Federal Register Vol. 82, No.160,

The SBA programs that are affected by this final rule are: (1) The 7(a) Loan Program; (2) the Microloan Program; (3) the Intermediary Lending Pilot (ILP) Program; (4) the 504 Loan Program, and (5) the Surety Bond Guarantee (“SBG”) Program.

SBA published in the Federal Register (81 FR 52595, August 9, 2016) a proposed rule containing proposed regulatory revisions for the 7(a) Loan Program, the Microloan Program, the 504 Loan Program, and the SBG Program. The ILP Program was inadvertently omitted from the proposed rule; therefore, changes to the ILP Program were added to this final rule to maintain consistency across SBA loan programs. The comment period ended October 11, 2016.

The Agency reviewed the public comments it received concerning its proposed rule changes for 13 CFR parts 115 and 120. The comment review of specific final rule changes for the 7(a) Loan Program, the Microloan Program, the 504 Loan Program, and the SBG Program is summarized as follows:

SBA received 57 comment submissions, of which two were duplicates from the same commenter. The 55 net comments were reviewed by the Agency.

The comments submitted consisted of 20 from Certified Development Companies (CDCs), 15 from banks and non-bank lenders, 12 from trade associations, three from lender service providers, two from law firms, and three from private citizens. SBA received comments from 51 commenters pertaining only to changes to the 7(a) Loan Program, the Microloan Program, and the 504 Loan Program (13 CFR part 120), and comments from three commenters pertaining only to changes in the SBG Program (13 CFR part 115).

The majority of the commenters supported the proposed changes, with some commenters recommending minor modifications. SBA addresses the comments in detail within the appropriate Section-by-Section analysis below.

Section 109.400 Eligible Small Business Concerns. Revisions to the ILP Program regulations were added to this final rule to conform the program to changes being made to the other Business Loan Programs. Although no new ILP intermediaries are authorized, there are currently intermediaries with outstanding revolving funds for eligible small businesses. Therefore, the ILP Program is affected by the rule changes. SBA is removing § 109.400(b)(12) to align with the removal of § 120.110(l), which stated that consumer and marketing cooperatives were not eligible to participate in the Business Loan Programs. While SBA did not originally propose any changes to this section, the removal is appropriate to align requirements consistently across SBA programs.

Section 109.510 On-site and off-site reviews. To align this section with the removal of the terms “on-site” and “off-site” from 13 CFR part 120, SBA is removing these terms from 13 CFR part 109.

Section 115.19 Denial of liability. In §§ 115.19(c)(1), (d)(2) and (e)(2), SBA proposed modifying the threshold amount for determining when an increase in the Contract or bond amounts may result in a denial of liability from “25% or $100,000, whichever is less” to simply “25%.” One commenter noted that, under paragraph (c)(1), grounds for denial include when the Surety has committed a material breach of the terms or conditions of the Prior Approval or Preferred Surety Bond (PSB) Agreements, and a material breach is considered to have occurred if “[s]uch breach . . . causes an increase in the Contract amount or in the bond amount of at least 25% or $100,000, whichever is less.” Similarly, under paragraph (d), grounds for denial include when the Surety has committed a substantial violation of SBA regulations, and such violation occurs when a violation “causes an increase in the bond amount of at least 25% or 100,000, whichever is less in the aggregate . . .” The commenter stated that they could not contemplate a scenario where a breach or violation actually causes the contract or bond amounts to increase. However, the intent of the regulation is to make this connection between the breach or violation and an increase in the contract or bond amount, and it is appropriate as written. The commenter also suggested that the rule be clarified to state that the base amount to which the 25% is being applied is the “original contract amount.” SBA agrees with this suggestion and is revising the rule accordingly.

In addition, for the reasons discussed in section 115.32 below, SBA is revising the rule to retain a dollar threshold, but to increase it from $100,000 to $500,000.

Section 115.22 Quarterly Contract Completion Report. As proposed, this new section would require participating Sureties to submit Contract Completion Reports within 45 days of the end of each quarter, identifying completed contracts, contract amount changes, and any related fees due. Two commenters expressed concern this may be an administrative burden limiting Sureties' program participation. The third commenter recommended that this provision not be incorporated due to the increased administrative burden of reporting this information to SBA within 45 days.

SBA considered these comments, but has decided not to accept the recommendation. As SBA stated in the preamble to the proposed rule (81 FR 52597), SBA currently does not receive a final accounting of fees due and paid by the Surety and Principal on contracts that are successfully completed and, consequently, SBA is unable to ensure that fees due the Government as a result of an increase in the contract amount are paid in a timely manner on contracts that do not default. This report will assist SBA in ensuring that fees due for increases on successfully completed contracts are accurately calculated and paid timely. SBA is amending this section as proposed.

Section 115.30 Submission of Surety's guarantee application. SBA proposed to amend paragraph (d)(2)(i) of this section to increase the Quick Bond eligible contract limit from $250,000 to $400,000. Two commenters support this change to provide greater bonding opportunities for small contractors. SBA is amending this section as proposed.

Section 115.32 Fees and Premiums. In the proposed rule, SBA proposed to revise § 115.32(d)(1) to modify the threshold amount for determining when an increase in the Contract or bond amounts would require a Prior Approval Surety to notify SBA, or obtain SBA's prior written approval, from “25% or $100,000, whichever is less” to “25%.” SBA explained that it was proposing the change to better align SBA requirements with the prevailing practice in the surety industry—which now allows increases to the Contract and bond amounts without prior notification to the Surety—while managing the increased bond liability to the Government.

Three commenters generally expressed support for this provision and indicated that, with the increase in the maximum contract amount from $2 million to $6.5 million (and to $10 million for certain Federal contracts), the $100,000 threshold was too low and unduly burdensome. However, two of the commenters also expressed concern that smaller contracts would be negatively impacted by a threshold based only on percentage. These comments have caused SBA to reconsider the effects of totally removing the dollar threshold. For example, with no dollar threshold, a $5 million contract could be increased by $1 million without the Prior Approval Surety notifying SBA or requesting, when required, SBA's prior approval. To minimize the risks to the Agency that would be posed by such a large increase, the Surety should be required to notify SBA or, when required, seek SBA's prior approval. Thus, upon reconsidering this issue, SBA has decided to retain a dollar threshold, but in the interests of striking a balance between the risks to the Agency and minimizing any burden on Sureties, the rule is being revised to increase the dollar threshold from $100,000 to $500,000.

In addition, as discussed above for § 115.19, SBA is accepting and incorporating the recommendation to add clarifying language in the final rule to read “25% of the original contract amount”.

Section 115.60 Selection and admission of PSB Sureties. SBA proposed that a Surety, for the initial nine months following admission to the PSB Program, must obtain SBA's prior written approval before executing a bond greater than $2 million. One commenter requested that SBA clarify that this change does not apply to Sureties that participate in the PSB Program prior to the effective date of this final rule. SBA confirms that this change applies only to Sureties that are admitted to the PSB Program after the effective date of the final rule.

Another commenter suggested that this requirement may discourage applications from Sureties for acceptance into the PSB Program. With PSB Sureties executing SBA-guaranteed bonds without SBA's prior approval, SBA believes that it is in the taxpayers' and the Agency's best interests to require newer Sureties to demonstrate an understanding of the program before being allowed to issue bonds larger than $2 million without SBA's oversight. SBA is amending this section as proposed.

Section 115.67 Changes in Contract or bond amount. In the proposed rule, SBA proposed to change the threshold for when a PSB Surety must remit additional fees due as a result of increases to the Contract or bond amount from “25% of the contract or bond amount or $100,000, whichever is less” to “25%.” As discussed above, two commenters supported this change but expressed concern that this could negatively impact smaller contracts. For the reasons discussed above for section 115.32, and because the same thresholds should apply to when PSB Sureties are required to remit the additional fees owed, the rule is being revised to retain and increase the dollar threshold from $100,000 to $500,000. The rule is also being revised to add clarifying language that the increases will be based on the original contract amount.

Section 115.68 Guarantee percentage. In the proposed rule, SBA proposed to revise this section to provide that SBA will reimburse a PSB Surety in the same percentages and under the same terms as set forth in § 115.31, as authorized by § 874 of Title VIII of Division A of the National Defense Authorization Act, 2016, Public Law 114-92, 129 Stat. 726. All commenters supported this revision and this provision is adopted as proposed.

Section 120.110 What businesses are ineligible for SBA business loans?

As proposed, SBA is removing consumer and marketing cooperatives from the ineligible types of businesses identified in this section and is reserving paragraph (l). SBA received support for the proposed change from 22 commenters. With respect to the comments received, 18 commenters requested the removal of the requirement that at least one individual or entity provide an unlimited guaranty for a loan made to a consumer or marketing cooperative, and instead permit the use of a loan guarantee pool funded by cooperative enterprises. Commenters suggested that the ownership for many cooperatives consists of multiple members, and that obtaining personal guaranties from multiple members can be overly burdensome and should not apply to cooperatives. Currently, SBA allows for an entity to provide the required loan guaranty in lieu of a personal guaranty from an individual. SBA is not removing the guaranty requirements for cooperatives at this time due to the inequity it would create for all other classes of loan applicants where the unlimited guaranty of an individual or entity is required. The rules governing guaranties will continue to apply to cooperatives. SBA is amending this section as proposed.

Section 120.111 What conditions must an Eligible Passive Company satisfy?

SBA is amending this regulation as proposed with some modifications as discussed below. The amended regulation will permit SBA loan proceeds to be used to finance a change of ownership between existing owners of the Eligible Passive Company (EPC). SBA does not intend for this regulation to be used to finance a change of ownership in an EPC that has only been in existence for a limited period of time. This regulatory change is intended to assist with the preservation of a business that might otherwise cease operations due to the departure of an owner, as opposed to simply facilitating the withdrawal of capital out of the business. SBA will include in Standard Operating Procedure (SOP) 50 10 further guidance on when an EPC may use loan proceeds to finance a change of ownership between existing owners.

In the 504 Loan Program, the amended regulation will permit loan proceeds to be used to finance a change of ownership in the EPC when the asset(s) of the EPC are limited to real estate and/or other eligible long-term fixed assets that the EPC leases to one or more Operating Companies (“OC”) for conducting the OC's business. SBA recognizes that an EPC's balance sheet may include limited assets in addition to the real estate or other eligible long-term fixed assets, such as capital replacement reserves or escrow accounts for taxes and/or insurance (such assets are referred to in this discussion as “ineligible assets”). In such case, 504 loan proceeds may be used to finance a change of ownership between existing owners of the EPC as long as (1) the ineligible assets are directly related to the real estate or other eligible long-term fixed assets, (2) the amount attributable to such ineligible assets is de minimis, and (3) the ineligible assets are excluded from the Project financing. Further guidance for the 504 Loan Program will be incorporated into SOP 50 10.

SBA received 15 comments in support of this change with no objection. Nine additional commenters supported this change with minor modification and suggested language revisions to the introductory paragraph to clarify what purpose loan proceeds may be used for when an OC is a co-borrower with the EPC. One commenter suggested changing the term “Lender” to “SBA Lender” as it is a defined term that includes both a 7(a) Lender and CDC in this section. The term “lender” as used in paragraph (a)(3) of this section includes Third Party Lenders in 504 Loan projects, so it is not appropriate to use “SBA Lender.” However, the term “lender” as used in paragraph (a)(6) is directed to both a 7(a) Lender and a CDC; therefore, SBA is accepting this recommendation for paragraph (a)(6) of this section, changing the term “lender” to read “SBA Lender.”

Eight commenters also suggested revised language that they believe would clarify the Direct Final Rule that took effect on May 17, 2012 (77 FR 19531, April 2, 2012). That revision provided that in an EPC/OC structure, when the OC is a co‐borrower the Agency would allow loan proceeds to be used for working capital (as was already allowed) as well as for “the purchase of other assets for use by the OC, including the purchase of stock or intangible assets (such as trademarks, copyrights, intellectual property or goodwill).” An industry trade association, suggested in its comments that when the Direct Final Rule was published in 2012, SBA inadvertently omitted language from the introductory paragraph of § 120.111, and the omission of the language led to incorrect interpretations of the revised regulation. SBA considers this particular comment to be a logical outgrowth of reviewing § 120.111 and within the context of the proposed rule to clarify and correct areas of the regulations that are out of date or inconsistent with the current procedures. While not included in the proposed rule, based on the comments received, SBA is adding language to the introductory paragraph to clarify the eligible uses of loan proceeds when the OC is a co-borrower on the loan to the EPC.

SBA is amending § 120.111(a)(3) to clarify that rent or lease payments made by the OC to the EPC cannot exceed the amount necessary to make the loan payment to the lender, and additional amounts to cover the EPC's direct expenses of holding the property, such as maintenance, insurance and property taxes. SBA received 32 comments concerning this proposed change, 12 in support of and 20 objecting to the proposed change to this paragraph. Commenters recommended the proposed language be amended to specify that the rents charged by the EPC to the OC could include a reserve to cover capital asset replacement such as heating, ventilation, and air conditioning (HVAC). One commenter stated that the proposed regulation refers only to the “the loan payment to the lender” and does not take into consideration that in a 504 Loan, the EPC/OC rent includes payments to the CDC, the Third Party Lender and any junior financing such as a borrowed equity loan or other financing outside of the 504 Project. Payments to the Third Party Lender participating in a 504 project are included in the “loan payment to the lender” and SBA determined that no additional clarification for this issue is necessary.

Several commenters who objected to the proposed change recommended that SBA adopt Internal Revenue Service (IRS) standards for holding companies and not require additional regulatory requirements. IRS rules generally do not consider or address SBA Loan Program Requirements such as the prohibition of financing for investors or landlords. While SBA permits eligible EPCs to hold certain assets financed for the benefit of the OC, it is not the intent of SBA to permit the EPC to profit from its relationship with the OC.

It is SBA's positon that routine maintenance costs, Project debt payments, and repairs are already included in the permissible direct expenses of holding the property and as such would be permissible under the regulation. Additional guidance on this issue will be placed in SOP 50 10.

SBA also proposed to add language to § 120.111(a)(6) to provide the Agency may, in its discretion and in consultation with the SBA Lender, require the guaranty of individuals or entities with less than 20 percent ownership of the EPC or the OC when circumstances warrant. In 2010, the Small Business Jobs Act of 2010, Public Law 111-240, 124 Stat. 2504 (September 27, 2010) (the “2010 Jobs Act”) increased the maximum loan size for 7(a) and 504 Loans. SBA now receives more loan requests from applicants with multiple owners who may hold less than 20 percent of the company regardless of managerial responsibilities, corporate titles or ownership interest, if any.

SBA received 24 comments on this proposed change: 18 in full support, five in support with modification, and one objecting to the proposed change. Recommended modifications to this paragraph included revising the language to provide greater detail as to when individuals could be required to guarantee the loan, and to provide authority to both SBA and delegated lenders to determine when there are sufficient reasons to do so. One commenter expressed concern that the proposed change would be “all encompassing” and may result in unintended consequences.

It is prudent for SBA to require a lender to obtain a guaranty when one or more individuals or entities have the authority and responsibility to manage operations regardless of their ownership interest in the applicant business. SBA will generally not require individuals or entities with less than 20 percent ownership of the applicant business to guarantee the loan when the lender obtains a guaranty from those with 20 percent or more ownership interest. SBA considered and accepts the recommendation to include the authority for delegated lenders to obtain full or limited guaranties from appropriate individuals or entities regardless of their ownership interest in the EPC or the OC, and is modifying the rule to state that SBA and, for loans processed under a SBA Lender's delegated authority, the SBA Lender, may determine when credit or other reasons make it necessary to obtain a full or limited guaranty from appropriate individuals or entities. SBA will provide additional guidance on the guaranty requirements in SBA SOP 50 10. In addition, as stated above, SBA is modifying § 120.111(a)(6) to replace the term “Lender” with “SBA Lender.”

Section 120.130 Restrictions on uses of proceeds. SBA proposed moving § 120.160(d) to § 120.130 as new paragraph (e) and redesignating § 120.130 (e) and (f) as paragraphs (f) and (g), respectively. The new paragraph (e) includes the text currently found in § 120.160 Loan Conditions, in paragraph (d), Taxes, which prohibits the use of proceeds for payment of past-due Federal or state payroll taxes. This requirement is a restriction, not a loan condition, and is appropriately moved to § 120.130(e). SBA also proposed revising what will become paragraph (g) to remove an inaccurate reference to § “120.203” and replacing it with § “120.202.” Section 120.203 cited in this paragraph was removed in 1996. SBA received eight comments, one in support and seven requesting a modification. The majority of commenters asked SBA to consider expanding the prohibited use of proceeds to include other similar taxes, such as sales taxes, that may be required to be collected by the small business in trust on behalf of a Federal, state or local government entity. SBA has considered and is accepting the recommendation to include the references to other local, state and Federal taxes in the final rule.

Section 120.160 Loan conditions. SBA proposed adding the word “generally” to the last sentence of § 120.160(a) to clarify that SBA may require a personal guaranty of an individual or entity with less than five percent ownership in the applicant business when the circumstances warrant. SBA received 24 comments concerning this proposed change: 22 in support, with 11 of the supporters recommending modification. Only two commenters expressed concerns, one that wanted to require no guaranties from non-owners, while another observed that this requirement is not currently included in the regulation. Recommendation was also made to use the defined term “SBA Lender” as it is appropriate for both the 7(a) and 504 Loan Programs. Finally, one commenter expressed concern that the proposed change was “all encompassing” and may result in unintended consequences. SBA agrees with the recommendation that the term “SBA Lender” should be used since the regulation includes both 7(a) lenders and CDCs, and will replace “Participating Lender” with “SBA Lender.” As stated in the discussion of guaranties for EPCs and OCs in § 120.111 above, the 2010 Jobs Act increased the maximum loan size for 7(a) and 504 loans. Small businesses needing larger loans are more likely to have complex ownership structures and multiple owners, where each owner may hold less than five percent of the company regardless of managerial responsibilities or corporate titles. The current regulation language restricts SBA from requiring personal guaranties from individuals with less than five percent ownership under any circumstance.

SBA deems it prudent to maintain discretion for SBA, in consultation with the Lender, to require guaranties from individuals or entities with less than 20% ownership of the applicant business when they are critical to the extension of credit. The removal of the reference to 5% as the strict measure for required guaranties will allow SBA to obtain full or limited guaranties from appropriate individuals or entities regardless of their ownership interest in the applicant business, if any, when deemed necessary. In addition, SBA considered and is accepting the recommendation to provide this discretion to delegated SBA Lenders as well and, therefore, is modifying the rule to state that SBA and, for loans processed under an SBA Lender's delegated authority, the SBA Lender, may determine when credit or other reasons make it necessary to obtain a full or limited guaranty from appropriate individuals or entities regardless of their ownership interest, if any, in the applicant business. SBA will provide additional guidance on the guaranty requirements in the appropriate SBA SOP.

Twenty commenters recommended the proposed changes to the personal guaranty rules be provided in SOPs, where exceptions can be made. While SBA provides additional detail on guaranty requirements in its SOPs, program-wide rules are appropriately included in this regulation. SBA is amending this section as proposed with the modifications discussed above.

Section 120.194 Use of computer forms. SBA is removing § 120.194 in its entirety, and reserving this section for future use. Technology has rendered this regulation unnecessary. SBA received nine comments on this proposed change: Eight in support of the proposed change and one objection. The objection was based on a misconception that SBA Lenders will no longer be able to submit loan packages using their own or commercially available lending software. SBA continues to work with participants and their software sources to expand electronic access in all program applications. SBA is removing this section as proposed.

Section 120.214 What conditions apply for variable interest rates? SBA is not proceeding with the proposed revisions to § 120.214 regarding when the allowable base rate is determined and when adjustments in the variable interest rate will be permitted. SBA received 10 comments, generally in support of a change, with some comments indicating that the guidance did not fully address the issues regarding the timing of rate changes and base rates. After reviewing current market activity, the impact of rate adjustments on the small business borrower, and the potential need to further simplify the guidance, SBA will conduct a more thorough discussion with internal and external stakeholders on how best to manage interest rate changes in the 7(a) Loan Program. SBA will not make changes to this section at this time.

Section 120.220 Fees that Lender pays SBA. As set forth in section 7(a)(31) of the Small Business Act (15 U.S.C. 636(a)(31)) (“the Act”), SBA is adding a new paragraph (a)(3) to § 120.220 to codify the statutory waiver of the up-front guaranty fee for SBA Express loans made to businesses owned and controlled by a veteran or spouse of a veteran (as defined in the Act) for fiscal years when the subsidy rate for the 7(a) program is zero. SBA received eight comments regarding the proposed changes. Of those, seven commenters recommended that SBA specifically use the term “SBA Express” to identify loans delivered under section 7(a)(31) of the Act. The conditions a business must meet to qualify for this fee waiver will be explained in SBA Loan Program Requirements.

In § 120.220(b), SBA is amending the regulation to advise Lenders to pay the guaranty fee electronically and revising the timeframe within which a Lender must pay the guaranty fee to SBA for loans with a maturity of 12 months or less (“short-term loans”). SBA is revising the timing of payment of the fee on a short-term loan from the “time of application” to “within 10 business days of SBA's approval of the loan.” The current requirements were implemented when Lenders paid fees using checks. Currently, fees are paid electronically through www.pay.gov, and requiring fee payments with the application on short-term loans can delay application processing and turn-around times. SBA received eight comments on this proposed change, all in support of the change. SBA is also amending paragraph (b) of this section to permit a Lender to be reimbursed by the Borrower for the guaranty fee on a short-term loan only after the Lender pays the fee to SBA. SBA will not permit Lenders to collect the guaranty fee from the Borrower prior to paying SBA. The final rule is incorporating both the 10 day fee payment guidance and the timeline for collection of the fee from the Borrower.

In § 120.220(c), SBA also proposed and is adopting the rule change removing the first two sentences which state when SBA will refund the guaranty fee paid on a short-term loan. The additional 10 day time period post-loan approval for payment of the fee negates the need for refunds. SBA received eight comments supporting the proposed change in the timing of payment to SBA of guarantee fees on loans of 12 months or less, but the commenters asked that SBA provide a provision for refund of the guaranty fee of an approved loan if the Lender had not made any disbursements. The guaranty fee is limited to one quarter of one percent of the guaranteed portion of the short-term loan and is only refundable if a short-term loan application is withdrawn by the Lender prior to approval by SBA, if SBA declines to guarantee the loan, or if SBA approves the loan but substantially changes the terms and SBA's modified terms are unacceptable to the Lender. SBA deems the fee earned for short-term loans once the SBA loan number is issued. SBA is not adopting the suggestion regarding refunds on short-term loans.

Section 120.221 Fees which the Lender may collect from a loan applicant.

SBA is adopting, as proposed, the addition of an introductory paragraph stating that, unless otherwise permitted by SBA Loan Program Requirements (e.g., the guaranty fee under § 120.220), the fees listed in § 120.221 are the only fees a Lender is permitted to charge and collect from an Applicant or Borrower. SBA received eight comments on this proposed change, all supporting the improvement in clarity. SBA also proposed to remove the contents of § 120.221(e), as it is not a fee a Lender may collect from a loan applicant in accordance with the stated purpose of § 120.221. SBA will insert in its place language which permits Lenders to collect fees for legal services. This change combines and provides clear guidance on the only fees a Lender is permitted to charge and collect from an Applicant or Borrower. Eight comments were received that suggested the language be revised to specifically include legal fees provided by “either outside or in-house counsel.” SBA has determined that the proposed language was somewhat cumbersome and revised the language slightly to incorporate SBA permits the Lender to charge the Borrower for legal services rendered on an hourly basis. SBA is revising the paragraph (e) to read “Legal services. Lender may charge the Borrower for legal services rendered on an hourly basis.”

Section 120.222 Fees which the Lender or Associate may not collect from the Borrower or share with third parties. As proposed, SBA is retitling § 120.222 from “Fees which the Lender or Associate may not collect from the Borrower or share with third parties” to “Prohibition on sharing premiums for secondary market sales.” SBA is also removing the contents of paragraphs (a), (b), (c), (d), and (e), and inserting the following language: “The Lender or its Associate may not share any premium received from the sale of an SBA guaranteed loan in the secondary market with a Service Provider, packager, or other loan-referral source.” All eight comments received indicated support for this proposed change. This proposed change completes the consolidation and re-organization of §§ 120.221 and 120.222, by clearly identifying the only fees that a Lender may charge and collect from an applicant. Unless otherwise permitted by SBA Loan Program Requirements, any fee not identified in § 120.221 is prohibited. SBA is retaining the prohibition on the sharing of secondary market fees in § 120.222 for consistency with 13 CFR 103.5(c), which prohibits a Lender from sharing any secondary market premium with a lender service provider. SBA is amending this section as proposed.

Section 120.394 What are the eligible uses of proceeds? For the Builders Loan Program, SBA proposed to increase the regulatory limitation on use of proceeds for land acquisition from 20 percent to 33 percent. SBA received eight comments regarding this proposed rule change, all in support. SBA is amending this section as proposed.

Section 120.400 Loan Guarantee Agreements. Section 120.400 includes a cross reference to §§ 120.441(b) and 120.451(d). SBA proposed to delete these sections and is deleting both in this final rule. In addition, SBA proposed revisions to § 120.440, which it is adopting as proposed with a minor modification. Accordingly, SBA is revising the cross reference in § 120.400 to read “See also 120.440(c) concerning Supplemental Guaranty Agreements.” Although this revision was not included in the proposed rule, SBA is revising § 120.400 to correct this inadvertent omission from the proposed rule.

Multiple Sections—On-Site/Off-Site Reviews for 7(a) Lenders, CDCs and Microloan Intermediaries (“Intermediaries”). Due to SBA's improved electronic methods, virtual reviews, such as Analytical Reviews, may cover much of what was previously performed in the scope of “on-site” reviews, diminishing the distinction between “off-site” and “on-site” reviews and allowing for more cost-effective reviews. Therefore, SBA proposed to remove all references to “on-site” reviews in §§ 120.410(a)(2), 120.424(b), 120.433(b), 120.434(c), 120.630(a)(5), 120.710(e)(1), 120.812(c), 120.816(c), 120.839, 120.841(c), 120.1050, 120.1051, 120.1070 and 120.1400(c)(4). SBA will retain the term “review/examination assessments” in these regulations. SBA also proposed to replace references to “off-site” reviews and monitoring with “monitoring” in §§ 120.1025 and 120.1051(a). SBA received eight comments on the proposed changes, with no objections.

SBA is amending the specified sections to remove the terms “on-site” and “off-site” as proposed.

SBA proposed and is adopting replacement of the term “Good Standing” with “Satisfactory” as it relates to a Lender's status with its other Federal regulators in §§ 120.410(e), 120.630(a)(4), and 120.1703(a)(4). SBA will determine if a Lender is considered “Satisfactory” by its other regulators based on, for example, information in published orders/agreements and call reports. Eight commenters provided no objection to the proposed changes.

Undesignated Center Heading—The Certified Lenders Program. SBA is adopting the proposed rule change to the heading immediately following § 120.435 in Subpart D—Lenders as proposed. SBA is removing “Certified Lenders Program (CLP)” and inserting in its place “Delegated Authority Criteria.” There were eight comments received on this change with no objections.

Section 120.440  The Certified Lenders Program. SBA is adopting the proposed rule change to remove the heading and remove §§ 120.440 and 120.441 as proposed. Implementation of more efficient technology-based processing, closing, servicing, and liquidation render this delivery method unnecessary and obsolete. SBA will remove the existing CLP language and insert guidance for Delegated Authority Criteria (see addition of Delegated Authority Criteria below). SBA received eight comments on this proposed change with no objections.

New Section 120.440 How does a 7(a) Lender obtain delegated authority? SBA is adopting the proposed rule change adding the criteria for initial approval or renewal of delegated authority in this section as proposed with a minor modification to the heading as discussed below. As stated in the preamble to the Notice of Proposed Rulemaking, these criteria are essentially identical to the criteria currently included in SBA's SOP 50 10 5(I), Subpart A for the 7(a) Loan Program delegated authorities (e.g., PLP (including PLP-EWCP), SBA Express and Export Express Programs). In applying these criteria when processing requests for PLP-EWCP authority, SBA will continue to also consider experience in providing trade finance to exporters and active participation in SBA's EWCP program. In addition, for lenders participating in the Delegated Authority Lender Program of the Export-Import Bank (or any successor Program), such lenders are eligible to participate in the PLP-EWCP Program, pursuant to 15 U.S.C. 636(a)(2)(C). SBA received a detailed comment and recommendations from a trade association as well as seven other comments supporting the trade association's position. The trade association commented they have no objection to the inclusion in regulations of the criteria for a Lender to obtain delegated authority and noted the listed criteria is similar to that currently provided in other SBA Loan Program Requirements. However, the trade association objected to paragraph (b) of the proposed section, which states delegated authority decisions are final. The trade association strongly recommended SBA provide a mechanism by which a Lender, if it is denied delegated authority, could provide SBA with additional information to overcome and administratively appeal such decision. SBA reviewed the suggested modification and determined that an additional appeal of SBA's decision to deny a Lender delegated authority is not necessary because, if delegated authority is declined, the Lender will still be able to process loans on a non-delegated basis and, when the Lender has overcome the reasons for the decline, it may re-apply. SBA is amending the regulation as proposed with a slight modification in the heading to clarify this section applies to 7(a) Lenders.

Section 120.441 How does a Lender become a CLP Lender? SBA is removing and reserving § 120.441 as proposed. SBA received eight comments, all in support of the proposed change.

Section 120.451 How does a Lender become a PLP Lender? SBA is removing and reserving § 120.451 as proposed. The process for lenders to obtain delegated authority for the 7(a) program, which includes Preferred Lender Program authority, will be set forth in § 120.440 pursuant to this final rule. There is no longer a need for the specific regulation at §  120.451. SBA received eight comments, all of which provided no objection to the proposed change.

Section 120.524 When is SBA released from liability on its guarantee? In this regulation, SBA proposed to clarify its rights to collect monies paid on a guaranty from which the Agency determines it has been released of liability. This includes judicial remedies and the right to offset funds due the Lender for the guaranty purchase of another loan. SBA's right to seek these remedies arises under contract law as interpreted by the courts. SBA received eight comments on this proposed change, all of which supported the rights provided to SBA under the proposed language. The eight commenters supported the proposed language; however, they recommended the language be amended to state such remedies will only be undertaken if all other attempts to collect from the lender have failed. Commenters also noted SBA is removing the specific language “responsible for those events” in paragraph (b) and requested an explanation of this specific change.

The Agency's ability to recover on a loan guaranty is not limited to the actions of the current holder of the Note. For example, when a Lender acquires a guaranteed loan from another lender, the acquiring lender is ultimately responsible for any action resulting in a loss on the loan, whether the loss is the result of its actions or inaction, or the actions or inaction of the original lender. SBA is amending this section as proposed.

Section 120.660  Suspension or revocation. SBA is adopting the proposed rule change in § 120.660(a) to provide that decisions regarding a temporary suspension or revocation of a Lender from SBA's Secondary Market under this regulation be made jointly by the Director, Office of Financial Assistance (D/FA) and the Director, Office of Credit Risk Management (D/OCRM). SBA received comments from eight commenters regarding the provisions in this proposed regulation; all registered no objection to the change. In addition, SBA is adopting as proposed a limit of no more than 120 calendar days for temporary suspensions under this regulation, and no more than two years under this regulation for temporary revocations of the privilege of a Lender, broker, dealer or Registered Holder to sell, purchase, broker or deal in loans or Certificates in SBA's Secondary Market. All eight commenters registered support for the timeframes in the proposed rule.

In § 120.660(a)(1)(ii), SBA is removing references to SBA Form 1085 from the current regulation, as proposed. SBA Form 1085 is no longer in use in the 7(a) Loan Program. SBA received only one comment and it was in support of the change. In § 120.660(a)(3), SBA is adding additional reasons under which SBA may temporarily suspend or revoke a Lender's privilege to participate in SBA's Secondary Market. As proposed, SBA may temporarily suspend or revoke a Lender from participation in SBA's Secondary Market when (1) a Lender receives from its primary Federal or state regulator (including SBA): (a) A cease and desist order; (b) a consent agreement affecting capital or commercial lending issues; or (c) a supervisory action citing unsafe or unsound banking practices or other items of concern to SBA that may create potential risk to SBA through loan sales; or (2) a Lender receives a going concern opinion issued by its auditor. SBA received eight comments all of which supported the proposed change with some modifications. The suggested modifications centered on better defining the phrase, “other items of concern to SBA . . .” and the practicality of providing SBA with notice within five business days from the issuance of the regulatory action or going concern opinion. SBA wants to avoid situations in which current supervisory actions from a Federal or state regulator are renamed, or new actions involving unsafe or unsound lending practices are created and are disclosed, but are not expressly listed in the SBA regulation.

SBA considered the comments provided. SBA has modified the text to provide a more complete explanation of supervisory actions which are subsequently renamed or have yet to be defined. This ensures that the grounds for temporary suspension or termination from SBA's Secondary Market are not limited by the prevailing terminology used by Federal or state regulators. Regarding the practicality of a Lender providing SBA notice, commenters raised the issue of disclosure of non-public supervisory actions and the date by which the required disclosure of public supervisory actions should be measured. At this time, Lenders will be required to notify SBA only for public actions.

SBA also modified the final rule to define the required notification date to SBA as five business days (or as soon as practicable thereafter) from the date that the regulatory action is placed into the public domain. This will establish a verifiable benchmark for when notice from the Lender is due to SBA. Note, SBA does not intend to require a Lender to disclose a non-public supervisory action unless SBA notifies the Lender that SBA has either an agreement with or consent from the regulator issuing the action. Lenders receiving a going concern opinion will have five business days (or as soon as practicable thereafter) from the date of the auditor's letter indicating a going concern opinion to provide written notice to SBA.

SBA also proposed to add a new paragraph (d) to this section to provide for early termination of a temporary suspension or revocation at the joint discretion of the D/FA and the D/OCRM, if warranted for good cause. SBA received eight comments regarding this proposed change, all in support, and SBA is adding the paragraph as proposed.

Section 120.823 CDC Board of Directors. SBA proposed to revise § 120.823(c)(5) to eliminate the language that prevents a CDC Board member from serving on the board of another entity, except for civic or charitable organizations not involved in financial services or economic development. SBA received 15 comments in support of this proposed change.

SBA also proposed in § 120.823(d)(4)(ii)(C) to clarify that individuals serving on the Loan Committee of a CDC do not have to be members of the CDC or the CDC's Board of Directors. SBA received 15 comments regarding this proposed change, all in support. Twelve of the commenters recommended § 120.823(d)(4)(ii)(A) also be revised for consistency with the proposed revision in § 120.823(d)(4)(ii)(C). SBA considered these comments and agrees that individuals who are not CDC members, shareholders, or Board members may be appointed by the Board of Directors to serve on the Loan Committee provided that the individual has background and expertise in financial risk management, commercial lending, or legal issues relating to commercial lending and is not associated with another CDC.

In order to ensure consistency in this section on Loan Committees, SBA will revise paragraphs (d)(4)(ii)(A), (d)(4)(ii)(B), (d)(4)(ii)(C) and (d)(4)(ii)(E) references to members of the Loan Committee. SBA will revise the terms “member” and “committee member” in this section to read “Loan Committee member”.

SBA also received one comment requesting reconsideration of SBA's general prohibition in § 120.820 against a CDC having an affiliation with a 7(a) Lender now that CDCs may offer 7(a) loans under the Community Advantage Pilot Program. Community Advantage is currently a pilot program—for which SBA has granted a regulatory waiver of the affiliation prohibition. SBA is not considering changes to this general prohibition at this time, and is adopting the changes to this section as described above.

Section 120.839 Case-by-case application to make a 504 loan outside of a CDC's Area of Operations. SBA proposed to replace the term “District Offices” in this section with “504 loan processing center” to reflect the SBA office that processes 504 loan applications. SBA received 13 comments supporting this change. One of the 13 commenters expressed concern with removing the District Office from the decision process. The commenter noted that a District Office may have local insights on markets not available to the 504 loan processing center. However, as explained in the preamble to the proposed rule, SBA is making this change to reflect the SBA office that processes 504 loan applications. Although SBA is not making any changes to the rule as proposed, the 504 loan processing center may consider input from the local District Office when making such a determination to allow a CDC to make a loan outside of its Area of Operations.

Section 120.884 Ineligible costs for 504 loans. SBA is amending this section to define heavy duty construction equipment in § 120.884(e)(3) without reference to the IRS definition because the IRS no longer publishes a definition for “capital equipment.” SBA is adding the requirement that the equipment have a remaining useful life of at least 10 years. SBA received one comment on this section which supported the change, yet expressed concern about adding a useful life requirement. In order to be consistent with the overall purpose of the 504 program, SBA will only permit the financing of construction equipment if it is heavy duty construction equipment integral to the business' operations with a remaining useful life of at least 10 years.

Section 120.1060 Confidentiality of Reports, Risk Ratings and related Confidential Information. SBA proposed a limited expansion of its definition in §  120.1060 of “permitted parties” to include a party who demonstrates a legitimate need to know Review/Exam Report information, Risk Rating, and Confidential Information for the purpose of assisting in improving an SBA Lender's, Intermediary's or Non-Lending Technical Assistance Provider's (NTAP's) SBA program operations in conjunction with SBA's Lender Oversight Program and SBA's portfolio management. This limited expansion of permitted parties may include the lender's parent entity, directors, auditors and those lender consultants under written contract specifically to assist the Lender in addressing SBA Findings and Corrective Actions Required to SBA's satisfaction. Consultants do not include Lender Service Providers. The change codifies SBA's practice of approving disclosure of Reports, Risk Rating, and Confidential Information for the expanded group of permitted parties, obviating the need for case-by-case approval and the use of a Confidentiality Agreement for these parties going forward. SBA received eight comments in support of this proposed change. Commenters suggested that it may also be appropriate for SBA to consider allowing Lenders to share SBA reports and other oversight information with their regulators in order to improve the overall quality of the program. Generally, SBA manages information sharing with other regulators on a case-by-case basis and in conjunction with agency-to-agency information sharing agreements. If a Lender's other regulator requests § 120.1060 information, the Lender should refer the regulator to SBA. SBA is adopting the change to this section as proposed.

Section 120.1070 Lender oversight fees. SBA proposed to amend this section to categorize the fee components as Examinations, Reviews, Monitoring, and Other Lender Oversight Activities. The proposed section also provided that SBA has discretion in how it allocates lender oversight costs to Lenders to allow contracting flexibility in how SBA pays for this cost and the fair and efficient allocation of costs to Lenders. The change specifies, consistent with SBA's current practice and current contracts, that, in general, where the costs that SBA incurs for the oversight activity are specific to a Lender, SBA will charge that Lender for the actual costs. Where the costs SBA incurs for the oversight activity are not sufficiently specific to a particular Lender and a flat fee is paid to a vendor, SBA may charge a Lender based on that Lender's portion of SBA guaranties in the portfolio or segment of the portfolio that the activity covers. SBA received nine comments regarding the proposed change. One commenter suggested SBA change the use of the word “Lender” to “SBA Lender,” which is a defined term in the regulations. The term “SBA Lender” is defined as 7(a) Lenders and CDCs in 13 CFR 120.10. This regulation only applies to 7(a) Lenders in accordance with 15 U.S.C. 634(b)(14). Therefore, SBA is not adopting the suggestion to use “SBA Lender” in this regulation.

Another commenter, a trade association, joined by seven other commenters, stated that, while they have no objection to the proposed change, they have concerns that SBA has virtually no incentive to limit the costs that it imposes on program participants for the review function. The trade association expressed concern that increasing oversight costs could, at some point, make program participation too expensive for some lenders, thus limiting small business' access to critically needed capital. The trade association recommended that SBA continue to find ways to make the OCRM review function as cost‐effective as possible for SBA and for program participants.

SBA disagrees that it has little incentive to limit the costs of lender oversight. SBA is committed to developing and operating a robust risk management program at the most efficient cost possible and to reducing costs where possible. SBA will continue to minimize its oversight costs and the fees it charges program participants through competitive bidding processes, using fixed price contracts where appropriate, contract monitoring, and efficiently coordinating the work with its contractors.

In addition, one commenter requested that SBA publish its lender oversight fees annually. SBA lender oversight fees do not always change from year-to-year, so it may not be necessary to publish each fee every year. However, generally, when a lender oversight fee changes, SBA communicates the fees to all 7(a) Lenders via SBA notice. SBA is adopting this section as proposed.

Section 120.1400 Grounds for enforcement actions—SBA Lenders. SBA proposed to amend § 120.1400(a) to provide that by making 7(a) guaranteed loans or 504 loans after a certain date, SBA Supervised Lenders (except Other Regulated Small Business Lending Companies (SBLCs)) or CDCs, as applicable, consent to the appointment of a receiver and such injunctive relief or other equitable relief as appropriate, and waive in advance any defenses to such relief as sought by SBA, in connection with an enforcement action.

There were responses from 27 commenters concerning the proposed changes in this section. There were eight commenters in support of the changes. However, there were some concerns that SBA continues to cite SBA Form 750, Loan Guaranty Agreement (Deferred Participation), as the document that Lenders should rely on as “fully” setting forth 7(a) Loan Program Requirements, considering that the current version of the SBA Form 750 in use is outdated and may not be reflective of current policy and SBA Loan Program Requirements. There were eight commenters who were concerned about the SBA's intention when imposing a prior waiver provision—that is, whether the SBA Supervised Lender or CDC would be waiving only its defenses against having SBA bring the matter before the court, or whether it also would be waiving all of its defenses with respect to all of the actions that SBA may be seeking to enforce against the SBA Supervised Lender or CDC, and sought additional clarification on this point.

There were 18 commenters who voiced objection to the proposed language as overly broad and not necessary under the current regulations. The objecting commenters stated that, while they agree SBA has a right to regulate the 504 Loan Program, they believe that the right of SBA to appoint an uncontested receiver for an SBA Supervised Lender or CDC over-reaches the SBA's regulatory authority over these entities. The objectors believe the language in the proposed rule is unnecessarily broad in that it seeks to include a waiver of any and all defenses an SBA Supervised Lender or CDC may validly raise to an enforcement action by the SBA. Additionally, the commenters stated that while SBA may be able to manage and service the SBA loan portfolio, they believe SBA has no interest in managing and servicing the non-SBA loans of a CDC or an SBA Supervised Lender that is a Non-Federally Regulated Lender or managing the contracts CDCs may have with their state, city, or other governmental organizations.

SBA considered the receivership comments concerning SBA Supervised Lenders and CDCs, but determined that the proposed provisions that allow SBA to seek receiverships by consent will provide the Agency added flexibility in protecting and safeguarding the security and integrity of these federally funded loan programs. SBA is conditioning its guarantee of 7(a) loans made by SBA Supervised Lenders (except Other Regulated SBLCs) and 504 debentures after a certain date on consent to this relief in connection with an enforcement action because the injury to SBA and its supervision and regulatory oversight of the SBA Supervised Lender or CDC due to the SBA Supervised Lender's or CDC's default under its agreement(s) with SBA would be irreparable and the amount of damage would be difficult to ascertain, making this relief necessary. Consent to receivership is not without precedent in Federal agency practice and has been upheld by the courts as valid and legally enforceable. SBA identified an example of such a case in the proposed rule, U.S. v. Mountain Village Company, 424 F. Supp. 822 (D. Mass. 1976). The consent to receivership does not mandate the appointment of a receiver in connection with every enforcement action. SBA will review the facts and circumstances of the enforcement action when deciding whether or not to seek the appointment of a receiver and in determining the scope of the receiver's duties and powers, including whether the receiver's duties and powers will be limited to taking possession of, servicing and/or selling or transferring the 7(a) or 504 loan portfolios.

After careful consideration of comments, SBA believes that it is in the best interests of the taxpayers for SBA to have the added flexibility of seeking receiverships, if necessary or appropriate, when taking enforcement actions. However, in response to comments, SBA has revised the language of the proposed rule to clarify that along with the consent to the remedies in §§ 120.1500(c)(3) or 120.1500(e)(3), the SBA Supervised Lender or CDC waives in advance any right to contest the validity of the appointment of a receiver. SBA has not adopted the proposed regulatory text providing for a waiver in advance of any defenses to the relief sought by SBA.

Section 120.1500 Types of enforcement actions—SBA Lenders. SBA proposed to revise the language permitting the Agency to initiate a request for the appointment of a receiver of an SBA Supervised Lender in § 120.1500(c)(3) and proposed to add language permitting SBA to initiate a request for the appointment of a receiver of a CDC in § 120.1500(e)(3). After careful consideration of comments received, SBA believes that it is in the best interests of the taxpayers for the Agency to have the added flexibility of seeking receiverships, if necessary or appropriate, when taking enforcement actions. SBA has therefore determined that it will amend this section as proposed. There were responses from 27 commenters concerning the proposed changes in this section. There were 19 commenters who voiced objection to the proposed language as overly broad and not necessary under the current regulations. Again, the objecting commenters provided that, while they agree SBA has a right to regulate its loan programs, they believe that the right of SBA to appoint an uncontested receiver for a CDC over-reaches the SBA's regulatory authority over these entities.

While the objectors did support the need for proper oversight and supervision of SBA Supervised Lenders and CDCs, they also believe that SBA Supervised Lenders and CDCs should be afforded their constitutional right to notice and a hearing before being deprived of their property rights and interests. SBA considered the constitutional issue of due process/waiver of notice. Consent to receivership in favor of Federal agencies—including without notice—has been upheld in Federal court as valid, enforceable and meeting constitutional due process. SBA identified an example of such a case in the proposed rule, U.S. v. Mountain Village Company, supra.

As stated above, SBA considered the receivership comments concerning SBA Supervised Lenders and CDCs, but determined that the proposed provisions that allow SBA to seek receiverships by consent will provide the Agency with added flexibility in protecting and safeguarding the security and integrity of these federally funded loan programs. SBA is conditioning its guarantee of 7(a) loans made by SBA Supervised Lenders (except Other Regulated SBLCs) and 504 debentures after a certain date on consent to this relief in connection with an enforcement action because the injury to SBA and its supervision and regulatory oversight of the SBA Supervised Lender or CDC due to the SBA Supervised Lender's or CDC's default under its agreement(s) with SBA would be irreparable and the amount of damage would be difficult to ascertain, making this relief necessary. The consent to receivership does not mandate the appointment of a receiver in connection with every enforcement action. SBA will review the facts and circumstances of the enforcement action when deciding whether or not to seek the appointment of a receiver and in determining the scope of the receiver's duties and powers, including whether the receiver's duties and powers will be limited to taking possession of, servicing and/or selling or transferring the 7(a) or 504 loan portfolios.

Section 120.1600 General procedures for enforcement actions against SBA Lenders, SBA Supervised Lenders, Other Regulated SBLCs, Management Officials, Other Persons, Intermediaries, and NTAPs. SBA proposed to add language regarding the procedures for the appointment of a receiver over a CDC or an SBA Supervised Lender in §§ 120.1600(a), 120.1600(a)(6) and 120.1600(b)(4). The proposed amendments allow SBA to follow applicable procedures under Federal law to obtain the appointment of a receiver and to enforce an SBA Supervised Lender's or CDC's consent and waiver in advance. The comments that SBA received on this section repeated the comments received on §§ 120.1400 and 120.1500. SBA considered the comments received on this section, and for the reasons stated above in response to the comments received on §§ 120.1400 and 120.1500, SBA has determined the proposed amendments to § 120.1600 will provide the Agency added flexibility in protecting and safeguarding the security and integrity of the federally funded 7(a) and 504 Loan Programs. SBA is amending this section as proposed.

Section 120.1707 Seller's retained Loan Interest. SBA proposed to replace the execution of a new First Lien Position 504 Loan Pool Guarantee Agreement with an allonge. This would obligate the purchaser of a Seller Receipt in the First Lien Position 504 Loan Pooling (“FMLP”) Program to the same terms and conditions of the First Lien Position 504 Loan Pool Guarantee Agreement. No comments were received. SBA is adopting the change into the final rule as proposed.

Subpart K—Establishment of an SBA Direct Loan Program for Systemically Important Secondary Market Broker-Dealers (SISMBD Loan Program). SBA proposed to remove §§ 120.1800 through 120.1900. These regulations relate to rules which establish a temporary, short-term loan program for systemically-important secondary market broker-dealers. Sections 120.1800-120.1893 set forth the program participation criteria and the conditions under which qualified participants could obtain secured debt financing from SBA. Section 120.1900 established a sunset date for the program of no later than February 16, 2011, with all loan proceeds due to be paid in full by no later than February 16, 2013. SBA received seven comments on its proposal to remove these regulations. All commenters supported the removal of the regulation and, as a result, SBA is removing these regulations in the Final Rule.

Compliance with Executive Orders 12866, 12988, 13132, 13563, 13771, and 13777, the Paperwork Reduction Act (44 U.S.C., Ch. 35), and the Regulatory Flexibility Act (5 U.S.C. 601-612).

This final rule is the result of a proposed rule that the Office of Management and Budget (OMB) determined is not a “significant” regulatory action for the purposes of Executive Order 12866. This is not a major rule under the Congressional Review Act, 5 U.S.C. 800.

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

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

SBA's Business Loan Programs operate through the Agency's lending partners, which are 7(a) Lenders for the 7(a) Loan Program, Third Party Lenders and CDCs for the 504 Loan Program, Microloan Intermediaries for the Microloan Program, and ILP Intermediaries for the ILP Program. SBA's SBG Program operates through Surety Bond Companies. The Agency has participated in public forums and meetings which have included outreach to hundreds of its lending partners and surety bond companies to seek valuable insight, guidance, and suggestions for program reform.

On January 30, 2017, President Trump signed Executive Order 13771, Reducing Regulation and Controlling Regulatory Costs, which, among other objectives, is intended to ensure that an agency's regulatory costs are prudently managed and controlled so as to minimize the compliance burden imposed on the public. For every significant regulation an agency proposes to implement, this Executive Order requires the agency to (i) identify at least two existing regulations that the agency can cancel; and (ii) use the cost savings from the cancelled regulations to offset the cost of the new regulation. On February 24, 2017, the President issued Executive Order 13777, Enforcing the Regulatory Agenda, which further emphasized the goal of the Administration to alleviate the regulatory burdens placed on the public. Under Executive Order 13777, agencies must evaluate their existing regulations to determine which ones should be repealed, replaced, or modified. In doing so, agencies should focus on identifying regulations that, among other things, eliminate jobs or inhibit job creation; are outdated, unnecessary or ineffective; impose costs that exceed benefits; create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies; or implemented Executive Orders or other Presidential directives that have been rescinded or substantially modified. SBA has reviewed this final rule in light of these two new Executive Orders.

Regulation elimination as proposed for this rule will eliminate duplication of effort costs for sureties, lenders and certified development companies to develop computerized forms and sun-sets two prior SBA initiatives the CLP lender designations and the SBA Director Program for Systematically Important Secondary Market Broker-Dealers (SISMD Loan Program). The cost savings of sun-setting the two programs have already been absorbed by SBA so no further cost savings is anticipated.

The final rule increases the Quick Bond eligible contract limit in § 115.30 from $250,000 to $400,000. This action reduces administrative burden that results in cost savings to the sureties.

The following 29 regulations are removed as of the publication of this Federal Register document:

(1) 13 CFR 120.194 Use of computer forms

(2) 13 CFR 120.441 How does a Lender become a CLP Lender

Subpart K—Establishment of an SBA Direct Program for Systematically Important Secondary Market Broker-Dealers (SISMD Loan Program) which consists of the following regulations:

(3) 13 CFR 120.1800 Definitions used in subpart K

(4) 13 CFR 120.1801 Program Purpose

(5) 13 CFR 120.1802 How does a broker-dealer participate in the SISMID Loan Program?

(6) 13 CFR 120.1810 What is a Systematically Important SBA Secondary Market Broker-Dealer (SISMBD)?

(7) 13 CFR 120.1820 What are the basic eligibility requirements for SBA designation as a Systemically Important Secondary Market Broker-Dealer?

(8) 13 CFR 120.1821 What is the process to obtain designation as a Systematically Important Secondary Market Broker-Dealer?

(9) 13 CFR 120.1822 What is the process to apply for an SISMBD Loan?

(10) 13 CFR 120.1823 Creditworthiness

(11) 13 CFR 120.1824 How will an SISMBD receive notice of an approval of denial of a loan or request for an advance under an SISMBD Loan?

(12) 13 CFR 120.1825 May an SISMBD request reconsideration after denial?

(13) 13 CFR 120.1830 What are the terms and conditions of an SBA loan to an SISMBD?

(14) 13 CFR 120.1831 Is there a limit to the number of SISMBD Loans or advances that an SISMBD may request from SBA?

(15) 13 CFR 120.1832 What is the minimum and maximum SISMBD Loan advance amount?

(16) 13 CFR 120.1833 May an SISMBD request an increase in the loan amounts?

(17) 13 CFR 120.1834 What fees are associated with an SISMBD Loan?

(18) 13 CFR 120.1840 What are the allowable uses of proceeds of an SISMBD Loan?

(19) 13 CFR 120.1850 Will the Collateral be held by SBA?

(20) 13 CFR 120.1860 How will the SISMBD Loan be disbursed?

(21) 13 CFR 120.1870 How does the SISMBD provide funds for the Premium?

(22) 13 CFR 120.1880 How will the loan be repaid?

(23) 13 CFR 120.1881 How are payments on the Collateral allocated between the SISMBD borrower and repayment of the SISMBD Loan?

(24) 13 CFR 120.1882 What happens if funds to make required loan payments are not generated from the Collateral?

(25) 13 CFR 120.1890 What is the maturity on a SISMBD Loan from SBA?

(26) 13 CFR 120.1891 What happens if an SISMBD is ineligible to receive an SISMBD Loan or an adverse?

(27) 13 CFR 120.1892 What happens if an SISMBD does not use SISMBD Loan funds for a statutorily mandated purpose?

(28) 13 CFR 120.1893 Data collections and reporting

(29) 13 CFR 120.1900 When does the Secondary Market Lending Authority Program end?

SBA has determined that this final rule imposes additional reporting requirements under the Paperwork Reduction Act (PRA). As described above, SBA proposed to require all participating sureties to notify SBA of all contracts that were successfully completed on a quarterly basis. SBA invited the public to comment on this proposed new report and to submit any comments by October 11, 2016.

SBA invited comments on: (1) Whether the proposed collection of information is necessary for the proper performance of SBA's functions, including whether the information will have a practical utility; (2) the accuracy of SBA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology. Three comments were received related to the requirement of this proposed form. A discussion of the comments received is included in the section-by-section analysis of § 115.22. As stated above, SBA considered the comments, but will proceed with requiring the form as proposed. SBA will submit the final form and other documents required under the Paperwork Reduction Act to OMB for review and approval.

A summary description of this information collection, the respondents, and the estimate of the annual hour burden resulting from this new process is provided below. Included in the estimate is the time for reviewing instructions, searching existing data sources, gathering information needed, and completing and reviewing the responses.

Title: Quarterly Contract Completion Report (SBA Form 2461).

Description: The Quarterly Contract Completion Report will be submitted by all participating surety companies to provide SBA with information about successfully completed contracts. The information reported will include the Surety Bond Guarantee number, the name of the Principal, the original Contract dollar amount, the revised Contract dollar amount (if applicable), the date of Contract completion, and a fee recap. Reports will be due to SBA within 45 days of each fiscal quarter end.

OMB Control Number: 3245-0395.

Description of and Estimated Number of Respondents: The collection will be submitted by the surety companies that participate in the SBG Program. The burden estimate for this requirement is based on the 30 current participants.

Estimated Number of Responses: Each of the estimated 30 sureties would be required to submit the report to SBA four times per year, for a total of 120 responses.

Estimated Response Time: It is estimated that each surety would need approximately one hour to complete the proposed report.

Total Estimated Annual Hour Burden: 120 hours.

Estimated Annual Cost Burden: $6,005.

When an agency issues a rulemaking proposal, the Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, requires the agency to “prepare and make available for public comment an initial regulatory analysis” which will “describe the impact of the proposed rule on small entities.” Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the proposed rulemaking is not expected to have a significant economic impact on a substantial number of small entities. Currently, there are 30 Sureties that participate in the SBG Program, and no part of this rule would impose any significant cost or burden on them. Although the rulemaking will impact all of the approximately 6,000 7(a) Lenders (some of which are small), all of the approximately 230 CDCs (all of which are small), all of the approximately 145 Microloan Intermediaries (most of which are small), and all of the approximately 35 ILP Intermediaries (most of which are small), SBA does not believe the impact will be significant. This rule will reduce the burden of the Agency's lending partners because they choose their own level of program participation (i.e., 7(a) Lenders and CDCs are not required to process more loan applications simply because there is a reduced burden for small businesses to apply for a business loan). Therefore, the proposed modernization of certain program participation requirements would not have a substantial economic impact or cost on the small business borrower, lender, or CDC, and in fact, may reduce costs to lender participants.

SBA's final rule encompasses clear and transparent best practice guidance that aligns with the Agency's mission to increase access to capital for small businesses and facilitate American job preservation and creation by removing unnecessary regulatory requirements. A review of the summary and preamble provides more detailed discussion on the specific improvements that will reduce regulatory burdens and encourage increased program participation. For these reasons, SBA has determined that there is no negative impact on a substantial number of small entities.

For the reasons stated in the preamble, SBA amends 13 CFR parts 109, 115, and 120 as follows:

Discussion

On May 11, 2017, at 82 FR 21956, 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 Airbus Model AS332L2 helicopters with an attachment pin part number (P/N) 332A31-2123-00 or P/N 332A31-2115-20 installed and Model EC225LP helicopters with an attachment pin P/N 332A31-3204-20 installed. The NPRM proposed to require an initial and recurring inspection of each attachment pin for corrosion, a crack, and any pitting. If there is a crack or any pitting, the NPRM proposed to require replacing the attachment pin. If there is corrosion, the NPRM proposed to require removing the corrosion up to a maximum of four times. The NPRM also proposed to require performing these inspections prior to installing an attachment pin. The proposed requirements were intended to detect corrosion or a crack in an attachment pin and prevent loss of an M/R blade and subsequent loss of control of the helicopter.

The NPRM was prompted by AD No. 2015-0016, dated January 30, 2015, issued by EASA, which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition for Airbus Model AS 332 L2 and EC 225 LP helicopters with certain part-numbered attachment pins installed. EASA advises of three cracked attachment pins on a Model AS 332 L2 helicopter, which resulted from a combination of factors including corrosion that had initiated in the inner diameter area of the attachment pin chamfer. EASA states that if this condition is not detected and corrected, it may lead to failure of the attachment pin with loss of control of the helicopter. Due to design similarity, Model EC225LP helicopters are also affected by this issue.

For these reasons, EASA AD No. 2015-0016 requires repetitive inspections of the attachment pins for corrosion.

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

These helicopters have been approved by the aviation authority of France and are approved for operation in the United States. Pursuant to our bilateral agreement with France, EASA, its technical representative, has notified us of the unsafe condition described in its 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.

The EASA AD does not require an inspection of the protective coating of each attachment pin for Model EC225LP helicopters. This AD requires inspecting the protective coating of each attachment pin for both model helicopters. The EASA AD requires ensuring there are no corrosion pits without a corresponding corrective action. This AD requires replacing an attachment pin that has any pitting. The EASA AD requires a non-destructive inspection if in doubt about whether there is a crack, while this AD does not. Lastly, the EASA AD requires contacting and returning to Airbus Helicopters any attachment pin with a crack, and this AD does not.

We reviewed Airbus Helicopters Alert Service Bulletin (ASB) No. AS332-05.00.99, Revision 0, dated December 22, 2014 (AS332-05.00.99), for Model AS332L2 helicopters and Airbus Helicopters ASB No. EC225-05A040, Revision 0, dated December 22, 2014 (EC225-05A040), for Model EC225LP helicopters. Airbus Helicopters advises of cracks discovered in attachment pins that resulted from a combination of factors, but mainly corrosion which initiated in the inner diameter at the chamfer. This service information specifies repetitively inspecting for corrosion and cracks and ensuring there are no corrosion pits in the attachment pins. If there is corrosion, this service information allows an attachment pin to be reworked up to four times before removing it from service. If there is a crack, this service information specifies contacting and sending the attachment pin to Airbus Helicopters.

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 5 helicopters of U.S. Registry. We estimate that operators may incur the following costs in order to comply with this AD. Labor costs are estimated at $85 per work-hour.

For Model AS332L2 helicopters, there are no costs of compliance with this AD because there are no helicopters with this type certificate on the U.S. Registry.

For Model EC225LP helicopters, which have ten attachment pins installed, inspecting the attachment pins takes about 1 work-hour for a total cost of $85 per helicopter and $425 for the U.S. fleet. Removing corrosion takes about 1 work-hour for a total cost of $85 per attachment pin. Replacing an attachment pin takes negligible additional labor time and required parts would cost about $5,720.

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:

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Model 737-100, -200, -200C, -300, -400, and -500 series airplanes. The NPRM published in the Federal Register on May 17, 2017 (82 FR 22619) (“the NPRM”). The NPRM was prompted by a report of cracks in the upper aft skin of the right wing at certain fastener holes along the rear spar upper chord. The NPRM proposed to require repetitive inspections for cracking of the upper aft skin of the wings, and repair if necessary.

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.

Boeing and Robert Simpson concurred with the content of the NPRM.

Aviation Partners Boeing stated that accomplishing the supplemental type certificate (STC) ST01219SE does not affect compliance with the actions specified in the NPRM.

We agree with the commenter. We have redesignated paragraph (c) of the proposed AD as paragraph (c)(1) and added paragraph (c)(2) to this AD to state that installation of STC ST01219SE does not affect the ability to accomplish the actions required by this AD. Therefore, for airplanes on which STC ST01219SE 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.

We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this final rule with the change 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 also determined that these changes will not increase the economic burden on any operator or increase the scope of this final rule.

We reviewed Boeing Alert Service Bulletin 737-57A1332, dated January 3, 2017. This service information describes procedures for repetitive detailed inspections of the upper aft skin of the wings for cracking. 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 471 airplanes of U.S. registry. We estimate the following costs to comply with this AD:

We have received no definitive data that enables us to provide cost estimates for the on-condition actions specified in 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.

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, 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:

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 737-300, -400, and -500 series airplanes. The NPRM published in the Federal Register on March 23, 2017 (82 FR 14835). The NPRM was prompted by a report of fatigue cracking found in a certain fuselage frame common to the water tank support intercostal clip located between certain stringers. The NPRM proposed to require inspections for any cracking of a certain fuselage frame, and repair if necessary. We are issuing this AD to detect and correct fatigue cracking that could grow in size and result in a severed frame. Multiple adjacent severed frames would result in reduced structural integrity of the airplane.

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. Boeing supported the NPRM.

Aviation Partners Boeing stated that accomplishing the supplemental type certificate (STC) ST01219SE does not affect the actions specified in the NPRM.

We concur with the commenter. We have redesignated paragraph (c) of the proposed AD as paragraph (c)(1) and added paragraph (c)(2) to this AD to state that installation of STC ST01219SE does not affect the ability to accomplish the actions required by this AD. Therefore, for airplanes on which STC ST01219SE 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.

We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this final rule with the change 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 also determined that these changes will not increase the economic burden on any operator or increase the scope of this final rule.

We reviewed Boeing Alert Service Bulletin 737-53A1357, dated August 9, 2016. The service information describes procedures for inspections for any cracking of a certain fuselage frame, and repair if necessary. 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 140 airplanes of U.S. registry. We estimate the following costs to comply with this AD:

We estimate the following costs to do any necessary repairs that would be required based on the results of the inspection. We have no way of determining the number of aircraft that might need this repair:

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

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

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.

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, 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:

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all The Boeing Company Model 777 airplanes. The NPRM published in the Federal Register on January 3, 2017 (82 FR 54) (“the NPRM”). The NPRM was prompted by reports of cracks on the underwing longerons. The NPRM proposed to require repetitive inspections of the left and right side underwing longerons for any crack, and related investigative and corrective actions if necessary. We are issuing this AD to detect and correct cracks in the underwing longerons, which could result in fuel leakage into the forward cargo area and consequent increased risk of a fire or, in a more severe case, could adversely affect the structural integrity of the airplane.

Since we issued the NPRM, Boeing has released Boeing Alert Service Bulletin 777-53A0081, Revision 1, dated May 1, 2017. In the NPRM, we refer to Boeing Alert Service Bulletin 777-53A0081, dated September 8, 2016, as the appropriate source of service information. Boeing Alert Service Bulletin 777-53A0081, Revision 1, dated May 1, 2017, corrects typographical errors, including errors in steps 3.c.(1) and 3.c.(2) of Part 1 of the Accomplishment Instructions, and provides additional access and inspection procedures. Boeing Alert Service Bulletin 777-53A0081, Revision 1, dated May 1, 2017, also adds a surface high frequency eddy current (HFEC) inspection of the external surface of the fuselage skin for any crack, to the inspection of the fuselage skin that is part of the underwing longeron replacement procedure specified in Part 8 and Part 9 of the Accomplishment Instructions. No additional work is necessary on airplanes on which the inspection of the fuselage skin was already done as specified in Boeing Alert Service Bulletin 777-53A0081, dated September 8, 2016. We have determined that Revision 1 is also an appropriate source of service information and have revised this AD accordingly.

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.

Boeing expressed support for the NPRM.

Air France requested that we delay our AD action. The commenter pointed out that the manufacturer has not determined the root cause of underwing longeron failure and that because longeron cracking is a design defect, a design correction should only be implemented once during the life of the airplane. The commenter also pointed out that the service information would require multiple repairs that could be considered design corrections. The commenter stated that repetitive inspections should not be mandated until a final fix (design improvement) is available and that Air France believes that the safety concern (as stated in the service information) of fuel leaking into the forward cargo area could be addressed by A-Check level inspections. The commenter also indicated that they believe the structural integrity safety concern (as stated in the service information) could be addressed by existing inspections, specified in the Maintenance Planning Document (MPD), that are able to detect cracked longerons and surrounding related damages and are already continuously performed on the fleet.

We disagree with the commenter's request to delay this AD. The existing MPD inspections have been reviewed and do not adequately address the unsafe condition identified in this AD. Additionally, the determinations of the unsafe conditions, mitigating action, and compliance times of this AD have been coordinated with the manufacturer, and we have determined that the actions specified in this AD are required to address the unsafe condition. We have not changed this AD in this regard.

Air France requested that we increase the compliance time for the initial inspection and include independent compliance times for the left and right underwing longeron inspections. United Airlines (UAL), Air France, All Nippon Airways (ANA), and Cathay Pacific Airways (CPA) also requested that we extend the intervals for the repetitive inspections to coincide with either A or C-Check level inspections. Additionally, ANA expressed concern that if cracking is found during the repetitive inspections then the consequent repairs could inadvertently extend the amount of time that the airplane is on the ground. UAL and CPA also noted the proposed compliance time would result in operational disruptions if not aligned with a C-check. Air France stated there are already inspections contained in the MPD and that the initial inspection compliance time should take into account when cracking was found. Air France also stated that there is no safety issue when there is a cracked underwing longeron and there is no fuel leak into the forward cargo area or a structural integrity issue.

We disagree with the commenters' requests. As stated previously, the existing MPD inspections have been reviewed and do not provide an acceptable level of safety for the affected airplanes for the identified unsafe condition. We have determined that the compliance times specified in this AD are necessary to address the identified unsafe conditions. However, we will consider requests for approval of alternative methods of compliance (AMOC), including extensions of the compliance times, if sufficient data is submitted to substantiate that a different compliance time will provide an acceptable level of safety. We have not changed this AD in this regard.

ANA requested that we exclude Boeing Model 777-200 airplanes that do not have a center fuel tank from the applicability of the proposed AD. ANA pointed out that since the Boeing Model 777-200 airplanes do not have a center fuel tank, a fuel leak from the center fuel tank and subsequent possible fire cannot occur.

We disagree with the request to exclude Boeing Model 777-200 airplanes from the applicability of this AD. The possibility of a fuel leak into the forward cargo area and subsequent possible fire is not the only safety concern. Severe cases of uncorrected longeron cracking could adversely affect the structural integrity of the airplane. As stated previously, the determinations of the unsafe conditions, mitigating action, and compliance times in this AD have been coordinated with the manufacturer. We have not changed this AD in this regard.

ANA requested that we include an alternative modified repetitive inspection program in the NPRM. ANA specifically requested that the alternative modified repetitive inspection program match with their C-check level inspection program for the non-destructive inspection and for the detailed inspection at the “line maintenance” interval within times since certain inspections. ANA pointed out that the manufacturer has agreed that the requested alternative inspection program meets the inspection specifications in Boeing Alert Service Bulletin 777-53A0081, dated September 8, 2016.

We disagree with the request to include an alternative modified repetitive inspection program in this AD. The commenter did not provide technical justification for such a change. We have determined that the compliance times specified in this AD are necessary to address the identified unsafe conditions. However, we will consider requests for approval of AMOCs, including extensions of the compliance times, if sufficient data is submitted to substantiate that a different compliance time will provide an acceptable level of safety. Additionally, operators may do the required inspections earlier than the compliance times required by the AD. For the inspection options specified in the Boeing Alert Service Bulletin 777-53A0081, an operator can change an inspection method at their discretion to meet operational needs, and the previous inspection determines the interval to the next inspection. We have not changed this AD in this regard.

Emirates requested that we mandate repair and future modification (for terminating action) as identical procedures to avoid incurring duplicate expenses. Emirates mentioned that the repair work is extensive (required resources, materials, and ground time) and the repair kit is expensive. Emirates pointed out that the manufacturer is expected to issue a modification service bulletin to terminate the inspection specified in Boeing Alert Service Bulletin 777-53A0081, dated September 8, 2016, and that the FAA is expected to mandate the terminating modification. The commenter also pointed out that the modification is expected to be extensive and require a modification kit that is also expensive, and concluded that the requirement of multiple kits for the repair and future planned modification would cause operators to incur duplicate expenses.

We disagree with the request because there is currently no modification kit available even though it might be possible to mitigate the unsafe condition through a modification to the underwing longeron. The inspections and repairs required by this AD are necessary to provide an acceptable level of safety for the affected airplanes. However, as stated previously, we will consider requests for AMOCs, including those that allow for revised service information, repairs, or terminating actions, if sufficient data is submitted to substantiate that different service information, repairs, or terminating actions will provide an acceptable level of safety. We have not changed this AD in this regard.

ANA requested that we specifically include certain alternate special tools in the NPRM to measure the thickness of the fuel barrier sealants. The commenter indicated that they do not have the special tools that are specified in the airplane maintenance manual (AMM) (which is specified as an accepted procedure to repair the secondary fuel barrier in Boeing Alert Service Bulletin 777-53A0081, dated September 8, 2016).

We disagree that alternate special tools should be specified in this AD because this AD does not mandate using a specific tool. This AD requires operators to perform inspections and repairs in accordance with Boeing Alert Service Bulletin 777-53A0081, dated September 8, 2016; or Boeing Alert Service Bulletin 777-53A0081, Revision 1, dated May 1, 2017. Boeing Alert Service Bulletin 777-53A0081, dated September 8, 2016; and Boeing Alert Service Bulletin 777-53A0081, Revision 1, dated May 1, 2017, refer to a specific procedure in the AMM as an accepted procedure to repair the secondary fuel barrier. However, we do not mandate the AMM procedure in this AD; therefore, operators may repair the secondary fuel barrier using accepted methods in accordance with their maintenance or inspection program. We have not changed this AD in this regard.

ANA requested that we allow simultaneous replacement of the longerons rather than completing one side before beginning work on the opposite side. ANA indicated that they prefer to start work on the opposite side when 50% final fastener installation has been completed on the initial longeron replacement. ANA also pointed out that the manufacturer has agreed that this method is structurally acceptable.

We disagree that simultaneous replacement of the longerons should be included in this AD. Boeing Alert Service Bulletin 777-53A0081, dated September 8, 2016; and Boeing Alert Service Bulletin 777-53A0081, Revision 1, dated May 1, 2017; specify that only one underwing longeron is to be removed and replaced at a time. However, as stated previously, we will consider requests for AMOCs if sufficient data is submitted to substantiate that a different method of completion will provide an acceptable level of safety. We have not changed this 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 final rule 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 also determined that these changes will not increase the economic burden on any operator or increase the scope of this final rule.

We reviewed Boeing Alert Service Bulletin 777-53A0081, dated September 8, 2016; and Boeing Alert Service Bulletin 777-53A0081, Revision 1, dated May 1, 2017. This service information describes procedures for repetitive detailed inspections, ultrasonic inspections, and HFEC inspections of the left and right side longerons, and related investigative and corrective actions if necessary. Boeing Alert Service Bulletin 777-53A0081, Revision 1, dated May 1, 2017, also includes an additional surface HFEC inspection of the external surface of the fuselage skin.

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 201 airplanes of U.S. registry. We estimate the following costs to comply with this AD:

We estimate the following costs to do any necessary replacements that are required based on the results of the inspection. We have no way of determining the number of aircraft that might need these replacements:

We have received no definitive data that would enable us to provide cost estimates for the on-condition actions, other than the replacement, specified in this AD.

According to the manufacturer, 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 for affected individuals. As a result, 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 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.

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, 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 Bombardier, Inc., Model CL-600-2B16 (CL-601-3A, CL-601-3R, and CL-604 Variants) airplanes. The NPRM published in the Federal Register on May 22, 2017 (82 FR 23156) (“the NPRM”). The NPRM was prompted by a report indicating that the lanyard length of the passenger drop down oxygen masks is too long. The NPRM proposed to require replacing the existing oxygen mask lanyards with lanyards of the correct length. We are issuing this AD to prevent improper oxygen flow functionality to the passenger oxygen masks in the event of an emergency.

Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF-2016-15, dated May 18, 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-600-2B16 (CL-601-3A, CL-601-3R, and CL-604 Variants) 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-2017-0477.

We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public.

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

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

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

Bombardier, Inc., has issued Service Bulletin 605-35-003, Revision 02, dated April 18, 2016. This service information describes procedures for replacing the existing oxygen mask lanyards with lanyards of the correct length. 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 120 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Airbus Model A300 series airplanes; and 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). The NPRM published in the Federal Register on May 31, 2017 (82 FR 24903) (“the NPRM”). The NPRM was prompted by reports of cracks initiating at the upper radius of frame (FR) 47 and a determination that the current inspection procedure is not reliable in detecting certain cracking of the forward fitting of FR 47. The NPRM proposed to require repetitive inspections to detect cracking of the upper radius of the forward fitting of FR 47, and related investigative actions and corrective actions if necessary. We are issuing this AD to detect and correct fatigue cracking of the FR 47 forward fitting upper radius on the left-hand and right-hand sides of the fuselage, which could propagate and result in reduced structural integrity 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 AD 2016-0150, dated July 25, 2016 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition on all. The MCAI states:

We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public.

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

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

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

Airbus has issued Airbus Service Bulletin A300-53-0246, Revision 08, including Appendix 1, dated April 13, 2016 (for Model A300 series airplanes); and Airbus Service Bulletin A300-53-6029, Revision 12, including Appendix 1, dated April 13, 2016 (for Model A300-600 series airplanes). The service information describes procedures for doing an SDI for cracking of the FR 47 forward fitting upper radius on the left-hand and right-hand sides of the fuselage, and related investigative and corrective actions. 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 will affect 132 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

We estimate the following costs to do any necessary related investigative and corrective actions that would be required based on the results of the inspection. We have no way of determining the number of aircraft that might need these repairs:

A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a current valid OMB control number. The control number for the collection of information required by this AD is 2120-0056. The paperwork cost associated with this AD has been detailed in the Costs of Compliance section of this document and includes time for reviewing instructions, as well as completing and reviewing the collection of information. Therefore, all reporting associated with this AD is mandatory. Comments concerning the accuracy of this burden and suggestions for reducing the burden should be directed to the FAA at 800 Independence Ave. SW., Washington, DC 20591, ATTN: Information Collection Clearance Officer, AES-200.

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:

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to remove AD 2014-16-01, Amendment 39-17925 (79 FR 45322, August 5, 2014) and add a new AD. AD 2014-16-01 applied to MDHI Model MD900 helicopters, serial numbers 900-00008 through 900-00140, with an upper hub part number (P/N) 900R2101006-105, -107, -109, or -111 installed. AD 2014-16-01 required eddy current inspecting the upper hub and replacing it if there is a crack. The NPRM published in the Federal Register on April 3, 2017 (82 FR 16138).

The NPRM was prompted by reports of three additional cracks found in the MD900 fleet. These cracks were not discovered by the one-time eddy current inspection required by AD 2014-16-01, but were found during regular maintenance of the upper hub. The NPRM proposed to require for MDHI MD900 helicopters with an upper hub, regardless of helicopter serial number, repetitive visual inspections of the fillet seal and the areas around the flexbeam boltholes for a crack and repetitive visual inspections of the lead leg shims and bushings for corrosion around the flexbeam boltholes. The NPRM also proposed repetitive ultrasonic eddy-current inspections of the areas adjacent to the flexbeam boltholes for a crack. If during any inspection there is corrosion or a crack, the NPRM proposed replacing the upper hub before further flight. Finally, after each inspection, the NPRM proposed installing a fillet seal to the bushing and upper hub interface.

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

We have reviewed the relevant information and determined that an unsafe condition exists and is likely to exist or develop on other helicopters of the same type design and that air safety and the public interest require adopting the AD requirements as proposed.

MDHI has issued Service Bulletin SB900-125, dated February 19, 2016, which describes procedures for repetitive visual and eddy current inspections of the upper hub upper and lower flexbeam bolthole areas and for applying a fillet seal on the interface of the bushing and the flex beam retention bolt hole.

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.

The service information applies to upper hubs with 1,000 or more hours TIS. This AD applies to all upper hubs regardless of hours TIS. The service information applies to upper hub P/N 900R2101006-107 and -109; this AD also applies to upper hub P/N 900R2101006-105 and -111.

We estimate that this AD affects 23 helicopters of U.S. Registry. At an average labor rate of $85 per hour, we estimate that operators may incur the following costs in order to comply with this AD.

Inspecting the fillet seal around the flexbeam boltholes (100 hour TIS inspection) requires about 1 work-hour, for a cost per helicopter of $85 and a cost of $1,955 for the fleet, per inspection cycle. Inspecting the flexbeam area and lead leg shims and bushings (annual inspection) requires about 2 work-hours, for a cost per helicopter of $170 and a cost of $3,910 for the fleet, per inspection cycle. Eddy current inspecting (1,000 hour TIS inspection) the upper hub requires about 2 work-hours, for a cost per helicopter of $170 and a cost of $3,910 for the fleet.

If required, replacing the upper hub requires about 11 work-hours, and required parts would cost about $15,998, for a cost per helicopter of $16,933. If required, replacing a missing or damaged fillet seal requires about .5 work-hour, and required parts cost would be minimal, for a cost per helicopter of $43.

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 have 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 DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),

(3) Will not affect intrastate aviation in Alaska to the extent that a regulatory distinction is required, 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 to supersede AD 2014-20-09, Amendment 39-17982 (79 FR 59630, October 3, 2014) (“AD 2014-20-09”). AD 2014-20-09 applied to certain Bombardier, Inc., Model DHC-8-400 series airplanes. The NPRM published in the Federal Register on February 22, 2017 (82 FR 11325). The NPRM was prompted by reports of missing clamps that are required to provide positive separation between the AC feeder cables and the hydraulic line of the landing gear alternate extension. The NPRM proposed to continue to require an inspection for missing clamps that are required to provide positive separation between the AC feeder cables and the hydraulic line of the landing gear alternate extension, and related investigative and corrective actions if necessary. We are issuing this AD to detect and correct chafing of the AC feeder cable. A chafed and arcing AC feeder cable could puncture the adjacent hydraulic line, which, in combination with the use of the alternate extension, could result in an in-flight fire.

Since we issued AD 2014-20-09, the FAA has determined that certain airplane serial numbers that are in a pre-modification MS 4M153025 configuration have sufficient space between the AC feeder cables and the landing gear alternate extension hydraulic line, and do not pose an in-flight fire risk. Therefore, these airplanes are not subject to the identified unsafe condition.

Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF-2013-16R1, effective July 26, 2016 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc., Model DHC-8-400 series airplanes. The MCAI states:

The related investigative action is a general visual inspection of the AC power feeder cables and the hydraulic line of the landing gear alternate extension for damage due to chafing. The corrective actions include repair of chafed parts and replacement of missing clamps. 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-2016-9575.

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.

Horizon Air requested that paragraph (g) of the proposed AD reference only the actions required for compliance. Horizon Air stated that incorporating the service bulletin job set-up and close-out sections as a requirement of the AD restricts an operator's ability to perform other maintenance in conjunction with the incorporation of Bombardier Service Bulletin 84-24-53, Revision B, dated September 10, 2015. Horizon Air asserted that only paragraph 3.B., “Procedure,” in the Accomplishment Instructions of Bombardier Service Bulletin 84-24-53, Revision B, dated September 10, 2015, should be referenced.

We agree with Horizon Air's request to exclude the “Job Set-up” and “Close Out” sections of Bombardier Service Bulletin 84-24-53, Revision B, dated September 10, 2015, for the reasons provided. We have revised paragraph (g) of this AD to require accomplishment of paragraph 3.B., “Procedure,” of the Accomplishment Instructions of Bombardier Service Bulletin 84-24-53, Revision B, dated September 10, 2015.

Horizon Air requested that the proposed AD be changed to allow credit for previous actions in accordance with Bombardier Service Bulletin 84-24-53, dated May 11, 2012; or Bombardier Service Bulletin 84-24-53, Revision A, dated May 16, 2013; either up to the effective date of this AD; or within 6,000 flight hours or 36 months from November 7, 2014 (the effective date of AD 2014-20-09), whichever occurs first. Horizon Air stated that paragraph (h) of the proposed AD only allows credit for actions performed before November 7, 2014. Horizon Air noted that the compliance for AD 2014-20-09 is within 6,000 flight hours or 36 months after the effective date of November 7, 2014 (and AD 2014-20-09 specifies that the actions be done in accordance with Bombardier Service Bulletin 84-24-53, Revision A, dated May 16, 2013).

We partially agree. We agree that credit for the actions required by paragraph (g) of this AD done using Bombardier Service Bulletin 84-24-53, Revision A, dated May 16, 2013, should be allowed up until the effective date of this AD. However, we do not agree to allow credit for Bombardier Service Bulletin 84-24-53, dated May 11, 2012, beyond November 7, 2014. AD 2014-20-09 only gives credit for Bombardier Service Bulletin 84-24-53, dated May 11, 2012, before November 7, 2014. We have revised paragraph (h) of this AD accordingly.

We have revised paragraph (g) of this AD to remove the statement that only Bombardier Service Bulletin 84-24-53, Revision B, dated September 10, 2015, may be used after the effective date of this AD because that statement is not necessary in this AD.

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 Bombardier Service Bulletin 84-24-53, Revision B, dated September 10, 2015. The service information describes procedures for a general visual inspection for installation of clamps between the AC feeder cables and hydraulic line of the landing gear alternate extension, and related investigative and corrective actions. 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 52 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

This AD merely removes certain airplanes from the applicability of this AD, and, therefore, adds no new actions or economic burden.

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:

Authority for This Rulemaking

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it modifies the air traffic service route structure in the eastern United States to maintain the efficient flow of air traffic.

On March 6, 2017, the FAA published in the Federal Register a notice of proposed rulemaking (NPRM) to amend V-7 and V-67, in the eastern United States due to the planned decommissioning of the Graham, TN, VORTAC navigation aid (82 FR 12522), Docket No. FAA-2017-0109. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal. Three comments were received.

The Aircraft Owners and Pilots Association (AOPA) wrote that, for those VOR NAVAIDs that are to be decommissioned and for those airways that are correspondingly removed, the FAA should create an RNAV waypoint at the previous NAVAID location and retain all fixes and intersections along that route by amending their definition to that of an RNAV waypoint. The impacted air traffic control facilities conducted a thorough review of their operations in the areas affected by the route changes to determine which fixes and intersections along the route segments being removed were necessary for continuing to support the facilities' operations and for navigation purposes through the area. As a result, the VALER fix is the only fix being retained to supplement the existing adjacent fixes, waypoints, and navigation aids in the areas that the V-7 and V-67 route segments are being removed. Additionally, the Graham VORTAC is currently functioning as a Distance Measuring Equipment (DME) only facility and is planned to be retained and charted as a DME facility with the “GHM” three-letter identifier. The change will be reflected in all appropriate publications and procedures prior to decommissioning the Graham VORTAC. Consequently, the FAA does not plan to replace the Graham VORTAC or fixes along the removed route segments with RNAV waypoints.

One commenter noted that V-124, which is also linked to the Graham VORTAC, is not addressed in this action. V-124 is being amended through a separate action for the decommissioning of the Jacks Creek, TN, VOR/DME. On June 7, 2017, the Jacks Creek final rule was published in the Federal Register (82 FR 26336), Docket No. 16-ASO-12. That rule amends V-124 by eliminating the route segments from Gilmore, AR, through Jacks Creek, TN, to Graham, TN. The effective date of the V-124 change is August 17, 2017.

A third comment noted concern about the length of the gaps in the amended airways V-7 and V-67. However, as the commenter admitted, this is a non-issue since 14 CFR 91.205(d)(2) requires that aircraft conducting IFR flight be equipped with navigation equipment suitable for the route to be flown. Additionally, the commenter called the route changes an important step toward implementation of the NextGen program.

Domestic VOR Federal airways are published in paragraph 6010(a) of FAA Order 7400.11A dated August 3, 2016, and effective September 15, 2016, which is incorporated by reference in 14 CFR 71.1. The VOR Federal airways listed in this document will be subsequently published in the Order.

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

This action amends Title 14, Code of Federal Regulations (14 CFR) part 71 by modifying the descriptions of VOR Federal airways V-7, and V-67, due to the planned decommissioning of the Graham, TN, VORTAC. The route changes are described below.

V-7: V-7 extends between Dolphin, FL, and Sawyer, MI. This rule removes the Graham, TN, VORTAC from the route which creates a gap in the route between Muscle Shoals, AL, and Central City, KY. Therefore, the amended route extends between Dolphin, FL, and Muscle Shoals, AL, as currently described; then between Central City, KY, and Sawyer, MI, as currently described.

V-67: V-67 extends between the Choo Choo, TN, VORTAC and the Rochester, MN, VOR/DME. This rule removes the Graham, TN, VORTAC from the route which creates a gap in the route between Shelbyville, TN, and Cunningham, KY. Therefore, the amended route extends between Choo Choo, TN, and Shelbyville, TN, as currently described; then between Cunningham, KY, and Rochester, MN, as currently described. This action also corrects the state location for the Choo Choo VORTAC to reflect Tennessee.

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

The FAA has determined that this action of modifying the descriptions of VOR Federal airways V-7, and V-67, due to the planned decommissioning of the Graham, TN, VORTAC. qualifies for categorical exclusion under the National Environmental Policy Act and its agency-specific implementing regulations in FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” regarding categorical exclusions for procedural actions at paragraph 5-6.5a, which categorically excludes from full environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points. Therefore, this airspace action is not expected to result in any significant environmental impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, this action has been reviewed for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis, and it is determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment.

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

To comply with the Do-Not-Call Registry Fee Extension Act of 2007 (Pub. L. 110-188, 122 Stat. 635) (“Act”), the Commission is amending the TSR by updating the fees entities are charged for accessing the Registry as follows: The revised rule increases the annual fee for access to the Registry for each area code of data from $61 to $62 per area code, and increases the maximum amount that will be charged to any single entity for accessing area codes of data from $16,714 to $17,021. The fee per area code of data during the second six months of an entity's annual subscription period increases from $30 to $31.

These increases are in accordance with the Act, which specifies that beginning after fiscal year 2009, the dollar amounts charged shall be increased by an amount equal to the amounts specified in the Act, multiplied by the percentage (if any) by which the average of the monthly consumer price index (for all urban consumers published by the Department of Labor) (“CPI”) for the most recently ended 12-month period ending on June 30 exceeds the CPI for the 12-month period ending June 30, 2008. The Act also states that any increase shall be rounded to the nearest dollar and that there shall be no increase in the dollar amounts if the change in the CPI is less than one percent. For fiscal year 2009, the Act specified that the original annual fee for access to the Registry for each area code of data was $54 per area code, or $27 per area code of data during the second six months of an entity's annual subscription period, and that the maximum amount that would be charged to any single entity for accessing area codes of data would be $14,850.

The determination whether a fee change is required and the amount of the fee change involves a two-step process. First, to determine whether a fee change is required, we measure the change in the CPI from the time of the previous increase in fees. There was an increase in the fees for fiscal year 2017. Accordingly, we calculated the change in the CPI since last year, and the increase was 1.84 percent. Because this change is over the one percent threshold, the fees will change for fiscal year 2018.

Second, to determine how much the fees should increase this fiscal year, we use the calculation specified by the Act set forth above, the percentage change in the baseline CPI applied to the original fees for fiscal year 2009. The average value of the CPI for July 1, 2007 to June 30, 2008 was 211.702; the average value for July 1, 2016 to June 30, 2017 was 242.656, an increase of 14.62 percent. Applying the 14.62 percent increase to the base amount from fiscal year 2009, leads to an increase from $61 to $62 in the fee from last year for access to a single area code of data for a full year for fiscal year 2018. The actual amount is $61.89, but when rounded, pursuant to the Act, the amount is $62. The fee for accessing an additional area code for a half year increases from $30 to $31 (rounded from $30.95). The maximum amount charged increases to $17,021 (rounded from $17,021.07).

Administrative Procedure Act; Regulatory Flexibility Act; Paperwork Reduction Act. The revisions to the Fee Rule are technical in nature and merely incorporate statutory changes to the TSR. These statutory changes have been adopted without change or interpretation, making public comment unnecessary. Therefore, the Commission has determined that the notice and comment requirements of the Administrative Procedure Act do not apply. See 5 U.S.C. 553(b). For this reason, the requirements of the Regulatory Flexibility Act also do not apply. See 5 U.S.C. 603, 604.

Pursuant to the Paperwork Reduction Act, 44 U.S.C. 3501-3521, the Office of Management and Budget (“OMB”) approved the information collection requirements in the Amended TSR and assigned the following existing OMB Control Number: 3084-0097. The amendments outlined in this Final Rule pertain only to the fee provision (§ 310.8) of the Amended TSR and will not establish or alter any record keeping, reporting, or third-party disclosure requirements elsewhere in the Amended TSR.

Accordingly, the Federal Trade Commission amends part 310 of title 16 of the Code of Federal Regulations as follows:

The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Due to the date of the event, notice and comment procedures would be impracticable in this instance.

For similar reasons as those stated above, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register.

The legal basis for the proposed rule is 33 U.S.C 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1, 6.04-6, 160.5; Department of Homeland Security Delegation No. 0170.1, which collectively authorize the Coast Guard to establish safety zones.

The Pacific Gas and Electric Company will sponsor the Pacific Gas and Electric Evolution on August 2, 2017 and on August 30, 2017, in the navigable waters of Humboldt Bay in King Salmon, CA. The evolution is necessary to complete an inspection and for re-licensing purposes. The evolution is scheduled to take place on August 2, 2017 and on August 30, 2017. The Coast Guard believes that a safety zone is necessary to provide for the safety of workers, mariners, and other vessels transiting the area due to the danger posed by the inspection of the dynamic fuel storage installation. This restricted area will apply to all vessels transiting the specified area.

For the reasons stated above, the Coast Guard is establishing a safety zone for the duration of the event. Upon commencement of the evolution, the safety zone will encompass the navigable waters of Humboldt Bay within a 300 meter radius of position: 40°44′31″ N., 124°12′39″ W. (NAD83). The safety zone is issued to establish a temporary restricted area on the waters surrounding the evolution. The Coast Guard or a designated representative will enforce a safety zone in navigable waters of Humboldt Bay within a 300 meter radius of position: 40°44′31″ N., 124°12′39″ W. (NAD83) during the evolution. The evolution is necessary to complete an inspection and for re-licensing purposes is scheduled to take place on August 2, 2017 and on August 30, 2017. At the conclusion of the evolution the safety zone shall terminate.

The effect of the temporary safety zone will be to restrict navigation in the vicinity of the evolution. Except for persons or vessels authorized by the Coast Guard Patrol Commander, no person or vessel may enter or remain in the restricted area. These regulations are needed to keep mariners and vessels away from the immediate vicinity of the evolution to ensure the safety of workers, mariners, and other vessels transiting the area.

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, it 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 limited duration and narrowly tailored geographic area of the safety zone. Although this rule restricts access to the waters encompassed by the safety zone, the effect of this rule will not be significant because it is outside of the Fields Landing Channel and the public will be notified via a Broadcast Notice to Mariners to ensure the safety zone will result in minimum impact. The entities most likely to be affected are waterfront facilities, commercial vessels, and pleasure craft engaged in recreational activities.

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

This rule may affect the following entities, some of which may be small entities: Owners and operators of waterfront facilities, commercial vessels, and pleasure craft engaged in recreational activities and sightseeing, if these facilities or vessels are in the vicinity of the safety zone at times when this zone is being enforced. This rule will not have a significant economic impact on a substantial number of small entities for the following reasons: (i) This rule will encompass only a small portion of the waterway for a limited period of time, (ii) vessel traffic can transit safely around the safety zone, and (iii) the maritime public will be advised in advance of this safety zone via Broadcast Notice to Mariners.

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 (NEPA) (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 of limited size and duration. This rule is categorically excluded from further review under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. A Record of Environmental Consideration is available in the docket for this rulemaking. We seek any comments or information that may lead to the discovery of a significant environmental impact from this rule.

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

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

On July 18, 2011, June 17, 2013, April 10, 2014, August 8, 2014, January 20, 2016, and July 27, 2016, SC DHEC submitted SIP revisions to EPA for approval that involve changes to South Carolina's SIP regulations to add definitions, make administrative and clarifying amendments, and correct typographical errors. These SIP submittals make changes to several air quality rules in South Carolina Code of Regulations Annotated (S.C. Code Ann. Regs.). The changes EPA is approving into the SIP in this action modify portions of Regulation 61-62.1 “Definitions and General Requirements” at Section I—“Definitions,” Regulation 61-62.1, Section IV—“Source Tests,” Regulation 61-62.1, Section V—“Credible Evidence.” EPA is also approving changes to Regulation 61-62.2—“Prohibition of Open Burning,” Regulation 61-62.3—“Air Pollution Episodes” at Section I—“Episode Criteria” and Regulation 61-62.6—“Control of Fugitive Particulate Matter” at Section I—“Control of Fugitive Particulate Matter in Non-Attainment Areas” and Section III—“Control of Fugitive Particulate Matter Statewide.”

At this time, EPA is not acting on the changes detailed in Table 1 below. EPA will address all remaining changes to the South Carolina SIP as listed above in a separate action.

South Carolina is amending its list of applicable definitions related to the regulation of air quality at Regulation 61-62.1, Section I—“Definitions.” The July 18, 2011, submittal makes several changes to the definitions as follows: (1) Adds a definition for “CAA [Clean Air Act];” (2) adds definitions for “PM2.5,” or fine particulate matter with an aerodynamic diameter less than or equal to a nominal 2.5 micrometers, and “PM2.5 emissions;” (3) revises the definition of “fugitive emissions” to match the federal definition at 40 CFR 51.165(a)(1)(ix), 40 CFR 51.166(b)(20), and 40 CFR 52.21(b)(20); and (4) makes other clarifying and administrative edits to definitions throughout the Section, including renumbering. The June 17, 2013, submittal further revises the definitions to make several administrative edits only.

The April 10, 2014, submittal makes one revision to the definitions at Regulation 61-62.1, Section I.94.—“Volatile Organic Compound (VOC),” to add a compound to the list of compounds determined to have negligible photochemical reactivity and therefore exempted from being considered a VOC, consistent with the federal definition. This revision in the April 10, 2014, submittal is superseded by another revision to the definition of VOC at I.94. in the August 8, 2014, submittal. This submittal changes the format of the definition of VOC at I.99., renumbered from I.94., to incorporate by reference the list of compounds exempted from the federal definition by making an explicit reference to the federal definition at 40 CFR 51.100(s). The August 8, 2014, submittal goes on to revise Section I by: (1) Adding definitions for “Code of Federal Regulations (CFR),” “NAICS [North American Industrial Classification System] Code,” and “SIC [Standard Industrial Classification] Code;” and (2) making administrative changes throughout.

Finally, the July 27, 2016, submittal makes subsequent revisions to Section I to add the definition of “emission” and makes administrative edits throughout. EPA has reviewed the changes made to South Carolina's definitions and is approving the aforementioned changes to Regulation 61-62.1, Section I into the SIP pursuant to CAA section 110.

South Carolina is amending its rules covering source testing at Regulation 61-62.1, Section IV—“Source Tests.” Federal implementing regulations at 40 CFR 51.212—“Testing, inspection, enforcement, and complaints,” require, among other things, that the SIP must provide for “periodic testing and inspection of stationary sources.”

The June 17, 2013, submittal revises the rule to make an administrative edit only. The August 8, 2014, submittal further revises the rule as follows: (1) Adds an additional requirement for site-specific test plans to account for procedures for obtaining, analyzing, and reporting source test audit samples and results; (2) adds language to provide more prescriptive requirements for notifications of testing; (3) adds language to specify that where federal regulation requires specific certification for conducting source tests, the individuals conducting the tests will meet that requirement; (4) removes language stating SC DHEC would provide audit samples to sources for required audits; (5) adds language stating that sources must purchase samples from an audit sample provider where commercially available, and including procedures for the source audits, consistent with federal rulemakings on stationary source auditing; 2 (6) adds language to specify additional information required for the required source test report; and (7) makes administrative changes throughout the Section.

EPA has reviewed the changes made to South Carolina's rules for source testing and is approving the aforementioned changes to Regulation 61-62.1, Section IV into the SIP pursuant to CAA section 110.

South Carolina is making a minor change to its rules covering credible evidence at Regulation 61-62.1, Section IV—“Source Tests.” Federal implementing regulations at 40 CFR 51.212—“Testing, inspection, enforcement, and complaints,” require, among other things, that the SIP must not “preclude the use, including the exclusive use, of any credible evidence or information, relevant to whether a source would have been in compliance with applicable requirements if the appropriate performance or compliance test or procedure had been performed.” SC DHEC's SIP-approved provisions at Regulation 61-62.1, Standard V clarify State authority for enforcement and compliance certification and asserts that credible evidence is data that may be used to determine compliance or noncompliance with applicable emission limits.

The August 8, 2014, submittal revises the regulation to make an administrative edit for consistency in internal citations only. EPA has reviewed the changes made to South Carolina's rules for credible evidence and is approving the aforementioned change to Regulation 61-62.1, Section V into the SIP pursuant to CAA section 110.

South Carolina is making a minor change to its rules covering open burning at Regulation 61-62.2—“Prohibition of Open Burning.” South Carolina's SIP-approved regulation prohibits open burning except in limited circumstances. The April 10, 2014, submittal revises the regulation to make an administrative edit to a referenced manual only. EPA has reviewed the changes made to South Carolina's rules for open burning and is approving the aforementioned change to Regulation 61-62.2 into the SIP pursuant to CAA section 110.

South Carolina is making minor changes to its rules covering air pollution episodes at Regulation 61-62.3—“Air Pollution Episodes.” South Carolina's SIP-approved regulation defines classifications of high air pollution for public notification and outlines emission reduction plans corresponding to the different classifications. The July 18, 2011 and June 17, 2013, submittals revise the regulation at Section I—“Episode Criteria” to make administrative edits to formatting and correct a typographical error only. EPA has reviewed the changes made to South Carolina's rules for air pollution episodes and is approving the aforementioned change to Regulation 61-62.3 into the SIP pursuant to CAA section 110.

South Carolina is making minor changes to its rules covering fugitive particulate matter at Regulation 61-62.6—“Control of Fugitive Particulate Matter.” South Carolina's SIP-approved regulation describes procedures for properly controlling the release of fugitive particulate matter in nonattainment areas for particulate matter-related standards, in areas with ambient air quality concentrations at or near primary standards, and generally applicable to all areas in the state. The April 10, 2014 submittal makes changes to Section I—“Control of Fugitive Particulate Matter in Non-Attainment Areas” and Section III—“Control of Fugitive Particulate Matter Statewide” to make administrative edits only. The January 20, 2016 submittal makes a subsequent administrative edit to Section I—“Control of Fugitive Particulate Matter in Non-Attainment Areas” only. EPA has reviewed the changes made to South Carolina's rules for controlling fugitive particulate matter and is approving the aforementioned change to Regulation 61-62.6 into the SIP pursuant to CAA section 110.

In this rule, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference of the following South Carolina Regulations: Regulation 61-62.1, Section I—“Definitions,” effective June 24, 2016, which revises definitions applicable to the SIP; Regulation 61-62.1, Section IV—“Source Tests,” effective June 27, 2014, which revises requirements for stationary source testing; Regulation 61-62.1, Section V—“Credible Evidence,” effective June 27, 2014, which revises formatting for consistency; Regulation 61-62.2—“Prohibition of Open Burning,” effective December 27, 2013, which revises formatting for consistency; Regulation 61-62.3, Section I—“Episode Criteria,” effective April 26, 2013, which makes administrative edits to regulations prescribing air quality episodes; Regulation 61-62.6, Section I—“Control of Fugitive Particulate Matter in Non-Attainment Areas,” effective November 27, 2015, which revises formatting; and Regulation 61-62.6, Section III—“Control of Fugitive Particulate Matter Statewide,” effective December 27, 2013, which makes administrative language changes for consistency. Therefore, these materials have been approved by EPA for inclusion in the State implementation plan, have been incorporated by reference by EPA into that plan, are fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of EPA's approval, and will be incorporated by reference by the Director of the Federal Register in the next update to the SIP compilation.3 EPA has made, and will continue to make, these materials generally available through www.regulations.gov and/or at the EPA Region 4 Office (please contact the person identified in the For Further Information Contact section of this preamble for more information).

EPA is approving the aforementioned changes to the South Carolina SIP, submitted on July 18, 2011, June 17, 2013, April 10, 2014, August 8, 2014, January 20, 2016, and July 27, 2016 because they are consistent with the CAA and federal regulations. EPA is publishing this rule without prior proposal because the Agency views this as a noncontroversial submittal and anticipates no adverse comments. However, in the proposed rules section of this Federal Register publication, EPA is publishing a separate document that will serve as the proposal to approve the SIP revision should adverse comments be filed. This rule will be effective October 20, 2017 without further notice unless the Agency receives adverse comments by September 20, 2017.

If EPA receives such comments, then EPA will publish a document withdrawing the final rule and informing the public that the rule will not take effect. All adverse comments received will then be addressed in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period. Parties interested in commenting should do so at this time. If no such comments are received, the public is advised that this rule will be effective on October 20, 2017 and no further action will be taken on the proposed rule. Please note that if we receive adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, we may adopt as final those provisions of the rule that are not the subject of an adverse comment.

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations. See 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

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

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

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

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

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

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

• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

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

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

In addition, this direct final action for the State of South Carolina does not have Tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because it does not have substantial direct effects on an Indian Tribe. The Catawba Indian Nation Reservation is located within the South Carolina portion of the bi-state Charlotte Area. Pursuant to the Catawba Indian Claims Settlement Act, S.C. Code Ann. 27-16-120, “all state and local environmental laws and regulations apply to the [Catawba Indian Nation] and Reservation and are fully enforceable by all relevant state and local agencies and authorities.” EPA notes this action will not impose substantial direct costs on Tribal governments or preempt Tribal law.

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 20, 2017. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the proposed rules section of today's Federal Register, rather than file an immediate petition for judicial review of this direct final rule, so that EPA can withdraw this direct final rule and address the comment in the proposed rulemaking. This action may not be challenged later in proceedings to enforce its requirements. See section 307(b)(2).

40 CFR part 52 is amended as follows:

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

You may access a frequently updated electronic version of 40 CFR part 180 through the Government Printing Office's e-CFR site at http://www.ecfr.gov/cgi-bin/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2016-0500 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before October 20, 2017. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2016-0500, by one of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the online instructions for submitting comments. Do not submit electronically any information you consider to be CBI or other information whose disclosure is restricted by statute.

• Mail: OPP Docket, Environmental Protection Agency Docket Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001.

• Hand Delivery: To make special arrangements for hand delivery or delivery of boxed information, please follow the instructions at http://www.epa.gov/dockets/contacts.html.

Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at http://www.epa.gov/dockets.

In the Federal Register of October 18, 2016 (81 FR 71668) (FRL-9952-19), EPA issued a document pursuant to FFDCA section 408, 21 U.S.C. 346a, announcing the filing of a pesticide petition (PP IN-10965) by Monsanto Company, 1300 I (Eye) Street NW., Washington, DC 20005. The petition requested that the existing exemption for residues of mono-, di-, and trimethylnapthalenesulfonic acids and napthalenesulfonic acids formaldehyde condensates, ammonium and sodium salts (CAS Reg. Nos. 9008-63-3, 9069-80-1, 9084-06-4, 36290-04-7, 91078-68-1, 141959-43-5, 68425-94-5) in 40 CFR 180.910 be amended to also exempt residues of the potassium salts (CAS Reg. No. 67828-14-2) when used as an inert ingredient (i.e., as a surfactant or related adjuvant of surfactants) in pesticide formulations applied to growing crops or raw agricultural commodities after harvest. That document referenced a summary of the petition prepared by Monsanto Company, the petitioner, which is available in the docket, http://www.regulations.gov. One comment was received on the notice of filing. EPA's response to that comment is discussed in Unit V.C.

Inert ingredients are all ingredients that are not active ingredients as defined in 40 CFR 153.125 and include, but are not limited to, the following types of ingredients (except when they have a pesticidal efficacy of their own): Solvents such as alcohols and hydrocarbons; surfactants such as polyoxyethylene polymers and fatty acids; carriers such as clay and diatomaceous earth; thickeners such as carrageenan and modified cellulose; wetting, spreading, and dispersing agents; propellants in aerosol dispensers; microencapsulating agents; and emulsifiers. The term “inert” is not intended to imply nontoxicity; the ingredient may or may not be chemically active. Generally, EPA has exempted inert ingredients from the requirement of a tolerance based on the low toxicity of the individual inert ingredients.

Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue . . . .”

EPA establishes exemptions from the requirement of a tolerance only in those cases where it can be clearly demonstrated that the risks from aggregate exposure to pesticide chemical residues under reasonably foreseeable circumstances will pose no appreciable risks to human health. In order to determine the risks from aggregate exposure to pesticide inert ingredients, the Agency considers the toxicity of the inert in conjunction with possible exposure to residues of the inert ingredient through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings. If EPA is able to determine that a finite tolerance is not necessary to ensure that there is a reasonable certainty that no harm will result from aggregate exposure to the inert ingredient, an exemption from the requirement of a tolerance may be established.

Consistent with FFDCA section 408(c)(2)(A), and the factors specified in FFDCA section 408(c)(2)(B), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for naphthalenesulfonic acids formaldehyde condensate potassium salt including exposure resulting from the exemption established by this action. EPA's assessment of exposures and risks associated with naphthalenesulfonic acids formaldehyde condensate potassium salt follows.

EPA has evaluated the available toxicity data and considered their validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

In the Federal Register of October 7, 2009 (74 FR 51470) (FRL-8439-1), EPA established an exemption from the requirement of a tolerance for the sodium and ammonium salts of naphthalenesulfonate formaldehyde condensates (SANFC). In the preamble to that rule, EPA concluded that there were no adverse effects observed in the available database. Naphthalenesulfonic acids formaldehyde condensate potassium salt differs from sodium and ammonium salts of naphthalenesulfonate formaldehyde condensates, only in the counterion (i.e., potassium versus sodium and ammomium) and would all share the same toxicity profile.

Specific information on the studies received and the nature of the adverse effects caused by naphthalenesulfonic acids formaldehyde condensate potassium salt as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies are discussed in the final rule published in the Federal Register of October 7, 2009 (74 FR 51470) (FRL-8439-1).

Based on the low potential hazard and the lack of a hazard endpoint for these compounds, EPA determined that a quantitative risk assessment is not appropriate.

In examining aggregate exposure, section 408 of FFDCA directs EPA to consider available information concerning exposures from the pesticide residue in food and all other nonoccupational exposures, including drinking water from ground water or surface water and exposure through pesticide use in gardens, lawns, or buildings (residential and other indoor uses).

No hazard was identified for the acute and chronic dietary assessment (food and drinking water), or for the short term, intermediate-term, and long-term residential assessments, and therefore, no quantitative aggregate exposure assessments were performed. The Agency qualitatively assessed exposure as follows. When used in pesticide formulations applied to growing crops and raw agricultural commodities after harvest, there may be exposure from residues in or on food and from residues ending up in drinking water from use on growing crops. The SANFC inerts are used as disperants, defoamers and emulsifiers in pesticide formulations. These surfactants have a wide range of industrial uses as well as serving as emulsifiers in personal care products and in food contact packaging; therefore, EPA concludes that exposure from these sources is also likely.

Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”

EPA has not found naphthalenesulfonic acids formaldehyde condensate potassium salt to share a common mechanism of toxicity with any other substances, and naphthalenesulfonic acids formaldehyde condensate potassium salt does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that naphthalenesulfonic acids formaldehyde condensate potassium salt does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's Web site at http://www.epa.gov/pesticides/cumulative.

Based on all available information, EPA concludes that there is a reasonable certainty that no harm will result to the general population or to infants and children from aggregate exposure to residues of the potassium salt of naphthalenesulfonic acids formaldehyde condensates, when used as inert ingredients in pesticide formulations applied to growing crops and raw agricultural commodities after harvest.

An analytical method is not required for enforcement purposes since the Agency is establishing an exemption from the requirement of a tolerance without any numerical limitation.

One comment was received for a notice of filing offering suggestions on how to move away from using synthetic chemicals as pesticides. This comment is not specifically directed at today's tolerance exemption action nor does it include any information for the Agency to consider in making its safety determination for this exemption.

Therefore, the existing exemption from the requirement of a tolerance in 40 CFR 180.910 for residues of mono-, di-, and trimethylnapthalenesulfonic acids and napthalenesulfonic acids formaldehyde condensates, ammonium and sodium salts is amended to include potassium salts (specifically, naphthalenesulfonic acids formaldehyde condensate potassium salt (CAS Reg. No. 67828-14-2)) when used as an inert ingredient (surfactant and related adjuvant of surfactant) in pesticide formulations applied to growing crops and raw agricultural commodities after harvest.

This action establishes an exemption from the requirement of a tolerance under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq.), nor does it require any special considerations under Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994).

Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the exemption in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), do not apply.

This action directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501 et seq.).

This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Therefore, 40 CFR chapter I is amended as follows: