICs submit this information electronically using the SBA's web-based application.

5. Section 107.1100 Types of Leverage and application procedures. Correcting the misspelling of “Yu” to “You” and removing paragraph (c), which identifies where to send Leverage applications. This paragraph is unnecessary because the application forms provide these instructions.

None of the comments SBA received in response to the proposed rule were related to these technical changes. This final rule incorporates these changes as proposed.

Section 521 of the Consolidated Appropriations Act, 2016, amended section 303(b)(2) of the Act to increase the maximum amount of Leverage available to two or more SBICs under Common Control from $225 million to $350 million. SBA defines Common Control in 13 CFR 107.50 to mean a condition where two or more persons, either through ownership, management, contract, or otherwise, are under the control of one group or person. SBA presumes that two or more SBICs are under Common Control if, among other things, they have common officers, directors, or general partners. Currently, 13 CFR 107.1150(b) limits two or more SBICs under Common Control to the maximum aggregate amount of outstanding Leverage of $225 million, which amount is subject to further limitations under SBA's credit policies. Solely as a conforming change, this rule increases the maximum amount set forth in the regulation from $225 million to $350 million. This statutory change was not addressed previously because it had not yet been enacted when the rule was proposed. Now that it has, the technical change has been included to ensure consistency between the regulations and the current law.

The Office of Management and Budget has determined that this rule is not a “significant” regulatory action under Executive Order 12866. This is also not a “major” rule under the Congressional Review Act, 5 U.S.C. 801, et seq.

This rule meets applicable standards set forth in section 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. The rule does not have retroactive or presumptive effect.

This final rule will not have substantial direct effects on the States, or the distribution of power and responsibilities among the various levels of government. Therefore, for the purposes of Executive Order 13132, Federalism, SBA determines that this rule has no federalism implications warranting the preparation of a federalism assessment.

This final rule was developed in response to comments received on previously proposed amendments to these regulations on investments in passive businesses. See 78 FR 77377 (December 23, 2013). SBA received one set of comments on that proposed rule that suggested changes to further liberalize permitted financings to passive businesses under § 107.720(b). In response to the comment, SBA indicated in the related final rule published on October 21, 2014 (79 FR 62819), that it would further consider the suggested changes in a future rulemaking. As part of that reconsideration, SBA discussed the comments with industry representatives and solicited additional comments in the proposed rule published in October 2015 at 80 FR 60077. In December 2016, SBA published a final rule that reflected the industry feedback, as well as comments from the general public. 81 FR 95419 (December 28, 2016). After reconsideration of that published final rule in accordance with the memorandum, dated January 20, 2017, from the Assistant to the President and Chief of Staff, entitled “Regulatory Freeze Pending Review,” as discussed above, on three separate occasions SBA delayed implementation of the rule. SBA also solicited additional comments from the public. Any comments received in response to those requests were also considered in finalizing this rule.

This rule is not an EO 13771 regulatory action because this rule is not significant under EO 12866.

SBA has determined that this rule would impose additional reporting and recordkeeping requirements under the Paperwork Reduction Act. In particular, this rule implements changes to the Portfolio Financing Report, SBA Form 1031 (OMB Control Number 3245-0078), to clarify information to be reported in Parts A, B, and C of the form. Both the proposed rule (80 FR 60077) and the December 2016 Final Passive Business Rule (81 FR 95419) included additional questions in a new Part D on the Form 1031 to collect information regarding Impact SBIC investments. These additions were related to the proposed rule, entitled “Impact SBICs,” published on February 3, 2016 (81 FR 5666), which would have defined a new class of SBICs in the regulations. However, because SBA is not finalizing that rule, these questions are no longer required and have been removed from the Form 1031. As a result, proposed Parts E and F have been designated as Parts D and E, respectively, in the revised Form 1031 and are discussed in detail below.

The title, description of respondents, description of the information collection and the changes to it are discussed below with an estimate of the revised annual burden. Included in the estimate is the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing each collection of information.

Title: Portfolio Financing Report, SBA Form 1031 (OMB Control Number 3245-0078).

Summary: SBA Form 1031 is a currently approved information collection. SBA regulations, specifically § 107.640, require all SBICs to submit a Portfolio Financing Report using SBA Form 1031 for each financing that an SBIC provides to a Small Business Concern within 30 days after closing an investment. SBA uses the information provided on Form 1031 to evaluate SBIC compliance with regulatory requirements. The form is also SBA's primary source of information for compiling statistics on the SBIC program as a provider of capital to small businesses. The proposed rule (80 FR 60077) invited the public to provide comments on the following changes to SBA Form 1031:

(1) Clarifying that SBICs should report the non-passive Small Business Concern information in the Form 1031. SBA has noted that SBICs sometimes report data on the passive Small Business Concern rather than the non-passive Small Business Concern when reporting financing information. SBA has clarified that the SBIC should report data on the non-passive Small Business Concern when reporting information on financings using passive businesses in the Form 1031 Part A—the Small Business Concern; Part B—the pre-financing data; and Part C—the financing information, with the exception of the financing dollars in Question 29. The amount of financing dollars provided by the SBIC should be the total amount of such financing, regardless of whether the dollars were provided directly or indirectly to the non-passive business concern. Example: The SBIC provides $5 million in equity to ABC Holding Corporation, which passes $4.98 million to the non-passive business, Acme Manufacturing LLC. In addition, the SBIC provides $5 million in debt directly to Acme Manufacturing LLC. The SBIC would report information on Acme Manufacturing LLC in Parts A, B, and C. However, the total financing dollars would be reported as $5 million in equity and $5 million in debt for a total of $10 million in total financing dollars.

(2) Identifying financings using one or more passive businesses. SBA has added a question on whether the financing utilizes one or more passive businesses as part of the financing, to help SBA identify these financings.

(3) Adding information on passive business financings to aid in regulatory compliance monitoring. SBA has also added a requirement under the new Part D for SBICs to upload a file in Portable Document Format (PDF) that contains the following information, which SBA will use to help assess whether the financing meets regulatory compliance:

(a) Qualifying exception: Identification of the passive business exception under which the financing is made (i.e., § 107.720(b)(2) Exception for pass-through of proceeds to subsidiary, or § 107.720(b)(3) Exception for certain Partnership Licensees). If the SBIC indicates that the financing is made under § 107.720(b)(3), it would also indicate the qualifying basis for the financing (i.e., financing would cause an investor in the fund to incur unrelated business taxable income or effectively connected income).

(b) Passive Business Entities: Identification of the name and employer ID number for each passive business entity used within the financing. This is needed so that SBA can identify all Portfolio Concerns involved in the financing.

(c) Financing Structure Description: A description of the financing structure, including the flow of the money between the SBIC and the non-passive Small Business Concern that receives the proceeds (including amounts and types of securities between each entity), and the ownership from the SBIC through each entity to the non-passive Small Business Concern. This information will help SBA assess that the Small Business Concern receives “substantially all” the financing dollars and the ownership percentages are in compliance with the regulations. This will also help SBA with SBICs transferred to the Office of Liquidation to identify the structure of the financing and aid in recovery of SBA leverage.

SBA did not receive any comments on the proposed changes. Therefore, except as described above, all other changes are adopted as final in this rule. SBA updated the below burden estimates from the December 2016 final rule (81 FR 31489) to remove the Impact SBIC burden estimate and update the estimates based on the SBIC portfolio as of June 2017, more recent SBIC financing data, and updated hourly costs.

Description of Respondents and Burden: As of June 2017 there were approximately 316 licensed SBICs. All of these SBICs are required to submit SBA Form 1031 for each financing. The current estimated number of responses (i.e., number of financings) is 2,695 based on a recent three year period (FY 2014 through 2016). The current estimate indicates that it takes approximately 12 minutes to complete the form, for a total annual burden of 539 hours.

Neither the number of respondents nor the number of responses per year is expected to be affected by this rule. However, SBA estimates an increase in the burden hours as a result of the additional reporting in new passive business reporting section, as discussed below.

Passive Business Reporting. SBA believes that the SBIC should be able to provide the passive business information since it should be readily available as part of the financing. SBA estimates that providing the information will take on average an additional 30 minutes for those financings utilizing passive businesses, with no incremental burden for those financings that do not use a passive business. SBA estimates that about 14% of the annual responses relate to passive businesses financings (based on financing data for the three year period of FYs 2014 through 2016). Based on the number of SBICs reporting such financings the total estimated annual hour burden resulting from Part D reporting would be 189.

Therefore, the total estimated annual hour burden for all SBICs submitting SBA Form 1031s in a year would be 728 hours.

The current cost estimate for completing SBA Form 1031 uses a rate of $35 per hour for an accounting manager to fill out the form. Using that same rate, the cost per form would change from $7 per form to $9.45 per form. However, SBA has increased its estimate of an hourly rate for an accounting manager to $46 per hour (estimated using www1.salary.com/Accounting-Manager-hourly-wages.html in May 2017), which rate results in a new cost per form of $12.43 for an aggregate cost of $33,488 for the 2,695 estimated responses.

This final rule also identifies information that an SBIC must maintain in its files to support the required changes. SBA believes that the SBICs should already be maintaining this information since a passive business by definition is a Portfolio Concern and the SBIC should be maintaining all documents needed to support each financing. The rule makes this expectation explicit. Furthermore, currently, an SBIC must maintain this information for it to effectively monitor and evaluate an investment that uses a passive business to finance a non-passive business. Therefore, SBA does not believe this recordkeeping requirement increases the burden.

The rule also requires a certification under § 107.610 when the SBIC makes a financing using the exemption in § 107.720(b)(3). This includes maintaining records supporting the certification. Since this regulation effectively replaces the requirement for SBICs to seek prior SBA approval, SBA does not believe this change will increase the burden.

The Regulatory Flexibility Act (RFA), 5 U.S.C. 601, requires administrative agencies to consider the effect of their actions on small entities, small non-profit businesses, and small local governments. Pursuant to the RFA, when an agency issues a rule, the agency must prepare a Final Regulatory Flexibility Act (FRFA) analysis which describes whether the impact of the rule will have a significant economic impact on a substantial number of small entities. However, Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an FRFA, if the rulemaking is not expected to have a significant economic impact on a substantial number of small entities. This rule would affect all SBICs, of which there are currently 316. SBA estimates that approximately 98 percent of these SBICs are small entities. Therefore, SBA has determined that this rule would have an impact on a substantial number of small entities. However, SBA has determined that the economic impact on entities affected by the rule would not be significant. As discussed under the Paperwork Reduction Act section, SBICs would need to provide descriptions of the transactions in the Form 1031 for which the annual burden totals 189 hours for the 316 SBICs. Based on the estimated $46 per hour, the cost for each SBIC would be approximately $28 per year (189 hours divided by 316 SBICs multiplied by $46 per hour). The changes in the passive business regulation provide SBICs with additional flexibility to employ transaction structures commonly used by private equity or venture capital funds that are not SBICs.

SBA asserts that the economic impact of the rule, if any, would be minimal and beneficial to small SBICs. Accordingly, the Administrator of the SBA certifies that this rule would not have a significant economic impact on a substantial number of small entities.

For the reasons stated in the preamble, the Small Business Administration amends 13 CFR part 107 as follows:

Discussion

Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF-2016-35, dated November 16, 2016 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc., Model CL-600-2E25 (Regional Jet Series 1000) airplanes. The MCAI states:

You may examine the MCAI on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2017-0699.

Bombardier, Inc. has issued Bombardier Service Bulletin 670BA-36-022, Revision B, dated December 20, 2016. The service information describes modifying the bleed-air duct and detection system.

Bombardier, Inc. has issued the following service information.

• Bombardier CRJ Series Regional Jet Airworthiness Limitations Temporary Revision ALI-0553, dated August 19, 2016, which describes an airworthiness limitation task for a detailed inspection of the protection jackets (shields) and insulating blankets located on top of the center wing and fuel tank and fuel vent lines for condition and security.

• Bombardier CRJ Series Regional Jet Airworthiness Limitations Temporary Revision ALI-0554, dated August 19, 2016, which describes an airworthiness limitation task for a functional check of the bleed air duct shrouds.

• Bombardier CRJ Series Regional Jet Airworthiness Limitations Temporary Revision ALI-0555, dated August 19, 2016, which describes an airworthiness limitation task for a detailed inspection of the bleed air duct coupling covers and detection manifolds.

• Bombardier CRJ Series Regional Jet Airworthiness Limitations Temporary Revision ALI-0556, dated August 19, 2016, which describes an airworthiness limitation task for a detailed inspection of the overwing shield and the protection jackets for condition and security.

• Bombardier CRJ Series Regional Jet Airworthiness Limitations Temporary Revision ALI-0557, dated August 19, 2016, which describes an airworthiness limitation task for a detailed inspection of the vent boot protection jackets for condition and security.

This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are issuing this AD because we evaluated all pertinent information and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design.

This AD requires revisions to certain operator maintenance documents to include new actions (e.g., inspections). Compliance with these actions is required by 14 CFR 91.403(c). For airplanes that have been previously modified, altered, or repaired in the areas addressed by this AD, the operator may not be able to accomplish the actions described in the revisions. In this situation, to comply with 14 CFR 91.403(c), the operator must request approval for an alternative method of compliance according to paragraph (k)(1) of this AD. The request should include a description of changes to the required inspections that will ensure the continued operational safety of the airplane.

Since there are currently no domestic operators of this product, notice and opportunity for public comment before issuing this AD are unnecessary.

This AD is a final rule that involves requirements affecting flight safety, and we did not precede it by notice and opportunity for public comment. We invite you to send any written relevant data, views, or arguments about this AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2017-0699; Directorate Identifier 2017-NM-004-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this AD. We will consider all comments received by the closing date and may amend this AD based on those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this AD.

We estimate that this AD affects 0 airplanes of U.S. registry.

We also estimate that it will take about 91 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Required parts cost are not available. Based on these figures, we estimate the cost of this AD on U.S. operators to be $0, or $7,735 per product.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);

3. Will not affect intrastate aviation in Alaska; and

4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain The Boeing Company Model 737-600, -700, -700C, -800, -900, and -900ER series airplanes. The NPRM published in the Federal Register on September 29, 2016 (81 FR 66874) (“the NPRM”). The NPRM was prompted by a report of a Krueger flap bullnose departing an airplane during taxi, which caused damage to the wing structure and thrust reverser. The NPRM proposed to require a one-time detailed visual inspection for discrepancies in the Krueger flap bullnose attachment hardware, and related investigative and corrective actions, if necessary. We are issuing this AD to detect and correct missing Krueger flap bullnose hardware. Such missing hardware could result in the Krueger flap bullnose departing the airplane during flight, which could damage empennage structure and lead to the inability to maintain continued safe flight and landing.

We gave the public the opportunity to participate in developing this AD. The following presents the comments received on the NPRM and the FAA's response to each comment.

Vincent Romano, a private citizen, and United Airlines (UAL), stated their support for the NPRM.

Aviation Partners Boeing stated that accomplishing the Supplemental Type Certificate (STC) ST00830SE does not affect the actions specified in the NPRM.

We concur with the commenter. We have redesignated paragraph (c) of the NPRM as paragraph (c)(1) and added paragraph (c)(2) to this AD to state that installation of STC ST00830SE does not affect the ability to accomplish the actions required by this AD. Therefore, for airplanes on which STC ST00830SE is installed, a “change in product” alternative method of compliance (AMOC) approval request is not necessary to comply with the requirements of 14 CFR 39.17.

All Nippon Airways (ANA), American Airlines (AAL), Boeing, Jet2.com, TUIfly GmbH (HAP), UAL, and Kennedy Juma, requested revising the NPRM to reference Boeing Alert Service Bulletin 737-57A1327, Revision 1, dated September 28, 2016. Some commenters pointed out that the original issue had some errors in the illustrations and needed certain clarifications. ANA and Boeing also requested that we provide credit for accomplishing the original issue of the service information.

We agree that this final rule should reference the latest service information. Since we issued the NPRM, Boeing issued Boeing Alert Service Bulletin 737-57A1327, Revision 1, dated September 28, 2016. We have revised paragraphs (c)(1) (paragraph (c) of the proposed AD) and (g) of this AD to reference Boeing Alert Service Bulletin 737-57A1327, Revision 1, dated September 28, 2016, for accomplishment of the required actions. We have also revised this AD to provide credit for using Boeing Alert Service Bulletin 737-57A1327, dated May 20, 2016, to accomplish the required actions before the effective date of this AD.

AAL requested that Boeing Alert Service Bulletin 737-57A1327, Revision 1, dated September 28, 2016, be corrected to address errors in Figures 1, 2, 3, and 4. AAL stated that these errors affect the depiction of how the clevis assembly, clevis, and bullnose hinge lug are attached to each other, and suggested that revising the figures to correct the errors would clarify which parts must be subject to the detailed inspection.

We acknowledge that Figures 1, 2, 3, and 4 of Boeing Alert Service Bulletin 737-57A1327, Revision 1, dated September 28, 2016, contain errors in the labeling of parts in the illustrations. However, the instructions in the tables in the figures correctly identify the parts and actions to be accomplished. Since the instructions are correct, the service bulletin adequately addresses the unsafe condition. We do not revise manufacturers' service information. However, Boeing might decide to revise Boeing Alert Service Bulletin 737-57A1327, Revision 1, dated September 28, 2016, to correct the errors. We have not changed the AD in this regard.

AAL and Southwest Airlines (SWA) requested that we revise the NPRM to provide an option to replace cracked or deformed bullnose hinge lugs or clevis assemblies with bullnose hinge lugs or clevis assemblies instead of replacement with a Krueger flap assembly, as specified in paragraph 3.B.2.a.(1)(a)1) of Boeing Alert Service Bulletin 737-57A1327, Revision 1, dated September 28, 2016. AAL suggested that the replacement option could be done using certain sections of a component maintenance manual (CMM). SWA suggested the use of Boeing production installation drawings. Both AAL and SWA also stated that replacing only the affected bullnose hinge lugs or clevis assemblies would also reduce the cost of repair or replacement. SWA also stated that there is a limited inventory of Krueger flap assemblies and that limited inventory, combined with a 6-month compliance time could significantly impair operators.

We understand that the suggested replacement option might reduce the burden on operators. However, we do not agree to revise this AD to include the suggested changes. The repairs provided by the suggested sections of the CMM address normal wear-and-tear, and these repairs may not be appropriate for addressing damage that might result from an improperly attached Krueger flap. Boeing informed us that there is no procedure in the CMM that would provide step-by-step instructions to remove only the bullnose other than by use of the drawing system. Engineering instructions would be needed to ensure that the remainder of the flap assembly is serviceable and not damaged in addition to the damaged bullnose hinge lugs or clevis assembly, and that level of instruction would be too much detail for an AD. However, once we issue this AD, any person may request approval of an AMOC under the provisions of paragraph (i) of this AD. We have not changed the AD in this regard.

We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this AD with the changes described previously and minor editorial changes. We have determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2015-22-06, Amendment 39-18311 (80 FR 68429, November 5, 2015) (“AD 2015-22-06”). AD 2015-22-06 applied to all Airbus Model A318, A319, A320, and A321 series airplanes. The NPRM published in the Federal Register on December 20, 2016 (81 FR 92749). The NPRM was prompted by reports that some maintenance messages pointed out the loss of elevator servo control monitoring performed by SEC 1, SEC 2, or both, during the engine start. The NPRM proposed to continue to require revision of the After Start Normal Procedures section of the AFM. The NPRM also proposed to require multiple actions depending on airplane configuration. For airplanes with SEC C that have received the previous Airbus modification to SEC hardware, the NPRM proposed to require a software update and revision to the AFM. For airplanes that have not received the modification, the NPRM proposed to require inspection of the currently installed SEC hardware to determine if it is affected by this AD and to complete a corrective action to update the software and AFM as required. We are issuing this AD to prevent an undetected loss of redundancy during flight if an affected SEC cannot control the related elevator servo control(s), which could result in reduced control of the airplane.

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive, 2016-0056, dated March 18, 2016 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus Model A318 and A319 series airplanes, and Model A320-211, -212, -214, -231, -232, and -233, and A321-111, -112, -131, -211, -212, -213, -231, and -232 airplanes. The MCAI states:

You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9508.

We gave the public the opportunity to participate in developing this AD. The following presents the comments received on the NPRM and the FAA's response to each comment.

The Air Line Pilots Association, International (ALPA), expressed its full support for the NPRM.

American Airlines (AAL) requested that we revise the proposed AD to extend the proposed compliance time for replacement of the affected software from 3 months to 24 months. AAL mentioned that it has 121 airplanes, for a total of 363 SEC computers, and that the proposed compliance time of 3 months poses a significant burden on its ability to comply with the proposed requirements. AAL asserted that an increase in the specified compliance time would greatly decrease the burden with no added safety risk, due to the revision of the AFM specified in paragraph (g) of the proposed AD.

We do not agree to extend the specified compliance time. The operator provided no technical justification for revising this compliance time. Further, in developing an appropriate compliance time for this action, we considered the urgency associated with the subject unsafe condition, the availability of necessary replacement software, recommendations from the manufacturer, and the practical aspect of accomplishing the required modification within a period of time that corresponds to the normal scheduled maintenance for most affected operators. We have determined that a 3-month compliance time will ensure an acceptable level of safety and allow the software replacement to be done during regular maintenance schedules for most affected operators. However, under the provisions of paragraph (p)(1) of this AD, we will consider requests for approval of an extension of the compliance time if sufficient data are submitted to substantiate that the new compliance time would provide an acceptable level of safety. We have not changed this AD in this regard.

AAL requested that we revise paragraph (i)(l) of the proposed AD to allow replacement of the SEC in lieu of installation of SEC software standard 126. AAL suggested that we add a statement similar to paragraph (i)(2) of the proposed AD, to paragraph (i)(1) of the proposed AD, allowing replacement of the SEC to be accomplished in accordance with an installation method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or EASA; or Airbus's EASA Design Organization Approval (DOA). AAL asserted that there are cases where the option to replace the SEC in accordance with the applicable Airbus airplane maintenance manual or other approved methods on airplanes having Airbus modification 39429 would benefit operators, especially given the 3-month compliance time.

We disagree with the request to revise paragraph (i)(1) of this AD. As specified in the MCAI, paragraph (i)(1) of this AD applies to airplanes with Airbus modification 39429 embodied in production and requires installing SEC software standard 126, which is the only approved corrective action. The instructions in paragraph (i)(2) of this AD only apply to airplanes that have not received the modification in production. However, under the provisions of paragraph (p)(1) of this AD, we will consider alternative replacements if sufficient data are submitted to substantiate that the alternative replacement would provide an acceptable level of safety. We have not changed this AD in this regard.

Airbus requested that we revise the NPRM to reference Airbus Service Bulletin A320-27-1257, Revision 01, dated January 1, 2017, for the applicable software replacement required by paragraph (i)(2) of this AD. Airbus Service Bulletin A320-27-1257, dated December 18, 2015, was specified as the appropriate source of service information for the proposed SEC software replacement provided in the proposed AD. Airbus stated that Airbus Service Bulletin A320-27-1257, Revision 01, dated January 1, 2017, was issued to add a maintenance records check for determining the part number of the SEC software, and to correct a typographical error in a part number in a certain subtask.

We agree that this AD should specify Airbus Service Bulletin A320-27-1257, Revision 01, dated January 1, 2017. This service information corrects errors in Airbus Service Bulletin A320-27-1257, dated December 18, 2015, which were noted in the NPRM. No additional work is necessary for airplanes on which the actions were performed using Airbus Service Bulletin A320-27-1257, dated December 18, 2015. Therefore, we have changed this AD to refer to Airbus Service Bulletin A320-27-1257, Revision 01, dated January 1, 2017, as the appropriate source of service information for the applicable required SEC software replacement. We have also added paragraph (o) to this AD to provide credit for actions accomplished prior to the effective date of this AD, if those actions were performed using Airbus Service Bulletin A320-27-1257, dated December 18, 2015, and redesignated subsequent paragraphs accordingly.

We have revised this AD to provide credit for the software replacement required by paragraph (i)(1) of this AD, if those actions were performed before the effective date of this AD using Airbus Service Bulletin A320-27-1252, dated November 6, 2015. We have also moved the content of note 1 to paragraph (g) of the proposed AD to the text in paragraph (g) of this AD. We have redesignated the subsequent note accordingly. In addition, we have revised paragraph (m) of this AD to clarify the provision for installation of equivalent software and hardware. The proposed AD referred to the effective date of this AD. This AD refers to the effective date of the MCAI.

We reviewed the available data, including the comments received, and determined that air safety and the public interest require adopting this AD with the changes described previously and minor editorial changes. We have determined that these changes:

• Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

We reviewed the following service information:

• Airbus Service Bulletin A320-27-1252, Revision 01, dated February 18, 2016.

• Airbus Service Bulletin A320-27-1257, Revision 01, dated January 1, 2017.

This service information provides information for identifying affected SECs and updating the software on affected SECs. These documents are distinct since they apply to different airplane configurations.

We also reviewed Airbus A318/A319/A320/A321 Temporary Revision TR572, Issue 1.0, dated August 13, 2015, to the Airbus A318/A319/A320/A321 AFM. This service information describes the reset of SEC 1 and SEC 2 that must be done after engine start.

This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We estimate that this AD affects 959 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);

3. Will not affect intrastate aviation in Alaska; and

4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Airbus Model A300 series airplanes; Model A300 B4-600, B4-600R, and F4-600R series airplanes, and Model A300 C4-605R Variant F airplanes (collectively called Model A300-600 series airplanes); and Model A310 series airplanes. The NPRM published in the Federal Register on August 30, 2016 (81 FR 59546) (“the NPRM”). The NPRM was prompted by reports of failure of an aft hinge bolt assembly in the NLG aft doors. The NPRM proposed to require replacement of the aft hinge bolt assembly in the left and right NLG aft doors, with new aft hinge bolt assemblies. We are issuing this AD to prevent failure of an aft hinge bolt assembly in an NLG aft door while the airplane is in flight, which could lead to an in-flight loss of an NLG aft door, and damage to the airplane.

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2016-0100, dated May 24, 2016 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus Model A300 series airplanes; Model A300 B4-600, B4-600R, and F4-600R series airplanes, and Model A300 C4-605R Variant F airplanes (collectively called Model A300-600 series airplanes); and Model A310 series airplanes. The MCAI states:

You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9052.

We gave the public the opportunity to participate in developing this AD. The following presents the comments received on the NPRM and the FAA's response to each comment.

FedEx stated it does not agree that the proposed hinge bolt replacement is necessary, asserting that the severity of a failed condition does not equate to an unsafe condition on the airplane. FedEx explained that in the last 22 years of flight operations, it has not had a departure of the NLG door, nor has it seen any cracking of the aft hinge bolt.

From this statement, we infer that FedEx requested we withdraw the NPRM. We disagree with this request. Airbus has records of multiple instances of hinge bolt failures. Failure of an aft hinge bolt assembly in an NLG aft door while the airplane is in flight could lead to an in-flight loss of an NLG aft door, and damage to the airplane. We have not changed this AD in this regard.

FedEx requested that a repetitive non-destructive test (NDT) technique be allowed as an option to replacing the affected bolts. FedEx stated that a routine NDT inspection would be best suited for this condition and that the affected bolts should only be replaced as an on-condition action. Further, FedEx stated that the proposed requirement to replace all affected bolts will be a financial burden on operators. FedEx also pointed out that the two bolts required for each airplane are $2,300, and these bolts will be required to be replaced every 10,000 flight cycles (approximately every 10 years). FedEx further requested that the FAA petition the EASA to revise the Airbus service information to permit the repetitive inspection as an option to the required bolt replacement.

We disagree with the commenter's request. The intent of this AD is to regularly replace the affected hinge bolt with a new one. The bolt loading and fatigue spectrum is complex, and the manufacturer is not able to substantiate a fatigue life to support a repeat inspection program. Therefore, we have made no changes to this AD in this regard. However, under the provisions of paragraph (k)(1) of this AD, we will consider requests for approval of an alternative method of compliance (AMOC) if sufficient data are submitted to substantiate that the change would provide an acceptable level of safety.

United Parcel Service (UPS) requested that we revise the proposed AD to remove the requirement to replace aft hinge bolts. UPS contended that the more appropriate method for implementation of the repetitive 10,000-flight-cycle replacement of the hinge bolt assembly would be through a maintenance program revision, or incorporation into the Safe Life Airworthiness Limitation Items (SL ALI)—Part 1. Therefore, UPS recommended that we delete the proposed hinge bolt replacement, and instead coordinate with EASA to revise the SL ALI to include the hinge bolt assembly.

We disagree with the commenter's request. Only parts that are identified as a safe life part are incorporated into the SL ALI. The specified hinge bolt does not meet the Airbus Airworthiness Limitations Section (ALS) Part 1 criteria for a safe life part. The hinge bolt does not have fatigue testing or demonstrated fatigue life analysis, which is required for safe life parts. We have not changed this AD in this regard.

UPS requested that, if its request to revise the proposed AD to remove the hinge assembly replacement is unacceptable to the FAA, we revise paragraph (h)(3) of this proposed AD to require removal and installation of a new bolt using only Airbus Service Bulletin A300-53-6182 and not list Airbus Service Bulletin A300-53-6186. UPS explained that the final result of the proposed AD is the replacement of the bolt in every case; however, Airbus Service Bulletin A300-53-6186 specifies doing an inspection of the bolt part number in addition to the replacement and is an added burden to the operator given the location of the identifying mark and the difficulty accessing that mark.

We disagree with the commenter's request because paragraphs (g) and (h) of this AD and the corresponding service information are necessary to distinguish between two different actions with different compliance times:

• Paragraph (g) of this AD and corresponding service information for the introduction of the bolt's new design.

• Paragraph (h) of this AD and corresponding service bulletin for regular bolt replacement, which includes an inspection for verification if the proper bolt part number was installed.

While it might be difficult for operators to identify the part number of the bolt when it is installed on the aircraft, the bolt is scheduled to be removed so it should not be difficult to verify that the correct part was installed. We have not changed this AD in this regard.

UPS requested that the FAA coordinate with EASA and Airbus to ensure that the IPC is updated to show only the post-modification part number prior to the AD being issued. UPS was concerned that an outdated IPC creates opportunities for installation of the original, non-compliant bolt assembly.

We infer that UPS was also requesting that we delay publication of the final rule pending revision of the IPC. We disagree with this request. Airbus has informed the FAA that the IPC is scheduled to be revised. However, we do not consider that delaying this action until after the release of the manufacturer's revised IPC is warranted, since sufficient information currently exists in this AD and the required service information to address the identified unsafe condition. We have not changed this AD in this regard.

We have clarified the corrective actions in the introductory text of paragraph (h) of this AD by referring to paragraph (k)(2) of this AD.

We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this AD as proposed except for minor editorial changes. We have determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

We reviewed the following Airbus service information.

• Airbus Service Bulletin A300-53-0396, dated November 25, 2015.

• Airbus Service Bulletin A300-53-6182, dated November 17, 2015.

• Airbus Service Bulletin A310-53-2142, dated November 17, 2015.

This service information describes procedures for replacement of the aft hinge bolt assemblies in the left and right NLG aft doors, with new aft hinge bolt assemblies. These documents are distinct since they apply to different airplane models and configurations.

We also reviewed the following Airbus service information.

• Airbus Service Bulletin A300-53-0397, dated January 18, 2016.

• Airbus Service Bulletin A300-53-6186, dated January 18, 2016.

• Airbus Service Bulletin A310-53-2144, dated January 18, 2016.

This service information describes procedures for replacement of the aft hinge bolt assemblies in the left and right NLG aft doors, with new aft hinge bolt assemblies. The replacement includes an inspection to verify if the proper bolt part number was installed and repair if the proper bolt part number was not installed. These documents are distinct since they apply to different airplane models and configurations.

This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We estimate that this AD affects 157 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes to the Director of the System Oversight Division.

We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);

3. Will not affect intrastate aviation in Alaska; and

4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

On February 17, 2017, at 82 FR 10971, the Federal Register published our notice of proposed rulemaking (NPRM), which proposed to amend 14 CFR part 39 by adding an AD that would apply to Romtex restraint systems with a rotary buckle sub-assembly (buckle assembly) with a part number and serial number listed in Romtex Service Bulletin No. 358SB-14-101, Revision 1, dated December 12, 2014. These restraint systems are installed on, but not limited to, Airbus Helicopters Model AS350B2, AS350B3, EC130B4, EC130T2, and AS355NP helicopters. The NPRM proposed to require inspecting the buckle assembly to determine whether the straps release, marking the seat as inoperative if the buckle fails to release the straps, and replacing the buckle assembly within 180 hours time-in-service (TIS). The NPRM also proposed to prohibit installing the affected buckle assemblies on any helicopter. The proposed requirements were intended to prevent a restraint system strap from failing to release from the buckle, preventing occupants from exiting the helicopter during an emergency.

The NPRM was prompted by AD No. 2014-0279, dated December 19, 2014, issued by EASA, which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition for Romtex Model 358 torso restraint systems installed on Airbus Helicopters Model EC130T2, AS350B2, and AS350B3 helicopters. EASA advises that ruptures have occurred on the upper side (knob) of several rotary buckles installed on these restraint systems. EASA states the material used in two batches of the buckle assembly were altered by a supplier, resulting in a specification different from the approved design data. The EASA AD states that this condition could prevent the release of the restraint system straps as intended after an emergency landing. To address this unsafe condition, the EASA AD requires inspecting the buckle assembly for proper operation, replacing or marking as inoperative any buckle assembly that fails to release the straps before further flight, and replacing all buckle assemblies within 6 months. The EASA AD also prohibits installing these buckle assemblies on any aircraft.

We gave the public the opportunity to participate in developing this AD, but we did not receive any comments on the NPRM.

These products have been approved by the aviation authority of Romania and are approved for operation in the United States. Pursuant to our bilateral agreement with Romania, EASA, its technical representative, has notified us of the unsafe condition described in the EASA AD. We are issuing this AD because we evaluated all information provided by EASA and determined the unsafe condition exists and is likely to exist or develop on other helicopters of these same type designs and that air safety and the public interest require adopting the AD requirements as proposed except we are correcting the name in the related service bulletin from Romtex to Anjou Aero. This change is consistent with the intent of the proposals in the NPRM and will not increase the economic burden on any operator nor increase the scope of this AD.

The EASA AD requires compliance within 30 days for the buckle inspection and 6 months for replacement; this AD requires the inspection within 30 hours TIS and replacement within 180 hours TIS. The EASA AD does not apply to Model EC130B4 and AS355NP helicopters, and this AD does.

We reviewed Anjou Aero Service Bulletin No. 358SB-14-101, Revision 1, dated December 12, 2014 (SB 358SB-14-101), which specifies removing from service certain part-numbered and serial-numbered buckle assemblies, consisting of the rotary buckle, belt, and attachment.

This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We estimate that this AD affects 893 helicopters of U.S. Registry.

We estimate that operators will incur the following costs in order to comply with this AD. At an average labor rate of $85 per hour, inspecting the buckle assembly requires about .5 work-hour, for a cost per helicopter of $43 and a total cost of $38,399 for the fleet. Replacing each buckle assembly requires about .5 work-hour, and required parts will cost $42,000, for a cost per helicopter of $42,043 and a total cost to U.S. operators of $37,544,399.

According to the Anjou Aero service information, some of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected individuals. We do not control warranty coverage by Anjou Aero. Accordingly, we have included all costs in our cost estimate.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on helicopters identified in this rulemaking action.

This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866;

(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);

(3) Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and

(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

We prepared an economic evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

I. Table of Abbreviations CFR Code of Federal Regulations COTP Captain of the Port DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking §  Section U.S.C. United States Code II. Background Information and Regulatory History

On May 17, 2017, The Kent Narrows Racing Association of Chester, MD notified the Coast Guard that it will be conducting power boat races from 9 a.m. until 5 p.m. on August 19, 2017 and August 20, 2017. The high-speed power boat racing event consists of approximately 60 participants competing on a designated 1-mile oval course in the Choptank River in a cove located between Hambrooks Bar and the shoreline at Cambridge, MD. In response, on July 10, 2017, the Coast Guard published a notice of proposed rulemaking (NPRM) titled “Special Local Regulation; Choptank River, Cambridge, MD” in the Federal Register (82 FR 31733). There we stated why we issued the NPRM, and invited comments on our proposed regulatory action related to this paddle race. During the comment period that ended August 9, 2017, we received no comments. No public meeting was requested, and none was held.

We are issuing this rule, and under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making it effective less than 30 days after publication in the Federal Register. Delaying the effective date of this rule would be contrary to public interest because immediate action is needed to respond to the potential safety hazards associated with a power boat racing event. Hazards from the power boat racing event include participants operating within and adjacent to designated navigation channels and interfering with vessels intending to operate within those channels, as well as operating within approaches to local public and private marinas and other facilities. Additionally, the public has been notified of the event by the event sponsor via local media.

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1233, which authorizes the Coast Guard to establish and define special local regulations. The COTP Maryland-National Capital Region has determined that potential hazards associated with the power boat racing would be a safety concern for anyone intending to operate within certain waters of the Choptank River in Cambridge, MD. The purpose of this rulemaking is to protect event participants, spectators and transiting vessels on certain waters of the Choptank River before, during, and after the scheduled event.

This rule establishes a special local regulation, which will be enforced from 8:30 a.m. until 5:30 p.m. on August 19, 2017, and from 8:30 a.m. until 5:30 p.m. on August 20, 2017. The regulated area covers all navigable waters within Hambrooks Bay and Choptank River west and south of a line commencing at the shoreline, at latitude 38°35′00″ N., longitude 076°04′43″ W., thence east to latitude 38°35′00″ N., longitude 076°04′23.7″ W., thence north to latitude 38°35′22.7″ N., longitude 076°04′23.7″ W., thence northwest to latitude 38°35′42.2″ N., longitude 076°04′51.1″ W., at Hambrooks Bar Light LLNR 24995, thence southwest to latitude 38°35′34.2″ N., longitude 076°05′12.3″ W., terminating at the Hambrooks Bay breakwall as it intersects the shoreline. This rule provides additional information about areas within the regulated area, their definitions, and the restrictions that apply to mariners. These areas include “Race Area,” “Buffer Zone” and “Spectator Area”.

The duration of the regulated area is intended to ensure the safety of vessels and these navigable waters before, during, and after the power boat racing event, scheduled to occur during August 19-20, 2017. Except for participants, no vessel or person will be permitted to enter the regulated area without obtaining permission from the COTP Maryland-National Capital Region or Coast Guard Patrol Commander. The regulatory text appears at the end of this document.

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

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.

This regulatory action determination is based on the size and enforcement duration of the regulated area, which will impact a small designated area of the Choptank River for 18 hours. The Coast Guard will issue a Broadcast Notice to Mariners via VHF-FM marine channel 16 about the status of the regulated area. Moreover, the rule allows vessels to seek permission to enter the regulated area, and vessel traffic will be able to safely transit the regulated area once the Coast Guard Patrol Commander deems it safe to do so.

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

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

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

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

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

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

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

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves implementation of regulations within 33 CFR part 100 applicable to organized marine events on the navigable waters of the United States that could negatively impact the safety of waterway users and shore side activities in the event area lasting for a total of 18 hours (enforcement period). It is categorically excluded from further review under paragraph 34(h) of Figure 2-1 of the Commandant Instruction. A Record of Environmental Consideration (REC) is available in the docket where indicated under ADDRESSES. We seek any comments or information that may lead to the discovery of a significant environmental impact from this rule.

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

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 100 as follows:

Union Pacific Railroad Company (UPRR), bridge owner, has requested a temporary deviation from the operating schedule for the Steel Bridge across the Willamette River, at mile 12.1, in Portland, OR. The deviation is necessary to accommodate roadway improvements. Oregon Department of Transportation will be removing and replacing pavement on the upper lift roadway. The Steel Bridge is a double-deck lift bridge with a lower lift deck and an upper lift deck which operate independent of each other. To facilitate this paving operation, the upper deck will remain in the closed-to-navigation position. When the lower deck is in the closed-to-navigation position, the bridge provides 26 feet of vertical clearance above Columbia River Datum 0.0; and in open-to-navigation position, the vertical clearance is 71 feet above Columbia River Datum 0.0. The deviation period is from 4 a.m. to 11:59 p.m. on October 7, 2017. The lower deck for the Steel Bridge will continue to operate in accordance with 33 CFR 117.897(c)(3)(ii), and at the end of this deviation period, the upper deck of the Steel Bridge will resume operating in accordance with 33 CFR 117.897(c)(3)(ii).

Waterway usage on this part of the Willamette River includes vessels ranging from commercial tug and barge to small pleasure craft. Vessels able to pass through the bridge with the lower deck in the open-to-navigation position or upper deck in the closed-to-navigation position may do so at any time. The upper lift of the Steel Bridge will not be able to open for emergencies; however, the lower lift will be able to open for emergencies, and there is no immediate alternate route for vessels to pass. The Coast Guard has conducted public outreach regarding this closure of the upper deck on the subject bridge to known mariners that transit on the river. The Coast Guard has not received any objections to this temporary deviation from the operating schedule. The Coast Guard will also inform the users of the waterways through our Local and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessel operators can arrange their transits to minimize any impact caused by the temporary deviation.

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

I. Table of Abbreviations CFR Code of Federal Regulations COTP Captain of the Port Upper Mississippi River DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking §  Section U.S.C. United States Code II. Background Information and Regulatory History

The Coast Guard preceded this final rule with a Notice of Proposed Rulemaking (NPRM). The NPRM was published in the Federal Register on June 21, 2017, (82 FR 28290). There we stated why we issued the NPRM, and invited comments on our proposed regulatory action related to high speed boat races on the Kaskaskia River in Evansville, IL. The NPRM listed dates and times of enforcement of the safety zone. During the comment period that ended July 21, 2017, we received no comments.

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The Captain of the Port Upper Mississippi River (COTP) has determined that potential hazards associated with the high speed boat races will cause safety concerns. The purpose of this rule is to ensure safety of life, vessels and the navigable waters in the safety zones, before, during, and after the scheduled event.

As noted above, during the comment period for our NPRM that published June 21, 2017, no comments were received. There are no changes in the regulatory text of this rule from the proposed rule in the NPRM.

This rule establishes a safety zone from 8 a.m. on September 16, 2017 through 6 p.m. on September 17, 2017. The zone will be enforced from 8 a.m. through 6 p.m. each day. The safety zone will cover all navigable waters between MM 9.0 and 11.0 on the Kaskaskia River in Evansville, IL. The duration of the zone is intended to ensure the safety of vessels and participants on the navigable waters before, during, and after the scheduled high speed boat practices and races. Entry of vessels or persons into this safety zone is prohibited without obtaining permission from the COTP or a designated representative.

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

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.

This regulatory action determination is based on the size, location, duration, and time-of-day of the regulated area. Vessel traffic will be able to safely navigate through the affected area before and after the scheduled event. The safety zone will only be enforced for a period of 10 hours on each of 2 days on 2 miles of navigable waters. Entry into the safety zones established through this rulemaking may be requested from the COTP or a designated representative; requests will be considered on a case-by-case basis.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received no comments from the Small Business Administration on this rulemaking. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

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

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

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

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order13132.

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

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone lasting for 10 hours on 2 days, during daylight hours and restricts transit on a section of the Kaskaskia River extending 2 miles. It is categorically excluded from further review under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES.

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

On January 6, 2017, the Department announced dates by which institutions subject to the Department's gainful employment (GE) regulations must comply with certain provisions of the GE regulations relating to the submission of alternate earnings appeals. On June 15, 2017, the Department announced its intention to negotiate issues related to gainful employment. On July 5, 2017, the Department announced that it would publish a Federal Register document to establish a new deadline for institutions to submit alternate earnings appeals in light of the Court Order in American Association of Cosmetology Schools v. DeVos, Civil Action No. 17-0263, D.D.C. June 28, 2017 (Court Order).

The Department establishes October 6, 2017, as the deadline for all programs to file a notice of intent to file alternate earnings appeal. The Department establishes February 1, 2018, as the deadline for all programs to file an alternate earnings appeal. However, programs are encouraged to submit their appeals before this deadline. These deadlines and the associated timelines are being established on a one-time basis to comply with the Court Order. Although the Court Order only applies to institutions that are members of the American Association of Cosmetology Schools, the Court noted concerns with the response threshold required for the graduate surveys used for all programs in the alternate earnings appeal under 34 CFR 668.406, and the Department is establishing these new deadlines for all programs subject to the GE regulations in 34 CFR part 668. Institutions that have already submitted a notice of intent to file an alternate earnings appeal, or an alternate earnings appeal, do not have to resubmit those items or amend their alternate earnings appeal in connection with the modified submission requirements described below. Institutions that wish to supplement an alternate earnings appeal that has already been submitted may do so, and should contact Department staff to make those arrangements on or before October 6, 2017.

To further comply with the Court Order, for alternate earnings appeals based on a graduate survey, the Department will not enforce § 668.406(b)(3) or (c) to the extent these provisions require that a graduate survey contain responses from all students that are not exempted under § 668.404(e), nor will the Department require a 50 percent threshold response rate. Instead, the Department will evaluate all graduate surveys, regardless of response rate, provided the submissions include the number of responses, the response rate, and a nonresponse bias analysis, as well as any other information the Department requests. The Department will consider the response rate, the nonresponse bias analysis, and any other information requested by the Secretary that indicates that the responses are a reliable measure of the program graduates' true earnings.

Furthermore, for alternate earnings appeals based on data from State-sponsored data systems, the Department will not enforce § 668.406(b)(3) or (d) to the extent these provisions require that an appeal include earnings data for all students that are not exempted under § 668.404(e), nor will the Department enforce § 668.406(d) to the extent that provision requires a 50 percent threshold to be met, or the earnings of 30 students to be included, before the Department will consider an alternate earnings appeal. Instead, the Department will consider the validity of appeals using State-sponsored data on a case-by-case basis, taking into account the response rate and other information requested by the Secretary.

In modifying the alternate appeals submission requirements, the Department seeks to reduce the burden on institutions in conducting these appeals while still ensuring that institutions provide enough information for the Department to determine whether the program graduates for whom alternate earnings data are provided are a valid representation of the overall cohort. Institutions must still submit the certifications and attestations required by § 668.406(c)(2) and (d)(3), as applicable, except to the extent inconsistent with anything in this document.

Institutions intending to file a notice of intent to appeal do not have to issue warnings to students unless they fail to timely submit an alternate earnings appeal or the appeal is resolved.

We invite your comments on this action. We will consider these comments in determining whether to take any future action in connection with the upcoming negotiated rulemaking.

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

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

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

A sector is a group of persons (three or more persons, none of whom have an ownership interest in the other two persons in the sector) holding limited access groundfish permits who have voluntarily entered into a contract and agree to certain fishing restrictions for a specified period of time. Sectors are self-selecting, meaning each sector can choose its members. The Northeast multispecies sector management system allocates a portion of the NE multispecies stocks to each sector. These annual sector allocations are known as annual catch entitlements (ACEs) and are based on the collective fishing history of a sector's members. Sectors may receive allocations of large-mesh NE multispecies stocks with the exception of Atlantic halibut, windowpane flounder, Atlantic wolffish, and ocean pout, which are non-allocated species. The ACEs are a portion of a stock's annual catch limit (ACL) available to commercial NE multispecies vessels within a sector. A sector determines how to harvest its ACEs and may decide to limit operations to fewer vessels.

Sectors submit operations plans and contracts to us for approval. We must approve a sector's operations plan in order to allocate ACE to the sector and for the sectors to operate. Because sectors elect to receive an allocation under a quota-based system, the Northeast Multispecies Fishery Management Plan (FMP) grants sector vessels several “universal” exemptions from the FMP's effort controls. Sectors may request additional exemptions to streamline operations for sector vessels and to increase economic opportunities. We review these requests for consistency with the NE Multispecies FMP and other FMPs, as well as for resource and community impacts. We may approve requested exemptions that benefit sector vessels and that are consistent with the goals and objectives of the relevant FMPs. Sectors are prohibited from requesting exemptions from permitting restrictions, gear restrictions designed to minimize habitat impacts, and most reporting requirements.

On April 28, 2017, we published an interim final rule (82 FR 19618) that approved sector operations plans, granted regulatory exemptions for sectors, and provided preliminary allocations of annual catch entitlements to sectors for the start of the 2017 fishing year . This interim final rule included consideration of a request from sectors to modify the Sectors Small-Mesh Fishery Exemption, which was first granted in fishing year 2015.

This exemption allows vessels to combine sector and small-mesh fishery trips in two discrete areas in Southern New England. Vessels may first target groundfish with large-mesh trawl gear and then switch to small-mesh trawl gear to target exempted fishery species like squid. These combined trips are more efficient and allow sector vessels to increase revenue and profitability on a single trip. There are additional requirements for gear modifications on the small-mesh portion of the trip to reduce bycatch of groundfish, and all legal groundfish caught on the small-mesh portion of the trip must be kept and counted against the sector's allocation. A vessel using this exemption is still required to meet the same at-sea monitoring coverage as normal groundfish trips, and is also required to submit a catch report through its Vessel Monitoring System (VMS) unit when switching gears.

The previously approved small-mesh sector exemption area includes two discrete areas, one that parallels the southern shore of Long Island to the waters just off Narragansett Bay, and a second area south of Martha's Vineyard (Figure 1). Sectors requested to modify the area to include all of statistical areas 537, 539 and 613, which would expand the geographic footprint of the exemption area, to better reflect fishing practices in the area and increase efficiency and opportunities for sector vessels (Figure 2). We received one public comment on this proposed change to the Sectors Small-Mesh Fishery Exemption. The comment supported approval of the modification to the exemption as proposed.

We are granting the modification to the exemption area, but as noted in the April 28, 2017, interim final rule, we are excluding areas that overlap with existing year-round groundfish closed areas or southern windowpane flounder accountability measure (AM) areas, regardless of whether the AMs are triggered, to be consistent with the goals and objectives of the NE Multispecies FMP. We are excluding the overlapping southern windowpane flounder AM areas because of concerns about potential interactions with windowpane flounder and other regulated groundfish species within the AM area. As with all sector exemptions, we will continue to monitor the use of the updated exemption, as well as any future changes to area management that the New England Fishery Management Council recommends.

All other requirements of the Sectors Small-Mesh Fishery Exemption remain unchanged from those previously approved and implemented. Vessels using the exemption must fish with one of three trawl gear modifications when using small mesh: Drop-chain sweep with a minimum of 12 inches (30.48 cm) in length; a large-mesh belly panel with a minimum of 32-inch (81.28-cm) mesh size; or an excluder grate secured forward of the codend with an outlet hole forward of the grate with bar spacing of no more than 1.97 inches (5.00 cm) wide. These gear modifications, when fished properly, have been shown to reduce the catch of legal and sub-legal groundfish stocks.

As in previously approved versions of the exemption, in order to facilitate proper coverage levels and assist with enforcement, the vessel is required to declare their intent to use small mesh to target small-mesh species by submitting a trip start hail through its VMS unit prior to departure. Trips declaring this exemption must stow their small-mesh gear and use their large-mesh gear first, and once finished with the large mesh, must submit a Multispecies Catch Report via VMS of all catch on board at that time and indicate that the small-mesh gear will now be fished. Once the Catch Report is sent, the vessel can then deploy small-mesh with the required modifications in the specific areas (see map above), outside of the Nantucket Lightship Closed Area, at which point, the large mesh cannot be redeployed. Any legal-sized allocated groundfish stocks caught during these small-mesh hauls must be landed and the associated landed weight (dealer or vessel trip report (VTR)) will be deducted from the sector's ACE.

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

The 2017 pollock incidental catch allowance in the BS was established as 47,210 metric tons (mt) by the 2017 and 2018 final harvest specifications for groundfish in the BSAI (82 FR 11826, February 27, 2017), and as adjusted by reallocations (82 FR 31925, July 11, 2017), in accordance with § 679.20(a)(5)(i)(A)(1) and the American Fisheries Act (AFA) (Pub. L. 105-277, Division C, Title II).

As of August 9, 2017, the Administrator, Alaska Region, NMFS, has determined that approximately 21,000 (mt) of pollock remain in the incidental catch allowance. Based on projected harvest rates of other groundfish species and the expected incidental catch of pollock in those fisheries, the Regional Administrator has determined that 4,000 mt of pollock specified in the incidental catch allowance will not be necessary as incidental catch. Therefore, NMFS is apportioning the projected unused amount, 4,000 mt, of pollock from the incidental catch allowance to the directed fishing allowances established pursuant to § 679.20(a)(5)(i)(A). Pursuant to the pollock allocation requirements set forth in § 679.20(a)(5)(i), this transfer will increase the allocation to catcher vessels harvesting pollock for processing by the inshore component by 2,000 mt, to catcher/processors and catcher vessels harvesting pollock for processing by catcher/processors in the offshore component by 1,600 mt, and to catcher vessels harvesting pollock for processing by motherships in the offshore component by 400 mt. Pursuant to § 679.20(a)(5)(i)(A)(4), 8.5 percent of the 1,600 mt allocated to catcher/processors in the offshore component, 136 mt, will be available for harvest only by eligible catcher vessels delivering to listed catcher/processors. Pursuant to § 679.20(a)(5)(i)(A)(4)(iii), an additional 8 mt or 0.5 percent of the catcher/processor sector allocation of pollock will be available to unlisted AFA catcher/processors.

Pursuant to § 679.20(a)(5)(i)(A), Tables 4 and 5 of the 2017 and 2018 final harvest specifications for groundfish in the BSAI are revised as follows:

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, (AA) finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such a requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the reallocation of projected unused amounts of BS pollock from the incidental catch allowance to the directed fisheries. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of August 9, 2017.

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

This action is taken under 50 CFR 679.20, and is exempt from review under Executive Order 12866.