Federal Register Vol. 82, No.3,

Federal Register Volume 82, Issue 3 (January 5, 2017)

Page Range1139-1591
FR Document

82_FR_3
Current View
Page and SubjectPDF
82 FR 1161 - National Stalking Awareness Month, 2017PDF
82 FR 1159 - National Slavery and Human Trafficking Prevention Month, 2017PDF
82 FR 1157 - National Mentoring Month, 2017PDF
82 FR 1149 - Establishment of the Gold Butte National MonumentPDF
82 FR 1139 - Establishment of the Bears Ears National MonumentPDF
82 FR 1380 - Sunshine Act: Notice of Public MeetingPDF
82 FR 1396 - Sunshine Act Meeting; Additional ItemPDF
82 FR 1386 - Sunshine Act MeetingPDF
82 FR 1333 - Combined Notice of Filings #1PDF
82 FR 1315 - Foreign-Trade Zone (FTZ) 7-Mayaguez, Puerto Rico Authorization of Production Activity MSD International GMBH (Puerto Rico Branch) LLC Subzone 7G (Pharmaceuticals) Las Piedras, Puerto RicoPDF
82 FR 1315 - Foreign-Trade Zone (FTZ) 46-Cincinnati, Ohio; Authorization of Production Activity; Givaudan Flavors Corporation (Flavor Products); Cincinnati, OhioPDF
82 FR 1316 - Foreign-Trade Zone (FTZ) 92-Harrison County, Mississippi; Authorization of Production Activity; TopShip, LLC (Shipbuilding); Gulfport, MississippiPDF
82 FR 1349 - Agency Information Collection Activities; Proposed Collection; Comment Request; Prior Notice of Imported Food Under the Public Health Security and Bioterrorism Preparedness and Response Act of 2002PDF
82 FR 1343 - Emerging Tick-Borne Diseases and Blood Safety; Public WorkshopPDF
82 FR 1316 - Foreign-Trade Zone (FTZ) 87-Lake Charles, Louisiana; Notification of Proposed Production Activity; Westlake Chemical Corporation; Subzone 87F (Polyethylene and Styrene); Sulphur, LouisianaPDF
82 FR 1316 - Foreign-Trade Zone (FTZ) 68-El Paso, Texas; Notification of Proposed Production Activity; PGTEX USA, Inc. (Fiber Glass Fabrics); El Paso, TexasPDF
82 FR 1329 - Records Governing Off-the-Record Communications' Public NoticePDF
82 FR 1330 - WBI Energy Transmission, Inc.; Supplemental Notice of Intent To Prepare an Environmental Assessment for the Planned Valley Expansion Project and Request for Comments on Environmental IssuesPDF
82 FR 1334 - Enel Trading North America, Inc.; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 AuthorizationPDF
82 FR 1332 - Old Dominion Electric Cooperative and Direct Energy Business, LLC on Behalf of Itself and Its Affiliate, Direct Energy Business Marketing, LLC and American Municipal Power, Inc. v. PJM Interconnection, L.L.C.; Notice of ComplaintPDF
82 FR 1333 - Northern Illinois Municipal Power Agency v. PJM Interconnection, L.L.C.; Notice of ComplaintPDF
82 FR 1334 - Nogales Transmission, L.L.C., Nogales Frontier Operations, L.L.C.; Notice of Petition for Declaratory OrderPDF
82 FR 1330 - American Municipal Power, Inc. v. Midcontinent Independent System Operator, Inc.; Notice of ComplaintPDF
82 FR 1345 - [Pediatric Advisory Committee; Notice of Meeting; Establishment of a Public Docket; Request for CommentsPDF
82 FR 1337 - Notice of Agreements FiledPDF
82 FR 1424 - Sanctions Actions Pursuant to Executive Order 13694PDF
82 FR 1423 - Additional Identifying Information Associated With Persons Whose Property and Interests in Property Are Blocked Pursuant to Executive Order 13694 of April 1, 2015, as amended by Executive Order 13757 of December 29, 2016.PDF
82 FR 1362 - Versum Materials US, LLC, a Subsidiary of Versum Materials, Inc., Including Workers Whose Unemployment Insurance (UI) Wages Were Reported Under Air Products and Chemicals, Inc., Surface Preparation and Clean (SP&C) Division, Allentown, Pennsylvania; Amended Certification Regarding Eligibility To Apply for Worker Adjustment AssistancePDF
82 FR 1361 - Graftech International Holdings Inc. Engineered Solutions Division, a Subsidiary of Brookfield Asset Management Inc., Anmoore, West Virginia; Notice of Affirmative Determination Regarding Application for ReconsiderationPDF
82 FR 1327 - Publication of the Manual for Courts-Martial, United States (2016 ed.) and Updated Supplementary MaterialsPDF
82 FR 1363 - Thermo Fisher Scientific, LLC, Including Workers Whose Unemployment Insurance (UI) Wages, Are Reported Under Thermo Finnigan LLC, and Including On-Site Leased Workers From ATR, ADECCO, AEROTEK and Kelly Services, Austin, Texas; Amended Certification Regarding Eligibility To Apply for Worker Adjustment AssistancePDF
82 FR 1361 - Compucom Systems, Inc., Dallas Service Desk, Dallas, Texas; Compucom Systems, Inc., Dallas Service Desk, Plano, Texas; Amended Certification Regarding Eligibility To Apply for Worker Adjustment AssistancePDF
82 FR 1344 - Reference Amounts Customarily Consumed: List of Products for Each Product Category; Draft Guidance for Industry; AvailabilityPDF
82 FR 1347 - Questions and Answers on the Nutrition and Supplement Facts Labels Related to the Compliance Date, Added Sugars, and Declaration of Quantitative Amounts of Vitamins and Minerals; Draft Guidance for Industry; AvailabilityPDF
82 FR 1323 - Proposed Information Collection; Comment Request; West Coast Region Pacific Tuna Fisheries Logbook and Fish Aggregating Device FormPDF
82 FR 1353 - Proposed Changes to the Black Lung Clinics Program for Consideration for the FY 2017 Funding Opportunity Announcement DevelopmentPDF
82 FR 1287 - Tariff of TollsPDF
82 FR 1285 - Seaway Regulations and Rules: Periodic Update, Various CategoriesPDF
82 FR 1284 - Oil, Gas, and Sulfur Activities on the Outer Continental Shelf-Adjustments to Cost Recovery FeesPDF
82 FR 1342 - Draft Guidance for Industry: Study Design Recommendations for Residue Studies in Honey for Establishing Maximum Residue Limits and Withdrawal Periods; AvailabilityPDF
82 FR 1359 - Advisory Council on Wildlife TraffickingPDF
82 FR 1318 - Certain Hot-Rolled Carbon Steel Flat Products From the Russian Federation: Preliminary Results of Antidumping Duty Administrative Review; 2014-2015PDF
82 FR 1322 - Floor-Standing, Metal-Top Ironing Tables and Certain Parts Thereof From the People's Republic of China: Notice of Amended Final Results of Antidumping Duty Administrative Reviews Pursuant to Settlement; 2004-2005 and 2006-2007PDF
82 FR 1321 - Sulfanilic Acid From India and the People's Republic of China: Final Results of Expedited Fourth Sunset Reviews of Antidumping Duty OrdersPDF
82 FR 1317 - Certain Preserved Mushrooms From the People's Republic of China: Final Rescission of Antidumping Duty New Shipper Review; 2015PDF
82 FR 1339 - Proposed Data Collection Submitted for Public Comment and RecommendationsPDF
82 FR 1375 - Request To Amend a License To Export Radioactive WastePDF
82 FR 1375 - Request To Amend a License To Import Radioactive WastePDF
82 FR 1357 - National Institute of Allergy and Infectious Diseases; Notice of Closed MeetingPDF
82 FR 1358 - National Institute of Diabetes and Digestive and Kidney Diseases; Notice of Closed MeetingsPDF
82 FR 1359 - National Institute of Diabetes and Digestive and Kidney Diseases; Notice of MeetingsPDF
82 FR 1423 - Application of Paklook Air, Inc. D/B/A Airlift Alaska for Certificate AuthorityPDF
82 FR 1423 - Application of Galaxy Air Services FBO, LLC D/B/A Texas Air Shuttle for Commuter AuthorityPDF
82 FR 1364 - Rhode Island Atomic Energy CommissionPDF
82 FR 1422 - Application of Nealco Air Charter Services, Inc., d/b/a Watermakers Air; for Commuter Air Carrier AuthorityPDF
82 FR 1423 - Application of Aztec Worldwide Airlines, Inc. for Commuter AuthorityPDF
82 FR 1422 - Application of Maine Aviation Aircraft Charter, LLC for Commuter Air Carrier AuthorityPDF
82 FR 1335 - Washoe Project-Rate Order No. WAPA-176PDF
82 FR 1363 - GE Power Electronics, Inc., GE Energy Management Division a Business Unit of General Electric Company Including Workers Whose Wages Are Reported Under Lineage Power Group, Galion, Ohio; Amended Certification Regarding Eligibility to Apply for Worker Adjustment AssistancePDF
82 FR 1361 - General Electric Company, d/b/a GE Capacitor and Power Quality Products, Energy Connections Division, Fort Edward, New York; Notice of Revised Determination on ReconsiderationPDF
82 FR 1362 - W.W. Grainger, Inc., Janesville Facility Division Including On-Sited Leased Workers From Peoplescout.Com and Superior Workforce Solutions, Inc., Janesville, Wisconsin; Amended Certification Regarding Eligibility To Apply for Worker Adjustment AssistancePDF
82 FR 1337 - Proposed Data Collections Submitted for Public Comment and RecommendationsPDF
82 FR 1340 - Agency Forms Undergoing Paperwork Reduction Act ReviewPDF
82 FR 1324 - New England Fishery Management Council; Public MeetingPDF
82 FR 1421 - 60-Day Notice of Intent To Seek Approval of an Existing Collection in Use Without an OMB Control Number: Dispute Resolution Procedures Under the Fixing America's Surface Transportation Act of 2015PDF
82 FR 1312 - Agency Information Collection Activities: Proposed Collection; Comments Request-Evaluation of the School Meal Data Collection ProcessPDF
82 FR 1360 - Boundary and Classification Descriptions and Final Maps for Snake River Headwaters, Grand Teton National Park, Yellowstone National Park, John D. Rockefeller, Jr. Memorial Parkway, and National Elk RefugePDF
82 FR 1348 - Food and Drug Administration Tribal Consultation Policy; AvailabilityPDF
82 FR 1288 - Ecclesiastical Endorsing OrganizationsPDF
82 FR 1395 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price ListPDF
82 FR 1356 - Delegation of Authority Under Title III, Part D, Section 340B(d)(1)(B)(vi) of the Public Health Service Act (PHSA)PDF
82 FR 1383 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change Related to a Change to the Trading Symbol for P.M.-Settled Options on the Standard & Poor's 500 IndexPDF
82 FR 1415 - Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Fees for C2 Real-Time Data FeedsPDF
82 FR 1387 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Fees for the Complex Order Book Data FeedPDF
82 FR 1398 - Self-Regulatory Organizations; LCH SA; Order Granting Application for Registration as a Clearing Agency and Request for Exemptive ReliefPDF
82 FR 1390 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Listing and Trading of the Shares of the First Trust Strategic Income ETF of First Trust Exchange-Traded Fund IVPDF
82 FR 1397 - DFA Investment Dimensions Group Inc., et al.; Notice of ApplicationPDF
82 FR 1419 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca Equities Rule 7.35(a)(10)(A)PDF
82 FR 1381 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7022(d)PDF
82 FR 1210 - 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties RegulationPDF
82 FR 1326 - Proposed Collection; Comment RequestPDF
82 FR 1328 - Agency Information Collection Activities; Comment Request; Migrant Education Program Regulations and Certificate of EligibilityPDF
82 FR 1370 - Tennessee Valley Authority; Watts Bar Nuclear Plant, Unit 2PDF
82 FR 1310 - Notice of Request for a New Information Collection: State Meat and Poultry Inspection ProgramsPDF
82 FR 1327 - Proposed Collection; Comment RequestPDF
82 FR 1308 - Amendments to the Reef Fish, Spiny Lobster, and Corals and Reef Associated Plants and Invertebrates Fishery Management Plans of Puerto Rico and the U.S. Virgin IslandsPDF
82 FR 1314 - Notice of Public Meeting of the Kansas Advisory Committee To Discuss the Committee's Draft Report Regarding Voting Rights in the State, as Well as Other Civil Rights Issues for Future InquiryPDF
82 FR 1314 - Notice of Public Meeting of the Ohio Advisory Committee for a Meeting To Discuss Approval and Publication of a Report Regarding Civil Rights and Hate Crime in the State, and To Begin Discussion of the Committee's Next Topic of Civil Rights StudyPDF
82 FR 1315 - Notice of Public Meeting of the Illinois Advisory Committee for a Meeting To Discuss Preparations for a Public Hearing on Civil Rights and Voter Participation in the StatePDF
82 FR 1357 - Center for Scientific Review; Notice of Closed MeetingsPDF
82 FR 1356 - Center for Scientific Review; Notice of Closed MeetingsPDF
82 FR 1363 - Cameron International Corporation, Measurement Division, Duncan, Oklahoma; Notice of Revised Determination on ReconsiderationPDF
82 FR 1276 - Proposed Establishment and Modification of Area Navigation Routes, Atlantic Coast Route Project; Northeastern United States.PDF
82 FR 1181 - Establishment of an Air Traffic Service (ATS) Route; Western United StatesPDF
82 FR 1325 - Endangered and Threatened Species; Recovery Plan for the Cook Inlet Beluga WhalePDF
82 FR 1265 - Airworthiness Directives; Pratt & Whitney Division Turbofan EnginesPDF
82 FR 1260 - Airworthiness Directives; Airbus HelicoptersPDF
82 FR 1252 - Airworthiness Directives; Airbus Helicopters Deutschland GmbH HelicoptersPDF
82 FR 1294 - Revisions to the Requirements for Authority To Manufacture and Distribute Postage Evidencing Systems; Customized Postage ProductsPDF
82 FR 1208 - Propiconazole; Extension of Tolerance for Emergency ExemptionsPDF
82 FR 1163 - Special Conditions: Cranfield Aerospace Limited, Cessna Aircraft Company Model 525; Tamarack Load Alleviation System and Cranfield Winglets-Interaction of Systems and StructuresPDF
82 FR 1279 - Proposed Establishment, Modification and Revocation of Air Traffic Service (ATS) Routes; Western United StatesPDF
82 FR 1258 - Airworthiness Directives; CFE Company Turbofan EnginesPDF
82 FR 1192 - Department of Defense Personnel Security Program RegulationPDF
82 FR 1296 - Air Plan Approval; Georgia: Procedures for Testing and Monitoring Sources of Air PollutantsPDF
82 FR 1206 - Air Plan Approval; Georgia: Procedures for Testing and Monitoring Sources of Air PollutantsPDF
82 FR 1352 - Agency Information Collection Activities: Submission to OMB for Review and Approval; Public Comment Request; The National Health Service Corps Loan Repayment ProgramPDF
82 FR 1376 - Requests for Approving Certain Alternative Methods for Computing Withdrawal Liability; Settlement of Withdrawal and Mass Withdrawal LiabilityPDF
82 FR 1179 - Airworthiness Directives; B-N Group Ltd. AirplanesPDF
82 FR 1192 - DoD Freedom of Information Act (FOIA) ProgramPDF
82 FR 1183 - Steel Import Monitoring and Analysis SystemPDF
82 FR 1336 - National Advisory Council for Environmental Policy and Technology: Assumable Waters Subcommittee; Notice of Public MeetingPDF
82 FR 1267 - Airworthiness Directives; Sikorsky Aircraft Corporation Helicopters (Type Certificate Previously Held by Schweizer Aircraft Corporation)PDF
82 FR 1262 - Airworthiness Directives; The Boeing Company AirplanesPDF
82 FR 1172 - Airworthiness Directives; PILATUS AIRCRAFT LTD. AirplanesPDF
82 FR 1296 - Endangered and Threatened Wildlife and Plants; Removing Trichostema austromontanumPDF
82 FR 1231 - Revisions and Clarifications in Requirements for the Processing of Donated FoodsPDF
82 FR 1183 - Regulations Implementing FAST Act Section 61003-Critical Electric Infrastructure Security and Amending Critical Energy Infrastructure Information; Availability of Certain North American Electric Reliability Corporation Databases to the Commission; CorrectionPDF
82 FR 1206 - International Mailing Services: Mailing Services Price ChangesPDF
82 FR 1254 - Airworthiness Directives; The Boeing Company AirplanesPDF
82 FR 1269 - Airworthiness Directives; Airbus Defense and Space S.A. (Formerly Known as Construcciones Aeronauticas, S.A.) AirplanesPDF
82 FR 1170 - Airworthiness Directives; Airbus AirplanesPDF
82 FR 1185 - Eligibility and Standards for Peace Corps Volunteer ServicePDF
82 FR 1175 - Airworthiness Directives; Airbus AirplanesPDF
82 FR 1426 - Energy Conservation Program: Test Procedures for Central Air Conditioners and Heat PumpsPDF

Issue

82 3 Thursday, January 5, 2017 Contents Agriculture Agriculture Department See

Food and Nutrition Service

See

Food Safety and Inspection Service

Army Army Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 2016-31929 1326-1327 2016-31934 Safety Enviromental Enforcement Bureau of Safety and Environmental Enforcement PROPOSED RULES Oil, Gas, and Sulfur Activities on Outer Continental Shelf: Adjustments to Cost Recovery Fees, 1284-1285 2016-31999 Centers Disease Centers for Disease Control and Prevention NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 2016-31967 1337-1341 2016-31968 2016-31991 Civil Rights Civil Rights Commission NOTICES Meetings: Illinois Advisory Committee, 1315 2016-31924 Kansas Advisory Committee, 1314 2016-31926 Ohio Advisory Committee, 1314-1315 2016-31925 Commerce Commerce Department See

Foreign-Trade Zones Board

See

International Trade Administration

See

National Oceanic and Atmospheric Administration

Defense Department Defense Department See

Army Department

RULES Freedom of Information Act Program, 1192-1206 2016-31686 Personnel Security Program Regulation, 1192 2016-31756 NOTICES Manual for Courts-Martial, United States (2016 ed.) and Updated Supplementary Materials, 1327-1328 2016-32010
Education Department Education Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Migrant Education Program Regulations and Certificate of Eligibility, 1328-1329 2016-31933 Employment and Training Employment and Training Administration NOTICES Determinations on Reconsideration: GrafTech International Holdings Inc., Engineered Solutions Division, Subsidiary of Brookfield Asset Management Inc., Anmoore, WV, 1361-1362 2016-32011 Worker Adjustment Assistance Eligibility; Amended Certifications: GE Power Electronics, Inc., GE Energy Management Division, Galion, OH, 1363-1364 2016-31972 Versum Materials US, LLC, Allentown, PA, 1362 2016-32014 W.W. Grainger, Inc., Janesville Facility Division, Including On-site Leased Workers from Peoplescout.com, Janesville, WI, 1362-1363 2016-31970 Worker Adjustment Assistance Eligibility; Determinations: Cameron International Corp., Measurement Division, Duncan, OK, 1363 2016-31917 Worker Adjustment Assistance Eligibility; Reconsiderations: General Electric Co., d/b/a GE Capacitor and Power Quality Products, Energy Connections Division, Fort Edward, NY, 1361 2016-31971 Worker Adjustment Assistance; Amended Certifications: CompuCom Systems, Inc., Dallas Service Desk, Dallas, TX; CompuCom Systems, Inc., Dallas Service Desk, Plano, TX, 1361 2016-32008 Thermo Fisher Scientific, LLC, including On-Site Leased Workers from ATR, Adecco, Aerotek, and Kelly Services, Austin, TX, 1363 2016-32009 Energy Department Energy Department See

Federal Energy Regulatory Commission

See

Western Area Power Administration

RULES Energy Conservation Programs: Test Procedures for Central Air Conditioners and Heat Pumps, 1426-1591 2016-30004
Environmental Protection Environmental Protection Agency RULES Air Quality State Implementation Plans; Approvals and Promulgations: Georgia; Procedures for Testing and Monitoring Sources of Air Pollutants, 1206-1208 2016-31753 Pesticide Tolerances: Propiconazole; Emergency Exemptions, 1208-1210 2016-31827 PROPOSED RULES Air Quality State Implementation Plans; Approvals and Promulgations: Georgia; Procedures for Testing and Monitoring Sources of Air Pollutants, 1296 2016-31754 NOTICES Meetings: National Advisory Council for Environmental Policy and Technology; Assumable Waters Subcommittee, 1336-1337 2016-31642 Federal Aviation Federal Aviation Administration RULES Air Traffic Service Routes: Western United States, 1181-1183 2016-31901 Airworthiness Directives: Airbus Airplanes, 1170-1172, 1175-1179 2016-30411 2016-31239 B-N Group Ltd. Airplanes, 1179-1181 2016-31699 PILATUS AIRCRAFT LTD. Airplanes, 1172-1175 2016-31600 Special Conditions: Cranfield Aerospace Limited, Cessna Aircraft Co. Model 525; Tamarack Load Alleviation System and Cranfield Winglets—Interaction of Systems and Structures, 1163-1169 2016-31819 PROPOSED RULES Airworthiness Directives: Airbus Defense and Space S.A. (Formerly Known as Construcciones Aeronauticas, S.A.) Airplanes, 1269-1275 2016-31365 Airbus Helicopters, 1260-1262 2016-31866 Airbus Helicopters Deutschland GmbH Helicopters, 1252-1254 2016-31865 CFE Co. Turbofan Engines, 1258-1260 2016-31780 Pratt and Whitney Division Turbofan Engines, 1265-1267 2016-31870 Sikorsky Aircraft Corporation Helicopters (Type Certificate Previously Held by Schweizer Aircraft Corporation), 1267-1269 2016-31622 The Boeing Company Airplanes, 1254-1258, 1262-1265 2016-31367 2016-31619 Area Navigation Routes: Atlantic Coast Route Project; Northeastern United States, 1276-1279 2016-31911 Navigation Routes: Proposed Establishment, Modification and Revocation of Air Traffic Service (ATS) Routes; Western United States, 1279-1284 2016-31818 Federal Energy Federal Energy Regulatory Commission RULES Critical Electric Infrastructure Security and Amending Critical Energy Infrastructure Information: Availability of Certain North American Electric Reliability Corp. Databases to the Commission; Correction, 1183 2016-31541 NOTICES Combined Filings, 1333-1334 2016-32042 Complaints: American Municipal Power, Inc. v. Midcontinent Independent System Operator, Inc., 1330 2016-32020 Northern Illinois Municipal Power Agency v. PJM Interconnection, LLC, 1333 2016-32022 Old Dominion Electric Cooperative and Direct Energy Business, LLC v. PJM Interconnection, LLC, 1332-1333 2016-32023 Environmental Assessments; Availability, etc.: WBI Energy Transmission, Inc.; Valley Expansion Project, 1330-1332 2016-32025 Initial Market-Based Rate Filings Including Requests for Blanket Section 204 Authorizations: Enel Trading North America, Inc., 1334 2016-32024 Petitions for Declaratory Orders: Nogales Transmission, LLC; Nogales Frontier Operations, LLC, 1334-1335 2016-32021 Records Governing Off-the-Record Communications, 1329-1330 2016-32026 Federal Maritime Federal Maritime Commission NOTICES Agreements Filed, 1337 2016-32018 Fish Fish and Wildlife Service PROPOSED RULES Endangered and Threatened Wildlife and Plants: Removal of Trichostema austromontanum ssp. compactum (Hidden Lake Bluecurls) from Federal List, 1296-1307 2016-31581 NOTICES Meetings: Advisory Council on Wildlife Trafficking, 1359-1360 2016-31997 Food and Drug Food and Drug Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Imported Food under Public Health Security and Bioterrorism Preparedness and Response, 1349-1352 2016-32030 Guidance: Questions and Answers on Nutrition and Supplement Facts Labels Related to Compliance Date, Added Sugars, and Declaration of Quantitative Amounts of Vitamins and Minerals, 1347-1348 2016-32005 Reference Amounts Customarily Consumed: List of Products for Each Product Category, 1344-1345 2016-32006 Study Design Recommendations for Residue Studies in Honey for Establishing Maximum Residue Limits and Withdrawal Periods, 1342-1343 2016-31998 Meetings: Emerging Tick-Borne Diseases and Blood Safety; Public Workshop, 1343-1344 2016-32029 Pediatric Advisory Committee, 1345-1347 2016-32019 Tribal Consultation Policy, 1348-1349 2016-31951 Food and Nutrition Food and Nutrition Service PROPOSED RULES Requirements for Processing of Donated Foods, 1231-1252 2016-31561 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Evaluation of School Meal Data Collection Process, 1312-1314 2016-31953 Food Safety Food Safety and Inspection Service NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: State Meat and Poultry Inspection Programs, 1310-1312 2016-31930 Foreign Assets Foreign Assets Control Office NOTICES Blocking or Unblocking of Persons and Properties, 1423-1424 2016-32016 2016-32017 Foreign Trade Foreign-Trade Zones Board NOTICES Production Activities: Foreign-Trade Zone 68, PGTEX USA, Inc., El Paso, TX, 1316-1317 2016-32027 Foreign-Trade Zone 7, MSD International GMBH (Puerto Rico Branch) LLC, Mayaguez, PR, 1315 2016-32035 Foreign-Trade Zone 87, Westlake Chemical Corp., Lake Charles, LA, 1316 2016-32028 Givaudan Flavors Corp., Foreign-Trade Zone 46, Cincinnati, OH, 1315-1316 2016-32033 TopShip, LLC, Foreign-Trade Zone 92, Harrison County, MS, 1316 2016-32031 Health and Human Health and Human Services Department See

Centers for Disease Control and Prevention

See

Food and Drug Administration

See

Health Resources and Services Administration

See

National Institutes of Health

RULES 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties, 1210-1230 2016-31935 NOTICES Delegations of Authority under Public Health Service Act, 1356 2016-31944
Health Resources Health Resources and Services Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: National Health Service Corps Loan Repayment Program, 1352-1353 2016-31723 Proposed Changes to Black Lung Clinics Program for Consideration for FY 2017 Funding Opportunity Announcement Development, 1353-1356 2016-32003 Interior Interior Department See

Bureau of Safety and Environmental Enforcement

See

Fish and Wildlife Service

See

National Park Service

International Trade Adm International Trade Administration RULES Steel Import Monitoring and Analysis System, 1183-1185 2016-31667 NOTICES Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Certain Hot-Rolled Carbon Steel Flat Products from Russian Federation, 1318-1321 2016-31995 Certain Preserved Mushrooms from People's Republic of China, 1317-1318 2016-31992 Floor-Standing, Metal-Top Ironing Tables and Certain Parts Thereof from People's Republic of China; Administrative Reviews, 2004-2005, 2006-2007, 1322-1323 2016-31994 Sulfanilic Acid from India and People's Republic of China, 1321-1322 2016-31993 Labor Department Labor Department See

Employment and Training Administration

National Institute National Institutes of Health NOTICES Meetings: Center for Scientific Review, 1356-1358 2016-31919 2016-31920 National Institute of Allergy and Infectious Diseases, 1357 2016-31985 National Institute of Diabetes and Digestive and Kidney Diseases, 2016-31983 1358-1359 2016-31984 National Oceanic National Oceanic and Atmospheric Administration PROPOSED RULES Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic: Amendments to Reef Fish, Spiny Lobster, and Corals and Reef Associated Plants and Invertebrates Fishery Management Plans of Puerto Rico and U.S. Virgin Islands, 1308-1309 2016-31927 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: West Coast Region Pacific Tuna Fisheries Logbook and Fish Aggregating Device Form, 1323 2016-32004 Endangered and Threatened Species: Recovery Plan for Cook Inlet Beluga Whale, 1325-1326 2016-31877 Meetings: New England Fishery Management Council, 1324-1325 2016-31966 National Park National Park Service NOTICES Boundary Revisions: Snake River Headwaters, Grand Teton National Park, Yellowstone National Park, John D. Rockefeller, Jr. Memorial Parkway, and National Elk Refuge, 1360-1361 2016-31952 Nuclear Regulatory Nuclear Regulatory Commission NOTICES Environmental Assessments; Availability, etc.: Rhode Island Atomic Energy Commission, 1364-1370 2016-31980 License Amendments: Tennessee Valley Authority, Watts Bar Nuclear Plant, Unit 2, 1370-1375 2016-31931 License Applications; Amendments: Export Radioactive Waste, 1375 2016-31989 Requests to Amend Licenses for Importation of Radioactive Waste, 1375-1376 2016-31988 Peace Peace Corps RULES Eligibility and Standards for Peace Corps Volunteer Service, 1185-1192 2016-30442 Pension Benefit Pension Benefit Guaranty Corporation NOTICES Requests for Information: Requests for Approving Certain Alternative Methods for Computing Withdrawal Liability; Settlement of Withdrawal and Mass Withdrawal Liability, 1376-1380 2016-31715 Postal Service Postal Service RULES International Mailing Services: Mailing Services Price Changes, 1206 2016-31525 PROPOSED RULES Requirements for Authority to Manufacture and Distribute Postage Evidencing Systems: Customized Postage Products, 1294-1296 2016-31856 Presidential Documents Presidential Documents PROCLAMATIONS Bears Ears National Monument; Establishment (Proc. 9558), 1139-1147 2017-00038 Gold Butte National Monument; Establishment (Proc. 9559), 1149-1155 2017-00039 Special Observances: National Mentoring Month (Proc. 9560), 1157-1158 2017-00040 National Slavery and Human Trafficking Prevention Month (Proc. 9561), 1159-1160 2017-00041 National Stalking Awareness Month (Proc. 9562), 1161-1162 2017-00042 Railroad Retirement Railroad Retirement Board NOTICES Meetings; Sunshine Act, 1380-1381 2017-00005 Saint Lawrence Saint Lawrence Seaway Development Corporation PROPOSED RULES Seaway Regulations and Rules, 1285-1286 2016-32000 Tariff of Tolls, 1287-1288 2016-32001 Securities Securities and Exchange Commission NOTICES Applications: DFA Investment Dimensions Group Inc., et al., 1397-1398 2016-31938 Meetings; Sunshine Act, 1386-1387, 1396-1397 2016-32047 2016-32048 Self-Regulatory Organizations; Proposed Rule Changes: C2 Options Exchange, Inc., 1415-1419 2016-31942 Chicago Board Options Exchange, Inc., 1383-1390 2016-31941 2016-31943 LCH SA, 1398-1415 2016-31940 NASDAQ Stock Market, LLC, 1381-1383, 1390-1394 2016-31936 2016-31939 New York Stock Exchange, LLC, 1395-1396 2016-31945 NYSE Arca, Inc., 1419-1421 2016-31937 Surface Transportation Surface Transportation Board NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Dispute Resolution Procedures under Fixing America's Surface Transportation Act of 2015, 1421-1422 2016-31956 Transportation Department Transportation Department See

Federal Aviation Administration

See

Saint Lawrence Seaway Development Corporation

NOTICES Applications for Certificate Authority: Paklook Air, Inc., D/B/A Airlift Alaska, 1423 2016-31982 Applications for Commuter Air Carrier Authority: Maine Aviation Aircraft Charter, LLC, 1422 2016-31977 Applications for Commuter Authority: Aztec Worldwide Airlines, Inc., 1423 2016-31978 Applications: Galaxy Air Services FBO, LLC, D/B/A Texas Air Shuttle; Commuter Authority, 1423 2016-31981 Nealco Air Charter Services, Inc., D/B/A Watermakers Air; Commuter Air Carrier Authority, 1422 2016-31979
Treasury Treasury Department See

Foreign Assets Control Office

Veteran Affairs Veterans Affairs Department PROPOSED RULES Ecclesiastical Endorsing Organizations, 1288-1294 2016-31949 Western Western Area Power Administration NOTICES Rate Orders: Washoe Project, 1335-1336 2016-31973 Separate Parts In This Issue Part II Energy Department, 1426-1591 2016-30004 Reader Aids

Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.

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82 3 Thursday, January 5, 2017 Rules and Regulations DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 23 [Docket No.FAA-2016-9409; Special Conditions No. 23-279-SC] Special Conditions: Cranfield Aerospace Limited, Cessna Aircraft Company Model 525; Tamarack Load Alleviation System and Cranfield Winglets—Interaction of Systems and Structures AGENCY:

Federal Aviation Administration (FAA), DOT.

ACTION:

Final special conditions.

SUMMARY:

These special conditions are issued for the Cessna Aircraft Company model 525 airplane. This airplane as modified by Cranfield Aerospace Limited will have a novel or unusual design feature associated with the installation of a Tamarack Active Technology Load Alleviation System and Cranfield Winglets. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.

DATES:

These special conditions are effective January 5, 2017 and are applicable on December 23, 2016.

FOR FURTHER INFORMATION CONTACT:

Mike Reyer, Continued Operational Safety, ACE-113, Small Airplane Directorate, Aircraft Certification Service, 901 Locust; Kansas City, Missouri 64106; telephone (816) 329-4131; facsimile (816) 329-4090.

SUPPLEMENTARY INFORMATION: Background

On January 25, 2016, Cranfield Aerospace Limited (CAL) applied for a supplemental type certificate to install winglets on the Cessna Aircraft Company (Cessna) model 525. The Cessna model 525 twin turbofan engine airplane is certified in the normal category for eight seats, including a pilot, a maximum gross weight of 10,700 pounds, and a maximum altitude of 41,000 feet mean sea level.

Special conditions have been applied on past 14 CFR part 25 airplane programs in order to consider the effects of systems on structures. The regulatory authorities and industry developed standardized criteria in the Aviation Rulemaking Advisory Committee (ARAC) forum based on the criteria defined in Advisory Circular 25.672-1, dated November 15, 1983. The ARAC recommendations have been incorporated in the European Aviation Safety Agency Certification Specifications (CS) 25.302 and CS 25, appendix K. The special conditions used for part 25 airplane programs, can be applied to part 23 airplane programs in order to require consideration of the effects of systems on structures. However, some modifications to the part 25 special conditions are necessary to address differences between parts 23 and 25 as well as differences between parts 91 and 121 operating environments.

Winglets increase aerodynamic efficiency. However, winglets also increase wing design static loads, increase the severity of the wing fatigue spectra, and alter the wing fatigue stress ratio, which under limit gust and maneuvering loads factors, may exceed the certificated wing design limits. The addition of the Tamarack Active Technology Load Alleviation System (ATLAS) mitigates the winglet's adverse structural effects by reducing the aerodynamic effectiveness of the winglet when ATLAS senses gust and maneuver loads above a predetermined threshold.

The ATLAS functions as a load-relief system. This is accomplished by measuring airplane loading via an accelerometer and moving an aileron-like device called a Tamarack Active Control Surface (TACS) that reduces lift at the tip of the wing. The TACS are located outboard and adjacent to the left and right aileron control surfaces. The TACS movement reduces lift at the tip of the wing, resulting in the wing spanwise center of pressure moving inboard, thus reducing bending stresses along the wing span. Because the ATLAS compensates for the increased wing root bending at elevated load factors, the overall effect of this modification is that the required reinforcement of the existing Cessna wing structure due to the winglet installation is reduced. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature.

The ATLAS is not a primary flight control system, a trim device, or a wing flap. However, several regulations under Part 23, Subpart D—Design and Construction—Control Systems, have applicability to ATLAS, which might otherwise be considered “Not Applicable” under a strict interpretation of the regulations. These Control System regulations include §§ 23.672, 23.675, 23.677, 23.681, 23.683, 23.685, 23.693, 23.697, and 23.701.

An airplane designed with a load-relief system must provide an equivalent level of safety to an airplane with similar characteristics designed without a load-relief system. In the following special conditions, an equivalent level of safety is provided by relating the required structural safety factor to the probability of load-relief system failure and the probability of exceeding the frequency of design limit and ultimate loads.

These special conditions address several issues with the operation and failure of the load-relief system. These issues include the structural requirements for the system in the fully operational state; evaluation of the effects of system failure, both at the moment of failure and continued safe flight and landing with the failure annunciated to the pilot; and the potential for failure of the failure monitoring/pilot annunciation function.

The structural requirements for the load-relief system in the fully operational state are stated in special condition 2(e) of these special conditions. In this case, the structure must meet the full requirements of part 23, subparts C and D with full credit given for the effects of the load-relief system.

In the event of a load-relief system failure in-flight, the effects on the structure at the moment of failure must be considered as described in special condition 2(f)(l) of these special conditions. These effects include, but are not limited to the structural loads induced by a hard-over failure of the load-relief control surface and oscillatory system failures that may excite the structural dynamic modes. In evaluating these effects, pilot corrective actions may be considered and the airplane may be assumed to be in 1g (gravitation force) flight prior to the load-relief system failure. These special conditions allows credit, in the form of reduced structural factors of safety, based on the probability of failure of the load-relief system. Effects of an in-flight failure on flutter and fatigue and damage tolerance must also be evaluated.

Following the initial in-flight failure, the airplane must be capable of continued safe flight and landing. Special condition 2(f)(2) in these special conditions assumes that a properly functioning, monitoring, and annunciating system has alerted the pilot to the load-relief failure. Since the pilot has been made aware of the load-relief failure, appropriate flight limitations, including speed restrictions, may be considered when evaluating structural loads, flutter, and fatigue and damage tolerance. These special conditions allows credit, in the form of reduced structural factors of safety, based on the probability of failure of the load-relief system and the flight time remaining on the failure flight.

Special condition 2(g) of these special conditions addresses the failure of the load-relief system to annunciate a failure to the pilot. These special conditions address this concern with maintenance actions and requirements for monitoring and annunciation systems.

These special conditions have been modified from previous, similar part 25 special conditions because of the differences between parts 23 and 25 as well as to address the part 91 operating and maintenance environment. Paragraph (c)(3) of the part 25 special condition 1 is removed from these special conditions. Special condition 2(h) of these special conditions is modified to require a ferry permit for additional flights after an annunciated failure or obvious system failure.

1 Special Condition No. 25-164-SC, “Boeing Model 737-700 IGW, Interaction of Systems and Structures,” Effective August 30, 2000 (65 FR 55443).

Type Certification Basis

Under the provisions of § 21.101, Cranfield Aerospace Limited must show that the Cessna model 525, as changed, continues to meet the applicable provisions of the regulations incorporated by reference in Type Certificate No. A1WI, revision 24, or the applicable regulations in effect on the date of application for the change. The regulations incorporated by reference in the type certificate are commonly referred to as the “original type certification basis.” The regulations incorporated by reference in Type Certificate No. A1WI, revision 24 are 14 CFR part 23 effective February 1, 1965, amendments 23-1 through 23-38 and 23-40.

If the Administrator finds the applicable airworthiness regulations (i.e., 14 CFR part 23) do not contain adequate or appropriate safety standards for the Cessna model 525 because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

In addition to the applicable airworthiness regulations and special conditions, the Cessna 525 must comply with the fuel vent and exhaust emission requirements of 14 CFR part 34 and the noise certification requirements of 14 CFR part 36.

The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type-certification basis under § 21.101.

Special conditions are initially applicable to the model for which they are issued. Should the applicant apply for a supplemental type certificate to modify any other model included on the same type certificate to incorporate the same or similar novel or unusual design feature, the FAA would apply these special conditions to the other model under § 21.101.

Novel or Unusual Design Features

The Cessna model 525 will incorporate the following novel or unusual design features: Cranfield winglets with a Tamarack Active Technology Load Alleviation System.

Discussion

For airplanes equipped with systems that affect structural performance, either directly or as a result of a failure or malfunction, the applicant must take into account the influence of these systems and their failure conditions when showing compliance with the requirements of part 23, subparts C and D.

The applicant must use the following criteria for showing compliance with these special conditions for airplanes equipped with flight control systems, autopilots, stability augmentation systems, load alleviation systems, flutter control systems, fuel management systems, and other systems that either directly or as a result of failure or malfunction affect structural performance. If these special conditions are used for other systems, it may be necessary to adapt the criteria to the specific system.

Discussion of Comments

Notice of proposed special conditions No. 23-16-03-SC for the Cessna model 525 airplane was published in the Federal Register on November 22, 2016 (81 FR 83737). No comments were received, and the special conditions are adopted as proposed.

Applicability

As discussed above, these special conditions are applicable to the Cessna model 525. Should Cranfield Aerospace Limited apply at a later date for a supplemental type certificate to modify any other model included on A1WI, revision 24 to incorporate the same novel or unusual design feature, the FAA would apply these special conditions to that model as well.

Under standard practice, the effective date of final special conditions would be 30 days after the date of publication in the Federal Register; however, as the supplemental type certification date for the Cessna model 525 is imminent, the FAA finds that good cause exists to make these special conditions effective upon issuance.

Conclusion

This action affects only certain novel or unusual design features on one model of airplanes. It is not a rule of general applicability and it affects only the applicant who applied to the FAA for approval of these features on the airplane.

List of Subjects in 14 CFR Part 23

Aircraft, Aviation safety, Signs and symbols.

Authority:

49 U.S.C. 106(g), 40113, 44701, 44702, 14 CFR 21.16, 21.101; and 14 CFR 11.38 and 11.19.

The Special Conditions

Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for Cessna Aircraft Company 525 airplanes modified by Cranfield Aerospace Limited.

1. Active Technology Load Alleviation System (ATLAS) SC 23.672 Load Alleviation System

The load alleviation system must comply with the following:

(a) A warning, which is clearly distinguishable to the pilot under expected flight conditions without requiring the pilot's attention, must be provided for any failure in the load alleviation system or in any other automatic system that could result in an unsafe condition if the pilot was not aware of the failure. Warning systems must not activate the control system.

(b) The design of the load alleviation system or of any other automatic system must permit initial counteraction of failures without requiring exceptional pilot skill or strength, by either the deactivation of the system or a failed portion thereof, or by overriding the failure by movement of the flight controls in the normal sense.

(1) If deactivation of the system is used to counteract failures, the control for this initial counteraction must be readily accessible to each pilot while operating the control wheel and thrust control levers.

(2) If overriding the failure by movement of the flight controls is used, the override capability must be operationally demonstrated.

(c) It must be shown that, after any single failure of the load alleviation system, the airplane must be safely controllable when the failure or malfunction occurs at any speed or altitude within the approved operating limitations that is critical for the type of failure being considered;

(d) It must be shown that, while the system is active or after any single failure of the load alleviation system—

(1) The controllability and maneuverability requirements of part 23, subpart D, are met within a practical operational flight envelope (e.g., speed, altitude, normal acceleration, and airplane configuration) that is described in the Airplane Flight Manual (AFM); and

(2) The trim, stability, and stall characteristics are not impaired below a level needed to permit continued safe flight and landing.

SC 23.677 Load Alleviation Active Control Surface

(a) Proper precautions must be taken to prevent inadvertent or improper operation of the load alleviation system. It must be demonstrated that with the load alleviation system operating throughout its operational range, a pilot of average strength and skill level is able to continue safe flight with no objectionable increased workload.

(b) The load alleviation system must be designed so that, when any one connecting or transmitting element in the primary flight control system fails, adequate control for safe flight and landing is available.

(c) The load alleviation system must be irreversible unless the control surface is properly balanced and has no unsafe flutter characteristics. The system must have adequate rigidity and reliability in the portion of the system from the control surface to the attachment of the irreversible unit to the airplane structure.

(d) It must be demonstrated the airplane is safely controllable and a pilot can perform all maneuvers and operations necessary to affect a safe landing following any load alleviation system runaway not shown to be extremely improbable, allowing for appropriate time delay after pilot recognition of the system runaway. The demonstration must be conducted at critical airplane weights and center of gravity positions.

SC 23.683 Operation Tests

(a) It must be shown by operation tests that, when the flight control system and the load alleviation systems are operated and loaded as prescribed in paragraph (c) of this section, the flight control system and load alleviation systems are free from—

(1) Jamming;

(2) Excessive friction; and

(3) Excessive deflection.

(b) The operation tests in paragraph (a) of this section must also show the load alleviation system and associated surfaces do not restrict or prevent aileron control surface movements, or cause any adverse response of the ailerons, under the loading prescribed in paragraph (c) of this section that would prevent continued safe flight and landing.

(c) The prescribed test loads are for the entire load alleviation and flight control systems, loads corresponding to the limit air loads on the appropriate surfaces.

Note:

Advisory Circular (AC) 23-17C “Systems and Equipment Guide to Certification of Part 23 Airplanes” provides guidance on potential methods of compliance with this section and other regulations applicable to this STC project.

SC 23.685 Control System Details

(a) Each detail of the load alleviation system and related moveable surfaces must be designed and installed to prevent jamming, chafing, and interference from cargo, passengers, loose objects, or the freezing of moisture.

(b) There must be means in the cockpit to prevent the entry of foreign objects into places where they would jam any one connecting or transmitting element of the load alleviation system.

(c) Each element of the load alleviation system must have design features, or must be distinctively and permanently marked, to minimize the possibility of incorrect assembly that could result in malfunctioning of the control system.

SC 23.697 Load Alleviation System Controls

(a) The load alleviation control surface must be designed so that during normal operation, when the surface has been placed in any position, it will not move from that position unless the control is adjusted or is moved by the operation of a load alleviation system.

(b) The rate of movement of the control surface in response to the load alleviation system controls must give satisfactory flight and performance characteristics under steady or changing conditions of airspeed, engine power, attitude, flap configuration, speedbrake position, and during landing gear extension and retraction.

SC 23.701 Load Alleviation System Interconnection

(a) The load alleviation system and related movable surfaces as a system must—

(1) Be synchronized by a mechanical interconnection between the movable surfaces or by an approved equivalent means; or

(2) Be designed so the occurrence of any failure of the system that would result in an unsafe flight characteristic of the airplane is extremely improbable; or

(b) The airplane must be shown to have safe flight characteristics with any combination of extreme positions of individual movable surfaces.

(c) If an interconnection is used in multiengine airplanes, it must be designed to account for unsymmetrical loads resulting from flight with the engines on one side of the plane of symmetry inoperative and the remaining engines at takeoff power. For single-engine airplanes, and multiengine airplanes with no slipstream effects on the load alleviation system, it may be assumed that 100 percent of the critical air load acts on one side and 70 percent on the other.

Sections 23.675, “Stops;” 23.681, “Limit Load Static Tests;” and 23.693, “Joints”

The load alleviation system must comply with §§ 23.675, 23.681, and 23.693 as written and no unique special condition will be required for these regulations.

Applicability of Control System Regulations to Other Control Systems

If applicable, other control systems used on the Cessna 525 may require a showing of compliance to §§ 23.672, 23.675, 23.677, 23.681, 23.683, 23.685, 23.693, 23.697 and 23.701 as written for this STC project.

2. Interaction of Systems and Structures

(a) The criteria defined herein only address the direct structural consequences of the system responses and performances and cannot be considered in isolation but should be included in the overall safety evaluation of the airplane. These criteria may in some instances duplicate standards already established for this evaluation. These criteria are only applicable to structure whose failure could prevent continued safe flight and landing. Specific criteria that define acceptable limits on handling characteristics or stability requirements when operating in the system degraded or inoperative mode are not provided in this special condition.

(b) Depending upon the specific characteristics of the airplane, additional studies may be required that go beyond the criteria provided in this special condition in order to demonstrate the capability of the airplane to meet other realistic conditions such as alternative gust or maneuver descriptions for an airplane equipped with a load alleviation system.

(c) The following definitions are applicable to this special condition.

(1) Structural performance: Capability of the airplane to meet the structural requirements of 14 CFR part 23.

(2) Flight limitations: Limitations that can be applied to the airplane flight conditions following an in-flight occurrence and that are included in the flight manual (e.g., speed limitations, avoidance of severe weather conditions, etc.).

(3) [Reserved]

(4) Probabilistic terms: The probabilistic terms (probable, improbable, extremely improbable) used in this special condition are the same as those used in § 23.1309. For the purposes of this special condition, extremely improbable for normal, utility, and acrobatic category airplanes is defined as 10 8 per hour. For commuter category airplanes, extremely improbable is defined as 10 9 per hour.

(5) Failure condition: The term failure condition is the same as that used in § 23.1309, however this special condition applies only to system failure conditions that affect the structural performance of the airplane (e.g., system failure conditions that induce loads, change the response of the airplane to inputs such as gusts or pilot actions, or lower flutter margins).

(d) General. The following criteria (paragraphs (e) through (i)) will be used in determining the influence of a system and its failure conditions on the airplane structure.

(e) System fully operative. With the system fully operative, the following apply:

(1) Limit loads must be derived in all normal operating configurations of the system from all the limit conditions specified in subpart C (or defined by special condition or equivalent level of safety in lieu of those specified in subpart C), taking into account any special behavior of such a system or associated functions or any effect on the structural performance of the airplane that may occur up to the limit loads. In particular, any significant nonlinearity (rate of displacement of control surface, thresholds or any other system nonlinearities) must be accounted for in a realistic or conservative way when deriving limit loads from limit conditions.

(2) The airplane must meet the strength requirements of part 23 (static strength and residual strength for failsafe or damage tolerant structure), using the specified factors to derive ultimate loads from the limit loads defined above. The effect of nonlinearities must be investigated beyond limit conditions to ensure the behavior of the system presents no anomaly compared to the behavior below limit conditions. However, conditions beyond limit conditions need not be considered when it can be shown that the airplane has design features that will not allow it to exceed those limit conditions.

(3) The airplane must meet the aeroelastic stability requirements of § 23.629.

(f) System in the failure condition. For any system failure condition not shown to be extremely improbable, the following apply:

(1) At the time of occurrence. Starting from 1-g level flight conditions, a realistic scenario, including pilot corrective actions, must be established to determine the loads occurring at the time of failure and immediately after failure.

(i) For static strength substantiation, these loads, multiplied by an appropriate factor of safety that is related to the probability of occurrence of the failure, are ultimate loads to be considered for design. The factor of safety is defined in figure 1.

ER05JA17.316

(ii) For residual strength substantiation, the airplane must be able to withstand two thirds of the ultimate loads defined in subparagraph (f)(1)(i).

(iii) For pressurized cabins, these loads must be combined with the normal operating differential pressure.

(iv) Freedom from aeroelastic instability must be shown up to the speeds defined in § 23.629(f). For failure conditions that result in speeds beyond VD/MD, freedom from aeroelastic instability must be shown to increased speeds, so that the margins intended by § 23.629(f) are maintained.

(v) Failures of the system that result in forced structural vibrations (oscillatory failures) must not produce loads that could result in detrimental deformation of primary structure.

(2) For the continuation of the flight. For the airplane, in the system failed state and considering any appropriate reconfiguration and flight limitations, the following apply:

(i) The loads derived from the following conditions (or defined by special condition or equivalent level of safety in lieu of the following conditions) at speeds up to VC/MC, or the speed limitation prescribed for the remainder of the flight, must be determined:

(A) The limit symmetrical maneuvering conditions specified in §§ 23.321, 23.331, 23.333, 23.345, 23.421, 23.423, and 23.445.

(B) The limit gust and turbulence conditions specified in §§ 23.341, 23.345, 23.425, 23.443, and 23.445.

(C) The limit rolling conditions specified in § 23.349 and the limit unsymmetrical conditions specified in §§ 23.347, 23.427, and 23.445.

(D) The limit yaw maneuvering conditions specified in §§ 23.351, 23.441, and 23.445.

(E) The limit ground loading conditions specified in §§ 23.473 and 23.493.

(ii) For static strength substantiation, each part of the structure must be able to withstand the loads in paragraph (f)(2)(i) of this special condition multiplied by a factor of safety depending on the probability of being in this failure state. The factor of safety is defined in figure 2.

ER05JA17.317

(iii) For residual strength substantiation, the airplane must be able to withstand two thirds of the ultimate loads defined in paragraph (f)(2)(ii) of this special condition. For pressurized cabins, these loads must be combined with the normal operating pressure differential.

(iv) If the loads induced by the failure condition have a significant effect on fatigue or damage tolerance then their effects must be taken into account.

(v) Freedom from aeroelastic instability must be shown up to a speed determined from figure 3. Flutter clearance speeds V′ and V″ may be based on the speed limitation specified for the remainder of the flight using the margins defined by § 23.629.

ER05JA17.318

(vi) Freedom from aeroelastic instability must also be shown up to V′ in figure 3 above, for any probable system failure condition combined with any damage required or selected for investigation by §§ 23.571 through 23.574.

(3) Consideration of certain failure conditions may be required by other sections of 14 CFR part 23 regardless of calculated system reliability. Where analysis shows the probability of these failure conditions to be less than 10 8 for normal, utility, or acrobatic category airplanes or less than 10 9 for commuter category airplanes, criteria other than those specified in this paragraph may be used for structural substantiation to show continued safe flight and landing.

(g) Failure indications. For system failure detection and indication, the following apply:

(1) The system must be checked for failure conditions, not extremely improbable, that degrade the structural capability below the level required by part 23 or significantly reduce the reliability of the remaining system. As far as reasonably practicable, the flightcrew must be made aware of these failures before flight. Certain elements of the control system, such as mechanical and hydraulic components, may use special periodic inspections, and electronic components may use daily checks, in lieu of detection and indication systems to achieve the objective of this requirement. These certification maintenance requirements must be limited to components that are not readily detectable by normal detection and indication systems and where service history shows that inspections will provide an adequate level of safety.

(2) The existence of any failure condition, not extremely improbable, during flight that could significantly affect the structural capability of the airplane and for which the associated reduction in airworthiness can be minimized by suitable flight limitations, must be signaled to the flightcrew. The probability of not annunciating these failure conditions must be extremely improbable (unannunciated failure). For example, failure conditions that result in a factor of safety between the airplane strength and the loads of subpart C below 1.25, or flutter margins below V″, must be signaled to the flightcrew during flight.

(h) Further flights with known load-relief system failure. Additional flights after an annunciated failure of the load-relief system or obvious failure of the load-relief system are permitted with a ferry permit only. In these cases, ferry permits may be issued to allow moving the airplane to an appropriate maintenance facility. Additional flights are defined as, further flights after landing on a flight where an annunciated or obvious failure of the load-relief system has occurred or after an annunciated or obvious failure of the load-relief system occurs during preflight preparation.

(i) Fatigue and damage tolerance. If any system failure would have a significant effect on the fatigue or damage evaluations required in §§ 23.571 through 23.574, then these effects must be taken into account.

Issued in Kansas City, Missouri, on December 23, 2016. Barry Ballenger, Acting Manager, Small Airplane Directorate, Aircraft Certification Service.
[FR Doc. 2016-31819 Filed 1-4-17; 8:45 am] BILLING CODE 4910-13-P
DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-9057; Directorate Identifier 2016-NM-055-AD; Amendment 39-18763; AD 2016-26-05] RIN 2120-AA64 Airworthiness Directives; Airbus Airplanes AGENCY:

Federal Aviation Administration (FAA), Department of Transportation (DOT).

ACTION:

Final rule.

SUMMARY:

We are superseding Airworthiness Directive (AD) 2014-26-08, for all Airbus Model A330-200, -200F, and -300 series airplanes. AD 2014-26-08 required revising the maintenance or inspection program to incorporate new maintenance requirements and airworthiness limitations. This new AD requires revising the maintenance or inspection program, as applicable, to incorporate new or revised airworthiness limitation requirements. This new AD also removes certain airplanes from the applicability. This AD was prompted by a determination that more restrictive maintenance instructions and airworthiness limitations are necessary. We are issuing this AD to address the unsafe condition on these products.

DATES:

This AD is effective February 9, 2017.

The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of February 9, 2017.

The Director of the Federal Register approved the incorporation by reference of a certain other publication listed in this AD as of March 2, 2015 (80 FR 3866, January 26, 2015).

ADDRESSES:

For service information identified in this final rule, contact Airbus SAS, Airworthiness Office—EAL, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 45 80; email [email protected]; Internet http://www.airbus.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221. It is also available on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9057.

Examining the AD Docket

You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9057; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The address for the Docket Office (telephone 800-647-5527) is Docket Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT:

Vladimir Ulyanov, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1138; fax 425-227-1149.

SUPPLEMENTARY INFORMATION:

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2014-26-08, Amendment 39-18059 (80 FR 3866, January 26, 2015) (“AD 2014-26-08”). AD 2014-26-08 applied to all Airbus Model A330-200, -200F, and -300 series airplanes. The NPRM published in the Federal Register on September 12, 2016 (81 FR 62676) (“the NPRM”). The NPRM was prompted by a determination that more restrictive maintenance instructions and airworthiness limitations are necessary. The NPRM proposed to require revising the maintenance or inspection program to incorporate new maintenance requirements and airworthiness limitations. The NPRM also proposed to remove certain airplanes from the applicability. We are issuing this AD to prevent safety-significant latent failures that would, in combination with one or more other specific failures or events, result in a hazardous or catastrophic failure condition.

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2016-0066, dated April 6, 2016 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Model A330-200, -200F, and -300 series airplanes. The MCAI states:

The airworthiness limitations are currently defined and published in the Airbus A330 and A340 Airworthiness Limitations Section (ALS) documents.

The mandatory instructions and airworthiness limitations applicable to the Certification Maintenance Requirements (CMR), which are approved by EASA, are specified in Airbus A330 and A340 ALS Part 3. Failure to comply with these instructions could result in an unsafe condition.

EASA issued AD 2013-0245 (A330 aeroplanes) [which corresponds to FAA AD 2014-26-08] and AD 2013-0021 (A340 aeroplanes) to require the actions as specified in Airbus A330 and A340 ALS Part 3 at Revision 04 and Revision 02, respectively.

Since those [EASA] ADs were issued, Airbus issued Revision 05 and Revision 03, respectively, of Airbus A330 and A340 ALS Part 3, to introduce more restrictive maintenance requirements.

For the reason described above, this [EASA] AD retains the requirements of EASA AD 2013-0245 and [EASA] AD 2013-0021, which are superseded, and requires accomplishment of the actions specified in Airbus A330 ALS Part 3 Revision 05, or A340 ALS Part 3 Revision 03, as applicable * * *.

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-2016-9057.

Comments

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.

Conclusion

We reviewed the available 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.

Related Service Information Under 1 CFR Part 51

We reviewed Airbus A330 Airworthiness Limitations Section ALS Part 3—Certification Maintenance Requirements, Revision 04, dated August 17, 2013; and Revision 05, dated October 19, 2015. The service information describes updated inspections and intervals to be incorporated into the maintenance or inspection program. These documents are distinct because each revision contains unique changes to be incorporated into the maintenance or inspection program.

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.

Costs of Compliance

We estimate that this AD affects 104 airplanes of U.S. registry.

The actions required by AD 2014-26-08, and retained in this AD take about 1 work-hour per product, at an average labor rate of $85 per work-hour. Based on these figures, the estimated cost of the actions that are required by AD 2014-26-08 is $85 per product.

We also estimate that it takes about 2 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this AD on U.S. operators to be $17,680, or $170 per product.

Authority for This Rulemaking

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.

Regulatory Findings

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.

List of Subjects in 14 CFR Part 39

Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

Adoption of the Amendment

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

PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

49 U.S.C. 106(g), 40113, 44701.

§ 39.13 [Amended]
2. The FAA amends § 39.13 by removing Airworthiness Directive (AD) 2014-26-08, Amendment 39-18059 (80 FR 3866, January 26, 2015), and adding the following new AD: 2016-26-05 Airbus: Amendment 39-18763; Docket No. FAA-2016-9057; Directorate Identifier 2016-NM-055-AD. (a) Effective Date

This AD is effective February 9, 2017.

(b) Affected ADs

This AD replaces AD 2014-26-08, Amendment 39-18059 (80 FR 3866, January 26, 2015) (“AD 2014-26-08”).

(c) Applicability

This AD applies to Airbus Model A330-201, -202, -203, -223, -223F -243, -243F, -301, -302, -303, -321, -322, -323, -341, -342, and -343 airplanes, certificated in any category, with an original certificate of airworthiness or original export certificate of airworthiness issued on or before October 19, 2015.

(d) Subject

Air Transport Association (ATA) of America Code 05, Periodic inspections.

(e) Reason

This AD was prompted by a determination that more restrictive maintenance instructions and airworthiness limitations are necessary. We are issuing this AD to prevent safety-significant latent failures that would, in combination with one or more other specific failures or events, result in a hazardous or catastrophic failure condition.

(f) Compliance

Comply with this AD within the compliance times specified, unless already done.

(g) Retained: Revision of the Maintenance or Inspection Program, With No Changes

This paragraph restates the requirements of paragraph (k) of AD 2014-26-08, with no changes.

(1) Within 90 days after March 2, 2015 (the effective date of AD 2014-26-08): Revise the maintenance or inspection program, as applicable, to incorporate Airbus A330 Airworthiness Limitations Section ALS Part 3—Certification Maintenance Requirements, Revision 04, dated August 27, 2013. Within the applicable compliance time defined in the “Record of Revisions” section of Airbus A330 Airworthiness Limitations Section ALS Part 3—Certification Maintenance Requirements, Revision 04, dated August 27, 2013, except as provided by paragraph (g)(2) of this AD, accomplish all applicable maintenance tasks. Accomplishing the actions specified in paragraph (i) of this AD terminates the requirements of this paragraph.

(2) Where paragraph 3 of the “Record of Revisions” section of Airbus A330 Airworthiness Limitations Section ALS Part 3—Certification Maintenance Requirements, Revision 04, dated August 27, 2013, specifies accomplishing the actions “from 27 August 2013,” this AD requires compliance within the specified compliance time after March 2, 2015 (the effective date of AD 2014-26-08).

(h) Retained: No Alternative Inspections or Intervals, With No Changes

This paragraph restates the requirements of paragraph (l) of AD 2014-26-08, with no changes. After accomplishment of the action required by paragraph (g)(1) of this AD, no alternative inspections or inspection intervals may be used, other than those specified in Airbus A330 Airworthiness Limitations Section ALS Part 3—Certification Maintenance Requirements, Revision 04, dated August 27, 2013, except as provided by paragraphs (g)(2) and (i) of this AD, unless the inspections or intervals are approved as an AMOC in accordance with the procedures specified in paragraph (k)(1) of this AD.

(i) New: Revision of the Maintenance or Inspection Program

Within 90 days after the effective date of this AD: Revise the maintenance or inspection program, as applicable, to incorporate Airbus A330 Airworthiness Limitations Section ALS Part 3—Certification Maintenance Requirements, Revision 05, dated October 19, 2015. Accomplishing the actions specified in this paragraph terminates the requirements of paragraph (g) of this AD.

(j) New: No Alternative Inspections or Intervals

After the action required by paragraph (i) of this AD has been done, no alternative inspections or inspection intervals may be used, other than those specified in Airbus A330 Airworthiness Limitations Section ALS Part 3—Certification Maintenance Requirements, Revision 05, dated October 19, 2015, unless the inspections or intervals are approved as an AMOC in accordance with the procedures specified in paragraph (k)(1) of this AD.

(k) Other FAA AD Provisions

The following provisions also apply to this AD:

(1) Alternative Methods of Compliance (AMOCs): The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the International Branch, send it to ATTN: Vladimir Ulyanov, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1138; fax 425-227-1149. Information may be emailed to: [email protected] Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.

(2) Contacting the Manufacturer: As of the effective date of this AD, for any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or the European Aviation Safety Agency (EASA); or Airbus's EASA Design Organization Approval (DOA). If approved by the DOA, the approval must include the DOA-authorized signature.

(l) Related Information

Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2016-0066, dated April 6, 2016, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9057.

(m) Material Incorporated by Reference

(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.

(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.

(3) The following service information was approved for IBR on February 9, 2017.

(i) Airbus A330 Airworthiness Limitations Section ALS Part 3—Certification Maintenance Requirements, Revision 05, dated October 19, 2015. The revision level of this document is identified on only the title page and in the Revision Status and the Record of Revisions.

(ii) Reserved.

(4) The following service information was approved for IBR on March 2, 2015 (80 FR 3866, January 26, 2015).

(i) Airbus A330 Airworthiness Limitations Section ALS Part 3—Certification Maintenance Requirements, Revision 04, dated August 27, 2013. The revision level of this document is identified on only the title page and in the Record of Revisions. The revision date is not identified on the title page of this document.

(ii) Reserved.

(5) For service information identified in this AD, contact Airbus SAS, Airworthiness Office—EAL, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 45 80; email [email protected]; Internet http://www.airbus.com.

(6) You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

(7) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.

Issued in Renton, Washington, on December 15, 2016. Victor Wicklund, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
[FR Doc. 2016-31239 Filed 1-4-17; 8:45 am] BILLING CODE 4910-13-P
DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-7003; Directorate Identifier 2016-CE-015-AD; Amendment 39-18766; AD 2016-26-08] RIN 2120-AA64 Airworthiness Directives; PILATUS AIRCRAFT LTD. Airplanes AGENCY:

Federal Aviation Administration (FAA), Department of Transportation (DOT).

ACTION:

Final rule.

SUMMARY:

We are superseding Airworthiness Directive (AD) 2014-22-01 for all PILATUS AIRCRAFT LTD. Models PC-12, PC-12/45, PC-12/47, and PC-12/47E airplanes. This AD results from mandatory continuing airworthiness information (MCAI) issued by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as a need to incorporate new revisions into the Limitations section, Chapter 4, of the FAA-approved maintenance program (e.g., maintenance manual). The limitations were revised to include repetitive inspections of the main landing gear (MLG) attachment bolts. We are issuing this AD to require actions to address the unsafe condition on these products.

DATES:

This AD is effective February 9, 2017.

The Director of the Federal Register approved the incorporation by reference of certain publications listed in the AD as of February 9, 2017.

ADDRESSES:

You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-7003; or in person at the Docket Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

For service information identified in this AD, contact PILATUS AIRCRAFT LTD., Customer Service Manager, CH-6371 STANS, Switzerland; telephone: +41 (0) 41 619 33 33; fax: +41 (0) 41 619 73 11; Internet: http://www.pilatus-aircraft.com or email: [email protected] You may view this referenced service information at the FAA, Small Airplane Directorate, 901 Locust, Kansas City, Missouri 64106. For information on the availability of this material at the FAA, call (816) 329-4148. It is also available on the Internet at http://www.regulations.gov by searching for Docket No. FAA-2016-7003.

FOR FURTHER INFORMATION CONTACT:

Doug Rudolph, Aerospace Engineer, FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone: (816) 329-4059; fax: (816) 329-4090; email: [email protected]

SUPPLEMENTARY INFORMATION: Discussion

We issued a supplemental notice of proposed rulemaking (SNPRM) to amend 14 CFR part 39 by adding an AD that would apply to all PILATUS AIRCRAFT LTD. Models PC-12, PC-12/45, PC-12/47, and PC-12/47E airplanes. That SNPRM was published in the Federal Register on August 31, 2016 (81 FR 59919), and proposed to supersede AD 2014-22-01, Amendment 39-18005 (79 FR 67343, November 13, 2014).

The SNPRM proposed to correct an unsafe condition for the specified products and was based on mandatory continuing airworthiness information (MCAI) originated by an aviation authority of another country. The MCAI states:

The airworthiness limitations are currently defined and published in the Pilatus PC-12 Aircraft Maintenance Manual(s) (AMM) under Chapter 4, Structural, Component and Miscellaneous—Airworthiness Limitations Section (ALS) documents. The limitations contained in these documents have been identified as mandatory for continued airworthiness.

Failure to comply with these instructions could result in an unsafe condition.

EASA issued AD 2014-0170 requiring the actions as specified in ALS, Chapter 4 of AMM report 02049 issue 28, for PC-12, PC-12/45 and PC-12/47 aeroplanes, and Chapter 4 of AMM report 02300 issue 11, for PC-12/47E aeroplanes.

Since that AD was issued, Pilatus issued Chapter 4 of PC-12 AMM report 02049 issue 31, and Chapter 4 of PC-12 AMM report 02300 issue 14 (hereafter collectively referred to as `the applicable ALS' in this AD), to incorporate new six-year and ten-year inspection intervals for several main landing gear (MLG) attachment bolts, and an annual inspection interval for the MLG shock absorber attachment bolts, which was previously included in the AMM Chapter 5 annual inspection. After a further review of the in-service data, Pilatus issued Service Letter (SL) 186, extending the special compliance time applicable for the MLG bolts inspection.

For the reasons described above, this AD retains the requirements of EASA AD 2014-0170, which is superseded, and requires the accomplishment of the new maintenance tasks, as described in the applicable ALS.

The MCAI can be found in the AD docket on the Internet at https://www.regulations.gov/document?D=FAA-2016-7003-0002.

Comments

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

Request To Incorporate Requirements of the New Revisions to the Limitations Section of the FAA-Approved Maintenance Program Into This AD

Fernando Campos of KACALP Flight Operations requested that the requirements of the new revisions to the Limitations section of the FAA-approved maintenance program (e.g., maintenance manual) be written into the AD instead of requiring operators to insert these new revisions into the Limitations section of the FAA-approved maintenance program (e.g., maintenance manual).

The commenter stated that most operators do not own a maintenance library subscription (hardcopy of the maintenance manual) from PILATUS AIRCRAFT LTD. (Pilatus). Therefore, it would be impossible to comply with paragraph (f)(1) of the proposed AD.

The commenter also stated that Pilatus PC-12 airplane operators are not subject to 14 CFR 91.409(e) and/or 14 CFR 91.409(f)(3) “Inspection Program” and operators can maintain their airplane in accordance with the operating rules of 14 CFR 91.409(a) and 14 CFR 91.409(b) only.

We do not agree with the commenter. Although some operators may or may not own a current hardcopy subscription of the Pilatus PC-12 maintenance library (e.g., maintenance manual), 14 CFR 21.50 requires that a complete set of instructions for continued airworthiness (ICA) be delivered with the airplane. Therefore, it is possible for an operator to comply with paragraph (f)(1) of this AD using the set of ICA delivered with the airplane. Pilatus PC-12 airplanes are bound by 14 CFR 91.409(a) and 14 CFR 91.409(b) if operated for hire. An option for 14 CFR 135 operators, if they desire to use an “Approved Aircraft Inspection Program” is 14 CFR 91.409(c). An option for using a “Progressive Inspection” is 14 CFR 91.409(d), and the Pilatus PC-12 ICA has such a program already in it. Operators of a Pilatus PC-12 airplane are not normally subject to 14 CFR 91.409(e) or 14 CFR 91.409(f)(3); however, if an exemption to 14 CFR 91.409(e) is granted to an operator, then 14 CFR 409(f)(3) is an option as well. Incorporating the limitation requirements into the AD could potentially cause confusion and/or unintended new unsafe conditions if there were any inadvertent changes when rewriting the limitations into this AD. In addition, this deviates from the method utilized by the foreign airworthiness authority in the MCAI and could cause confusion with future rulemaking.

We have not changed the AD based on this comment.

Request To Allow All A&P Mechanics To Do the Supplemental Structural Inspection Document (SSID) Program

Fernando Campos of KACALP Flight Operations requested that the AD be revised to allow all A&P mechanics to do the SSID program.

The commenter stated that paragraph (f)(3) of the proposed AD states that “only authorized Pilatus Service Centers can do the SSID.” The commenter stated that this is illegal and contrary to U.S. antitrust laws. Properly certificated repair stations and A&P mechanics cannot be prevented from engaging in aircraft commerce, especially if they have the appropriate ratings from the FAA under 14 CFR parts 65 and 145.

The FAA does not agree with the commenter that the requirements in this AD are illegal and contrary to U.S. antitrust laws. There is little margin for error on the safety risk presented in the SSID. Although the FAA believes that the requirement to use only Pilatus services centers appropriately addresses this risk, we will also consider an alternative method of compliance (AMOC), as stated in the AD. The FAA can issue an AMOC that allows properly certified mechanics to do the actions in the SSID, providing we believe the additional risk presented in the SSID is appropriately addressed. For such an AMOC, you should contact the FAA at the contact specified in paragraph (g)(1) of this AD.

We have not changed this AD based on this comment at this time, although we will consider AMOCs as indicated above.

Request Compliance Credit for Using Electronic Versus Hardcopy Maintenance Manual

Fernando Campos of KACALP Flight Operations requested compliance be allowed for operators who subscribe to the Pilatus maintenance library electronically (instead of hardcopy).

We agree with the commenter. Although we have to account for the actual paper document due to the fact that we have to incorporate by reference the documents referenced in this AD and make it part of the regulation, we understand the concerns. We added language to this AD stating that compliance with the electronic version of the Limitations sections to the FAA-approved maintenance program (e.g., maintenance manual) is acceptable provided the specifically referenced section is followed even though there may be differences with the pagination.

We have changed this AD based on this comment.

Conclusion

We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting the AD 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 SNPRM for correcting the unsafe condition; and

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

Related Service Information

PILATUS AIRCRAFT LTD. has issued Structural, Component and Miscellaneous—Airworthiness Limitations, document 12-A-04-00-00-00A-000A-A, dated July 12, 2016, and Structural and Component Limitations—Airworthiness Limitations, document 12-B-04-00-00-00A-000A-A, dated July 19, 2016. 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 of the AD.

Costs of Compliance

We estimate that this AD will affect 770 products of U.S. registry. We also estimate that it will take about 1.5 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this AD on U.S. operators to be $98,175, or $127.50 per product. This breaks down as follows:

• Incorporating new revisions into the Limitations section, Chapter 4, of the FAA-approved maintenance program (e.g., maintenance manual): .5 work-hour for a fleet cost of $32,725, or $42.50 per product.

• New inspections of the MLG attachment bolts: 1 work-hour with no parts cost for fleet cost of $65,450 or $85 per product.

In addition, we estimate that any necessary corrective actions (on-condition costs) that must be taken based on the inspections will take about 1 work-hour and require parts costing approximately $100 for a cost of $185 per product. We have no way of determining the number of products that may need these necessary corrective actions.

The only costs that will be imposed by this AD over that already required by AD 2014-22-01 is the costs associated with the insertion of the revised Limitation section and the MLG attachment bolts inspection and replacement as necessary.

Authority for This Rulemaking

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.

Regulatory Findings

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 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.

Examining the AD Docket

You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-7003; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains the NPRM, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone (800) 647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

List of Subjects in 14 CFR Part 39

Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

Adoption of the Amendment

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

PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

49 U.S.C. 106(g), 40113, 44701.

§ 39.13 [Amended]
2. The FAA amends § 39.13 by removing 39-18005 (79 FR 67343, November 13, 2014) and adding the following new AD: 2016-26-08 PILATUS AIRCRAFT LTD.: Amendment 39-18766; Docket No. FAA-2016-7003; Directorate Identifier 2016-CE-015-AD. (a) Effective Date

This airworthiness directive (AD) becomes effective February 9, 2017.

(b) Affected ADs

This AD replaces AD 2014-22-01, 39-18005 (79 FR 67343, November 13, 2014).

(c) Applicability

This AD applies to PILATUS AIRCRAFT LTD. Models PC-12, PC-12/45, PC-12/47, and PC-12/47E airplanes, all manufacturer serial numbers (MSNs), certificated in any category.

(d) Subject

Air Transport Association of America (ATA) Code 5: Time Limits.

(e) Reason

This AD was prompted by mandatory continuing airworthiness information (MCAI) originated by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as a need to incorporate new revisions into the Limitations section, Chapter 4, of the FAA-approved maintenance program (e.g., maintenance manual). The limitations were revised to include repetitive inspections of the main landing gear (MLG) attachment bolts. These actions are required to ensure the continued operational safety of the affected airplanes.

(f) Actions and Compliance

Unless already done, do the actions in paragraphs (f)(1) through (6) of this AD:

(1) Before further flight after February 9, 2017 (the effective date of this AD), insert the following revisions into the Limitations section of the FAA-approved maintenance program (e.g., maintenance manual). Compliance with an electronic version of the Limitations section is acceptable provided the specifically referenced sections are followed even though there may be differences with the pagination:

(i) STRUCTURAL, COMPONENT AND MISCELLANEOUS—AIRWORTHINESS LIMITATIONS, Data module code 12-A-04-00-00-00A-000A-A, dated July 12, 2016, of the Pilatus Model type—PC-12, PC-12/45, PC-12/47 MSN-101-888, Aircraft Maintenance Manual (AMM), Document No. 02049, 12-A-AM-00-00-00-I, revision 32, dated July 18, 2016; and

(ii) STRUCTURAL AND COMPONENT LIMITATIONS—AIRWORTHINESS LIMITATIONS, Data module code 12-B-04-00-00-00A-000A-A, dated July 19, 2016, of the Pilatus Model type—PC-12/47E MSN-1001-UP, Aircraft Maintenance Manual (AMM), Document No. 02300, 12-B-AM-00-00-00-I, revision 15, dated July 30, 2016.

(2) The new limitations section revisions listed in paragraphs (f)(1)(i) and (ii) of this AD specify the following:

(i) Establish inspections of the MLG attachment bolts,

(ii) Specify replacement of components before or upon reaching the applicable life limit, and

(iii) Specify accomplishment of all applicable maintenance tasks within certain thresholds and intervals.

(3) Only authorized Pilatus Service Centers can do the Supplemental Structural Inspection Document (SSID) as required by the documents in paragraphs (f)(1)(i) and (ii) of this AD because deviations from the type design in critical locations could make the airplane ineligible for this life extension.

(4) If no compliance time is specified in the documents listed in paragraphs (f)(1)(i) and (ii) of this AD when doing any corrective actions where discrepancies are found as required in paragraph (f)(2)(iii) of this AD, do these corrective actions before further flight after doing the applicable maintenance task.

(5) During the accomplishment of the actions required in paragraph (f)(2) of this AD, including all subparagraphs, if a discrepancy is found that is not identified in the documents listed in paragraphs (f)(1)(i) and (ii) of this AD, before further flight after finding the discrepancy, contact PILATUS AIRCRAFT LTD. at the address specified in paragraph (h) of this AD for a repair scheme and incorporate that repair scheme.

(6) Before or upon accumulating 6 years time-in-service (TIS) on the MLG attachment bolts or within the next 3 months TIS after February 9, 2017 (the effective date of this AD), whichever occurs later, inspect the MLB attachment bolts for cracks and corrosion and before further flight take all necessary corrective actions.

(g) Other FAA AD Provisions

The following provisions also apply to this AD:

(1) Alternative Methods of Compliance (AMOCs): The Manager, Standards Office, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Send information to ATTN: Doug Rudolph, Aerospace Engineer, FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone: (816) 329-4059; fax: (816) 329-4090; email: [email protected]

(i) Before using any approved AMOC on any airplane to which the AMOC applies, notify your appropriate principal inspector (PI) in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO.

(ii) AMOCs approved for AD 2014-22-01, 39-18005 (79 FR 67343, November 13, 2014) are not approved as AMOCs for this AD.

(2) Airworthy Product: For any requirement in this AD to obtain corrective actions from a manufacturer or other source, use these actions if they are FAA-approved. Corrective actions are considered FAA-approved if they are approved by the State of Design Authority (or their delegated agent). You are required to assure the product is airworthy before it is returned to service.

(h) Related Information

Refer to MCAI European Aviation Safety Agency (EASA) AD No. 2016-0083, dated April 28, 2016, for related information. You may examine the MCAI on the Internet at https://www.regulations.gov/document?D=FAA-2016-7003-0002.

(i) Material Incorporated by Reference

(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.

(2) You must use this service information as applicable to do the actions required by this AD, unless the AD specifies otherwise.

(i) STRUCTURAL, COMPONENT AND MISCELLANEOUS—AIRWORTHINESS LIMITATIONS, Data module code 12-A-04-00-00-00A-000A-A, dated July 12, 2016, of the Pilatus Model type—PC-12, PC-12/45, PC-12/47 MSN-101-888, Aircraft Maintenance Manual (AMM), Document No. 02049, 12-A-AM-00-00-00-I, revision 32, dated July 18, 2016.

(ii) STRUCTURAL AND COMPONENT LIMITATIONS—AIRWORTHINESS LIMITATIONS, Data module code 12-B-04-00-00-00A-000A-A, dated July 19, 2016, of the Pilatus Model type—PC-12/47E MSN-1001-UP, Aircraft Maintenance Manual (AMM), Document No. 02300, 12-B-AM-00-00-00-I, revision 15, dated July 30, 2016.

(3) For PILATUS AIRCRAFT LTD. service information identified in this AD, contact PILATUS AIRCRAFT LTD., Customer Service Manager, CH-6371 STANS, Switzerland; telephone: +41 (0) 41 619 33 33; fax: +41 (0) 41 619 73 11; Internet: http://www.pilatus-aircraft.com or email: [email protected]

(4) You may view this service information at FAA, FAA, Small Airplane Directorate, 901 Locust, Kansas City, Missouri 64106. For information on the availability of this material at the FAA, call (816) 329-4148. In addition, you can access this service information on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-7003.

(5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.

Issued in Kansas City, Missouri, on December 21, 2016. Melvin Johnson, Acting Manager, Small Airplane Directorate, Aircraft Certification Service.
[FR Doc. 2016-31600 Filed 1-4-17; 8:45 am] BILLING CODE 4910-13-P
DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-7424; Directorate Identifier 2015-NM-173-AD; Amendment 39-18756; AD 2016-25-30] RIN 2120-AA64 Airworthiness Directives; Airbus Airplanes AGENCY:

Federal Aviation Administration (FAA), Department of Transportation (DOT).

ACTION:

Final rule.

SUMMARY:

We are adopting a new airworthiness directive (AD) for all Airbus Model A330-200, -200 Freighter, and -300 series airplanes; and Model A340-200, -300, -500, and -600 series airplanes. This AD was prompted by certain anomalies of the flight guidance computers. We are issuing this AD to address the unsafe condition on these products.

DATES:

This AD is effective February 9, 2017.

The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of February 9, 2017.

ADDRESSES:

For service information identified in this final rule, contact Airbus SAS, Airworthiness Office—EAL, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone: +33 5 61 93 36 96; fax: +33 5 61 93 45 80; email: [email protected]; Internet: http://www.airbus.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221. It is also available on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-7424.

Examining the AD Docket

You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-7424; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone: 800-647-5527) is Docket Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT:

Vladimir Ulyanov, Aerospace Engineer, International Branch, ANM 116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone: 425-227-1138; fax: 425-227-1149.

SUPPLEMENTARY INFORMATION:

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Airbus Model A330-200, -200 Freighter, and -300 series airplanes; and Model A340-200, -300, -500, and -600 series airplanes. The NPRM published in the Federal Register on July 7, 2016 (81 FR 44235) (“the NPRM”).

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2015-0124R2, dated August 31, 2016 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus Model A330-200, -200 Freighter, and -300 series airplanes; and Model A340-200, -300, -500, and -600 series airplanes. The MCAI states:

It was determined that, when there are significant differences between all airspeed sources, the flight controls of an Airbus A330 or A340 aeroplane will revert to alternate law, the autopilot (AP) and the auto-thrust (A/THR) automatically disconnect, and the Flight Director (FD) bars are automatically removed. Further analyses have shown that, after such an event, if two airspeed sources become similar while still erroneous, the flight guidance computers will display the FD bars again, and enable the re-engagement of AP and A/THR. However, in some cases, the AP orders may be inappropriate, such as an abrupt pitch command.

This condition, if not corrected, may, under specific circumstances, result in reduced control of the aeroplane.

In order to prevent such events, EASA issued AD 2010-0271 [which corresponds to FAA AD 2011-02-09, Amendment 39-16583 (76 FR 4219, January 25, 2011)] to require an amendment of the Airplane Flight Manual (AFM) to ensure that flight crews apply the appropriate operational procedure.

Since EASA AD 2010-0271 was issued, new Flight Control Primary Computer (FCPC) software standards were developed that inhibit autopilot engagement under unreliable airspeed conditions. Consequently, EASA issued AD 2011-0199 (later revised) [which corresponds to FAA AD 2013-19-14, Amendment 39-17596 (78 FR 68347, November 14, 2013)] for A330 and A340-200/300 aeroplanes, and [EASA] AD 2013-0107 [which also corresponds to FAA AD 2013-19-14] for A340-500/600 aeroplanes, to require a software standard upgrade of the three FCPCs by either modification or replacement.

Since EASA AD 2011-0199R1 and [EASA] AD 2013-0107 were issued, new FCPC software standards were developed to correct aeroplane behaviour in case of undetected erroneous (Radio Altimeter) RA information and to introduce other improvements. In addition, the new FCPC software standards also implement enhanced Angle of Attack (AOA) monitoring in order to better detect cases of AOA blockage, including multiple AOA blockage.

Prompted by these developments, EASA issued AD 2015-0124 (later revised) to require the latest software standard upgrade of the three FCPCs, either by modification or replacement. At the time, some of the Airbus SBs as specified in Table 1 (originally, Appendix 1) of this [EASA] AD were not yet available.

Since EASA AD 2015-0124R1 was issued, Airbus published SB A340-27-5064, and for this reason, this [EASA] AD is revised to introduce the date of publication of this SB. This [EASA] AD also contains some editorial changes to meet the latest [EASA] AD writing standards, without changes to the technical content.

There is still one SB that remains unavailable at this time. It is expected that this [EASA] AD will be revised again when this SB is published.

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-2016-7424.

Comments

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.

Support for the NPRM

The Air Line Pilots Association, International stated that it had no objection to the NPRM.

Request To Include Certain Service Information in the NPRM

Airbus requested that Airbus Service Bulletin A340-27-5064, dated June 1, 2016, (“SB A340-27-5064, Revision 0”), which is applicable to Airbus Model A340-500 and -600 series airplanes, be included in the NPRM. Airbus noted that SB A340-27-5064, Revision 0, was issued after the NPRM was published and that EASA planned to issue a revision to EASA AD 2015-0124R1, dated February 2, 2016, to include SB A340-27-5064, Revision 0.

We agree with the commenter's request to include SB A340-27-5064, Revision 0, in this final rule. Paragraph (g) of the proposed AD instructed operators of Model A340-500 and -600 series airplanes to upgrade the three FCPCs in accordance with a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or EASA; or Airbus's EASA Design Organization Approval (DOA). Now that SB A340-27-5064, Revision 0, is available, we have revised paragraph (g) of this AD to require the upgrade to be done in accordance with the Accomplishment Instructions of the applicable service information specified in paragraphs (h)(1), (h)(2), (h)(3), (h)(4), and (h)(5) of this AD. We have added a new paragraph (h)(5) to this AD, which identifies the service information for Model A340-541 and A340-642 series airplanes with hardware standard FCPC 2K2 as Airbus Service Bulletin A340-27-5064, dated June 1, 2016.

In addition, the commenter is correct that EASA has revised AD 2015-0124 R1, dated February 2, 2016, to include SB A340-27-5064, Revision 0. We have revised the Discussion section of this final rule and paragraph (p)(1), Related Information, of this AD to refer to the revised EASA AD 2015-0124R2, dated August 31, 2016.

Request To Include Certain Airplane Models in the NPRM

Airbus stated that the NPRM addressed Model A330-200, -200 Freighter, and -300 series airplanes; and Model A340-200 and -300 airplanes; but not Model A340-500 and -600 series airplanes. Airbus commented that there were inconsistencies in the NPRM because if Model A340-500 and -600 series airplanes are not included in the applicability then paragraph (l) of the NPRM was incorrect because it referred to AD 2013-19-14, which includes all Model A340-541 and -642 airplanes in its applicability.

We infer that Airbus is requesting that Model A340-541 and -642 airplanes be included in the applicability of the NPRM, or requesting that this AD be revised to remove all text that is associated with Model A340-541 and -642 airplanes.

We agree to clarify. Model A340-541 and -642 airplanes were included in the applicability of the proposed AD and continue to be included in the applicability of this AD. The SUMMARY section of the NPRM included Model A340-500 and -600 series airplanes, and paragraphs (c)(6) and (c)(7) of the proposed AD included Model A340-541 and -642 airplanes, respectively. In addition, paragraph (g) of the proposed AD specified that operators of Model A340-500 and -600 airplanes must upgrade the FCPCs in accordance with a method approved by the Manager, International Branch, ANM-116 Transport Airplane Directorate, FAA; or the EASA; or Airbus's EASA DOA. For clarification we have revised the header of paragraph (g) of this AD to include Model A340-500 and -600 series airplanes.

Conclusion

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

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

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

We also determined that these changes will not increase the economic burden on any operator or increase the scope of this AD.

Related Service Information Under 1 CFR Part 51

We reviewed the following service information:

• Airbus Service Bulletin A330-27-3205, Revision 02, dated March 23, 2016.

• Airbus Service Bulletin A330-27-3207, dated June 30, 2015.

• Airbus Service Bulletin A340-27-4195, dated November 24, 2015.

• Airbus Service Bulletin A340-27-4196, dated November 24, 2015.

• Airbus Service Bulletin A340-27-5064, dated June 1, 2016.

The service information describes procedures for upgrading (replacing or modifying) the software standards for the FCPCs. These documents are distinct since they apply to different airplane models. 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.

Costs of Compliance

We estimate that this AD affects 92 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

Estimated Costs Action Labor cost Parts cost Cost per
  • product
  • Cost on U.S.
  • operators
  • Modification/replacement 3 work-hours × $85 per hour = $255 Not available $255 $23,460

    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.

    Authority for This Rulemaking

    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.

    Regulatory Findings

    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.

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    Adoption of the Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): 2016-25-30 Airbus: Amendment 39-18756; Docket No. FAA-2016-7424; Directorate Identifier 2015-NM-173-AD. (a) Effective Date

    This AD is effective February 9, 2017.

    (b) Affected ADs

    This AD affects the ADs identified in paragraphs (b)(1), (b)(2), (b)(3), and (b)(4) of this AD:

    (1) AD 2012-08-02, Amendment 39-17018 (77 FR 24829, April 26, 2012) (“AD 2012-08-02”).

    (2) AD 2013-03-06, Amendment 39-17341 (78 FR 15279, March 11, 2013) (“AD 2013-03-06”).

    (3) AD 2013-05-08, Amendment 39-17380 (78 FR 27015, May 9, 2013; corrected August 29, 2013 (78 FR 53237)) (“AD 2013-05-08”).

    (4) AD 2013-19-14, Amendment 39-17596 (78 FR 68347, November 14, 2013) (“AD 2013-19-14”).

    (c) Applicability

    This AD applies to the Airbus airplanes, certificated in any category, identified in paragraphs (c)(1) through (c)(7) of this AD, all manufacturer serial numbers.

    (1) Model A330-223F and -243F airplanes.

    (2) Model A330-201, -202, -203, -223, and -243 airplanes.

    (3) Model A330-301, -302, -303, -321, -322, -323, -341, -342, and -343 airplanes.

    (4) Model A340-211, -212, and -213 airplanes.

    (5) Model A340-311, -312, and -313 airplanes.

    (6) Model A340-541 airplanes.

    (7) Model A340-642 airplanes.

    (d) Subject

    Air Transport Association (ATA) of America Code 27, Flight Controls.

    (e) Reason

    This AD was prompted by a determination that, due to significant differences among all airspeed sources, the flight controls will revert to alternate law, the autopilot (AP) and the auto-thrust (A/THR) will automatically disconnect, and the flight director (FD) bars will be automatically removed. Then, if two airspeed sources become similar while still erroneous, the flight guidance computers will display the FD bars again, and enable the re-engagement of the AP and A/THR. In some cases, however, the AP orders may be inappropriate, such as a possible abrupt pitch command. We are issuing this AD to prevent AP engagement under unreliable airspeed conditions, which could result in reduced control of the airplane.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) New Software Standard Upgrade for Model A330 Series Airplanes, and Model A340-200, -300, -500, and -600 Series Airplanes

    At the applicable time specified in table 1 to paragraph (g) of this AD: Upgrade (by modification or replacement, as applicable) the three flight control primary computers (FCPCs), as specified in table 1 to paragraph (g) of this AD, in accordance with the Accomplishment Instructions of the applicable service information specified in paragraphs (h)(1), (h)(2), (h)(3), (h)(4), and (h)(5) of this AD.

    Table 1 to Paragraph (g) of This AD—Software Standard Updates and Compliance Times Software standard Hardware standard Compliance time
  • after effective date of this AD
  • P13/M22 FCPC 2K2 Within 9 months. P14/M23 FCPC 2K1 Within 9 months. M23 FCPC 2K0 Within 9 months. L24 FCPC 2K1 or 2K0 Within 15 months. L23 FCPC 2K2 Within 15 months. W13 FCPC 2K2 Within 15 months.
    (h) Service Information

    For the upgrade required by paragraph (g) of this AD, applicable service information is identified in paragraphs (h)(1), (h)(2), (h)(3), (h)(4), and (h)(5) of this AD.

    (1) For Model A330 airplanes with hardware standard FCPC 2K2: Airbus Service Bulletin A330-27-3205, Revision 02, dated March 23, 2016.

    (2) For Model A330 airplanes with hardware standard FCPC 2K1 or FCPC 2K0: Airbus Service Bulletin A330-27-3207, dated June 30, 2015.

    (3) For Model A340-200 and -300 series airplanes with hardware standard FCPC 2K0 or FCPC 2K1: Airbus Service Bulletin A340-27-4195, dated November 24, 2015.

    (4) For Model A340-200 and -300 series airplanes with hardware standard FCPC 2K2: Airbus Service Bulletin A340-27-4196, dated November 24, 2015.

    (5) For Model A340-500 and A340-600 series airplanes with hardware standard FCPC 2K2: Airbus Service Bulletin A340-27-5064, dated June 1, 2016.

    (i) Removal of Certain Airplane Flight Manual (AFM) Requirements

    After accomplishing the FCPC upgrade required by paragraph (g) of this AD, the AFM operational procedures required by the AFM revisions identified in paragraphs (i)(1), (i)(2), and (i)(3) of this AD are no longer required and can be removed from the AFM for that airplane only.

    (1) The AFM revision required by paragraph (g) of AD 2013-19-14.

    (2) The AFM revision required by paragraph (h) of AD 2013-19-14.

    (3) The AFM revision required by paragraph (g) of AD 2013-03-06.

    (j) Removal of Certain Other AFM Requirements

    Accomplishing the FCPC upgrade required by paragraph (g) of this AD terminates the dispatch limitations required by paragraphs (g), (h), and (i) of AD 2012-08-02 for that airplane only, and after accomplishing the FCPC upgrade, those dispatch limitations can be removed from the AFM for that airplane only.

    (k) Certain Actions Required by AD 2013-05-08 Affected by This AD

    Accomplishing the FCPC upgrade required by paragraph (g) this AD constitutes compliance with the requirements of paragraph (l) and paragraphs (o)(1) through (o)(4) of AD 2013-05-08.

    (l) Certain Actions Required by AD 2013-19-14 Affected by This AD

    Accomplishing the FCPC upgrade required by paragraph (g) this AD constitutes compliance with the requirements of paragraphs (i) and (j) of AD 2013-19-14.

    (m) Airplanes Excluded From Certain Requirements

    For Airbus Model A330 series airplanes having Airbus Modification 202680 (installation of FCPC 2K2 with software standard P13/M22) incorporated in production: The actions specified in paragraph (g) of this AD are not required, provided it can be positively determined that since the date of issuance of the original certificate of airworthiness or the original export certificate of airworthiness, no FCPC has been replaced on that airplane with an FCPC having an earlier standard.

    (n) Credit for Previous Actions

    This paragraph provides credit for the actions required by paragraph (g) of this AD, if those actions were performed before the effective date of this AD using Airbus Service Bulletin A330-27-3205, dated March 9, 2015; or Airbus Service Bulletin A330-27-3205, Revision 01, dated July 3, 2015.

    (o) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the International Branch, send it to ATTN: Vladimir Ulyanov, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone: 425-227-1138; fax: 425-227-1149. Information may be emailed to: [email protected] Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.

    (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or EASA; or Airbus's EASA DOA. If approved by the DOA, the approval must include the DOA-authorized signature.

    (3) Required for Compliance (RC): If any service information contains procedures or tests that are identified as RC, those procedures and tests must be done to comply with this AD; any procedures or tests that are not identified as RC are recommended. Those procedures and tests that are not identified as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the procedures and tests identified as RC can be done and the airplane can be put back in an airworthy condition. Any substitutions or changes to procedures or tests identified as RC require approval of an AMOC.

    (p) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA AD 2015-0124R2, dated August 31, 2016, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-7424.

    (2) Service information identified in this AD that is not incorporated by reference is available at the addresses specified in paragraphs (q)(3) and (q)(4) of this AD.

    (q) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.

    (2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.

    (i) Airbus Service Bulletin A330-27-3205, Revision 02, dated March 23, 2016.

    (ii) Airbus Service Bulletin A330-27-3207, dated June 30, 2015.

    (iii) Airbus Service Bulletin A340-27-4195, dated November 24, 2015.

    (iv) Airbus Service Bulletin A340-27-4196, dated November 24, 2015.

    (v) Airbus Service Bulletin A340-27-5064, dated June 1, 2016.

    (3) For service information identified in this AD, contact Airbus SAS, Airworthiness Office—EAL, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone: +33 5 61 93 36 96; fax: +33 5 61 93 45 80; email: [email protected]; Internet: http://www.airbus.com.

    (4) You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    (5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued in Renton, Washington, on December 7, 2016. Dionne Palermo, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-30411 Filed 1-4-17; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-9160; Directorate Identifier 2016-CE-022-AD; Amendment 39-18767; AD 2016-26-09] RIN 2120-AA64 Airworthiness Directives; B-N Group Ltd. Airplanes AGENCY:

    Federal Aviation Administration (FAA), Department of Transportation (DOT).

    ACTION:

    Final rule.

    SUMMARY:

    We are superseding an airworthiness directive (AD) 2016-06-01 for B-N Group Ltd. Models BN-2, BN-2A, BN-2A-2, BN-2A-3, BN-2A-6, BN-2A-8, BN-2A-9, BN-2A-20, BN-2A-21, BN-2A-26, BN-2A-27, BN-2B-20, BN-2B-21, BN-2B-26, BN-2B-27, BN-2T-4R, BN-2T, BN2A MK. III, BN2A MK. III-2, and BN2A MK. III-3 (all models on Type Certificate Data Sheets A17EU and A29EU) airplanes. This AD results from mandatory continuing airworthiness information (MCAI) originated by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as cracks in the inner shell of certain pitot/static pressure heads. This AD changes model applicability due to errors found in AD 2016-06-01. We are issuing this AD to require actions to address the unsafe condition on these products.

    DATES:

    This AD is effective February 9, 2017.

    The Director of the Federal Register approved the incorporation by reference of a certain other publication listed in this AD as of April 19, 2016 (81 FR 13717; March 15, 2016).

    ADDRESSES:

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9160; or in person at the Docket Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    For service information identified in this AD, contact Britten-Norman Aircraft Limited, Commodore House, Mountbatten Business Centre, Millbrook Road East, Southampton SO15 1HY, United Kingdom; telephone: +44 20 3371 4000; fax: +44 20 3371 4001; email: [email protected]; Internet: http://www.britten-norman.com/customer-support/. You may view this referenced service information at the FAA, Small Airplane Directorate, 901 Locust, Kansas City, Missouri 64106. For information on the availability of this material at the FAA, call (816) 329-4148. It is also available on the Internet at http://www.regulations.gov by searching for Docket No. FAA-2016-9160.

    FOR FURTHER INFORMATION CONTACT:

    Raymond Johnston, Aerospace Engineer, FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone: (816) 329-4159; fax: (816) 329-3047; email: [email protected]

    SUPPLEMENTARY INFORMATION:

    Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to B-N Group Ltd. Models BN-2, BN-2A, BN-2A-2, BN-2A-3, BN-2A-6, BN-2A-8, BN-2A-9, BN-2A-20, BN-2A-21, BN-2A-26, BN-2A-27, BN-2B-20, BN-2B-21, BN-2B-26, BN-2B-27, BN-2T-4R, BN-2T, BN2A MK. III, BN2A MK. III-2, and BN2A MK. III-3 (all models on Type Certificate Data Sheets A17EU and A29EU) airplanes. That NPRM was published in the Federal Register on September 23, 2016 (81 FR 65581), and proposed to supersede AD 2016-06-01, Amendment 39-18432 (81 FR 13717; March 15, 2016).

    Since we issued AD 2016-06-01, errors were discovered in the model applicability after issuance. This AD adds Models BN-2T and BN-2T-4R, removes nonexistent Model BN2B, and removes duplicate listings of BN2A and BN2A MK.III.

    The NPRM proposed to correct an unsafe condition for the specified products and was based on mandatory continuing airworthiness information (MCAI) originated by an aviation authority of another country. The MCAI states that:

    In 2005, occurrences were reported of finding cracks in the inner shell of certain pitot/static pressure heads, Part Number (P/N) DU130-24.

    This condition, if not detected and corrected, could lead to incorrect readings on the pressure instrumentation, e.g. altimeters, vertical speed indicators (rate-of-climb) and airspeed indicators, possibly resulting in reduced control of the aeroplane.

    To address this potential unsafe condition, B-N Group issued Service Bulletin (SB) 310 to provide inspection and test instructions. Consequently, CAA UK issued AD G-2005-0034 (EASA approval 2005-6447) to require repetitive inspections and leak tests and, depending on findings, accomplishment of applicable corrective action(s).

    Subsequently, B-N Group published SB 310 issue 2, prompting EASA to issue AD 2006-0143 making reference to SB 310 at issue 2, while the publication of BNA SB 310 issue 3 prompted EASA AD 2006-0143R1, introducing BNA modification (mod) NB-M-1728 (new pitot/static pressure head not affected by the AD requirements) as optional terminating action for the repetitive inspections and leak tests.

    Since that AD was issued, operators have reported a number of premature failures of the affected P/N DU130-24 pitot-static probes.

    Prompted by these reports, BNA issued SB 310 issue 4 to reduce the interval for the inspections and leak tests.

    The MCAI can be found in the AD docket on the Internet at: https://www.regulations.gov/document?D=FAA-2016-9160-0002.

    Comments

    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.

    Conclusion

    We reviewed the relevant data and determined that air safety and the public interest require adopting the 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.

    Related Service Information

    We reviewed B-N Group Ltd. Britten-Norman Service Bulletin Number SB 310, Issue 4, dated September 25, 2015. The service information describes procedures for inspections, and if necessary, replacement of the pitot/static pressure head. 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 of the AD.

    Costs of Compliance

    We estimate that this AD will affect 93 products of U.S. registry. We also estimate that it would take about 1 work-hour per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour.

    Based on these figures, we estimate the cost of this AD on U.S. operators to be $7,905, or $85 per product.

    In addition, we estimate that any necessary follow-on actions would take about 2 work-hours and require parts costing $10,000, for a cost of $10,170 per product. We have no way of determining the number of products that may need these actions.

    The cost impact of this AD is the same as that presented in AD 2016-06-01.

    Authority for This Rulemaking

    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.

    Regulatory Findings

    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 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.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9160; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains the NPRM, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone (800) 647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Safety.

    Adoption of the Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by removing Amendment 39-18432 (81 FR 13717; March 15, 2016) and adding the following new AD: 2016-26-09 B-N Group Ltd.: Amendment 39-18767; Docket No. FAA-2016-9160; Directorate Identifier 2016-CE-022-AD. (a) Effective Date

    This airworthiness directive (AD) becomes effective February 9, 2017.

    (b) Affected ADs

    This AD supersedes AD 2016-06-01, Amendment 39-18432 (81 FR 13717; March 15, 2016) (“AD 2016-06-01”).

    (c) Applicability

    This AD applies to B-N Group Ltd. Models BN-2, BN-2A, BN-2A-2, BN-2A-3, BN-2A-6, BN-2A-8, BN-2A-9, BN-2A-20, BN-2A-21, BN-2A-26, BN-2A-27, BN-2B-20, BN-2B-21, BN-2B-26, BN-2B-27, BN-2T-4R, BN-2T, BN2A MK. III, BN2A MK. III-2, and BN2A MK. III-3 (all models on Type Certificate Data Sheets A17EU and A29EU) airplanes, all serial numbers, certificated in any category.

    (d) Subject

    Air Transport Association of America (ATA) Code 34: Navigation.

    (e) Reason

    This AD was prompted by mandatory continuing airworthiness information (MCAI) issued by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as cracks in the inner shell of certain pitot/static pressure heads, which could cause incorrect readings on the pressure instrumentation, possibly resulting in reduced control of the airplane. We are issuing this AD to change the model applicability due to errors found in AD 2016-06-01.

    (f) Actions and Compliance

    Unless already done, do the following actions in paragraphs (f)(1) through (5) of this AD:

    (1) For all airplanes that are equipped with pitot/static pressure head part number (P/N) DU130-24, except Models BN-2T and BN-2T-4R: Within 50 hours time-in-service (TIS) after April 19, 2016 (the effective date retained from AD 2016-06-01) and repetitively thereafter at intervals not to exceed 50 hours TIS, inspect the pitot/static pressure head for cracks and/or separation and perform a leak test following the procedures in the action section of Britten-Norman Service Bulletin SB 310, Issue 4, dated September 25, 2015.

    (2) For Models BN-2T and BN-2T-4R that are equipped with pitot/static pressure head part number (P/N) DU130-24: Within 50 hours TIS after February 9, 2017 (the effective date of this AD) and repetitively thereafter at intervals not to exceed 50 hours TIS, inspect the pitot/static pressure head for cracks and/or separation and perform a leak test following the procedures in the action section of Britten-Norman Service Bulletin SB 310, Issue 4, dated September 25, 2015.

    (3) For all airplanes equipped with pitot/static pressure head part number (P/N) DU130-24: If any discrepancies are found during an inspection or test required in paragraph (f)(1) or (2) of this AD, before further flight, replace the pitot/static pressure head with an airworthy part.

    (4) For all airplanes equipped with pitot/static pressure head part number (P/N) DU130-24: Corrections performed on airplanes as required in paragraph (f)(3) of this AD do not constitute terminating action for the repetitive actions required in paragraph (f)(1) or (2) of this AD.

    (5) For all airplanes not equipped with a pitot/static pressure head P/N DU130-24 on February 9, 2017 (the effective date of this AD): After April 19, 2016 (the effective date retained from AD 2016-06-01), do not install a pitot/static pressure head P/N DU130-24.

    (g) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, Standards Office, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Send information to ATTN: Raymond Johnston, Aerospace Engineer, FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone: (816) 329-4159; fax: (816) 329-3047; email: [email protected] Before using any approved AMOC on any airplane to which the AMOC applies, notify your appropriate principal inspector (PI) in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO.

    (2) Airworthy Product: For any requirement in this AD to obtain corrective actions from a manufacturer or other source, use these actions if they are FAA-approved. Corrective actions are considered FAA-approved if they are approved by the State of Design Authority (or their delegated agent). You are required to assure the product is airworthy before it is returned to service.

    (h) Related Information

    Refer to MCAI European Aviation Safety Agency (EASA) AD No.: 2015-0184, dated September 1, 2015; for related information. You may examine the MCAI in the AD docket on the Internet at: https://www.regulations.gov/document?D=FAA-2016-9160-0002.

    (i) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.

    (2) You must use this service information as applicable to do the actions required by this AD, unless the AD specifies otherwise.

    (3) The following service information was approved for IBR on April 19, 2016.

    (i) Britten-Norman Service Bulletin SB 310, Issue 4, dated September 25, 2015.

    (ii) Reserved.

    (4) For Britten-Norman Aircraft Limited service information identified in this AD, contact Britten-Norman Aircraft Limited, Commodore House, Mountbatten Business Centre, Millbrook Road East, Southampton SO15 1HY, United Kingdom; telephone: +44 20 3371 4000; fax: +44 20 3371 4001; email: [email protected]; Internet: http://www.britten-norman.com/customer-support/.

    (5) You may view this service information at the FAA, Small Airplane Directorate, 901 Locust, Kansas City, Missouri 64106. For information on the availability of this material at the FAA, call (816) 329-4148. In addition, you can access this service information on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9160.

    (6) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued in Kansas City, Missouri, on December 22, 2016. Pat Mullen, Acting Manager, Small Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-31699 Filed 1-4-17; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 71 [Docket No. FAA-2015-1345; Airspace Docket No. 14-AWP-13] RIN 2120-AA66 Establishment of an Air Traffic Service (ATS) Route; Western United States AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Final rule.

    SUMMARY:

    This action establishes one low altitude Area Navigation (RNAV) T-route in the western United States. The route establishes a transition from the San Diego area to points east. This route promotes operational efficiencies for users and provides connectivity to current and proposed RNAV en route and terminal procedures.

    DATES:

    Effective date 0901 UTC, March 2, 2017. The Director of the Federal Register approves this incorporation by reference action under title 1 Code of Federal Regulations, part 51, subject to the annual revision of FAA Order 7400.11 and publication of conforming amendments.

    ADDRESSES:

    FAA Order 7400.11A, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at http://www.faa.gov/air_traffic/publications/. For further information, you can contact the Airspace Policy Group, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591; telephone: (202) 267-8783. The Order is also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of FAA Order 7400.11A at NARA, call (202) 741-6030, or go to http://www.archives.gov/federal_register/code_of_federal-regulations/ibr_locations.html.

    FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.

    FOR FURTHER INFORMATION CONTACT:

    Kenneth Ready, Airspace Policy Group, Office of Airspace Services, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591; telephone: (202) 267-8783.

    SUPPLEMENTARY INFORMATION:

    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 north central United States to maintain the efficient flow of air traffic.

    History

    On June 5, 2015, the FAA published in the Federal Register a notice of proposed rulemaking (NPRM) (80 FR 32074), Docket No. FAA-2015-1345, to establish 13 RNAV Q-routes and one T-route originating in Los Angeles Air Route Traffic Control Center's (ARTCC) airspace. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal. No comments were received.

    A final rule was published in the Federal Register February 4, 2016 (81 FR 5898), Docket No. FAA-2015-1345, addressing the 13 RNAV Q-routes. The T-Route was not addressed in that final rule because it required more coordination due to it being part of the Southern California Metroplex Environmental Assessment.

    The development of new RNAV Standard Instrument Departure (SID) and Standard Terminal Arrival (STAR) routes requires incorporation of this T-Route into the National Airspace System route structure in order to maximize the benefits of increased safety in high volume enroute sectors.

    The Los Angeles Air Route Traffic Control Center (ARTCC) currently does not have routes that join the Performance Based Navigation (PBN) arrival and departure procedures. The existing conventional jet route structure does not serve the new SID/STAR designs. Routes made up of ground based navigational aids are not capable of delivering aircraft onto the RNAV based arrival and departure procedures in an efficient manner. Developing these predictable and repeatable flight paths through a complex area confined by restricted areas will improve throughput and safety for Los Angeles ARTCC.

    This first phase of a two-phase project will align a network of Q-Routes with the new SIDs and STARs. The Q-Route structure is projected to optimize descent/climb profiles to/from several airports in southern California and create segregated arrival/departure paths to reduce airspace complexity. The T-Route in this final rule de-conflicts current airway traffic from southern California to de-conflict with the newly established Q-Routes and provides a route east bound along mountainous terrain and Mexico's border.

    Low altitude United States RNAV routes are published in paragraph 6011 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 low altitude United States RNAV T-route listed in this document will be subsequently published in the Order.

    Availability and Summary of Documents for Incorporation by Reference

    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.

    Differences From the NPRM

    A previous rule published in the Federal Register of February 4, 2016 (81 FR 5898), Docket No. 2015-1345, had several changes from the NPRM which were addressed in the February 4, 2016, final rule. This rule establishes RNAV T-route T-326, which was proposed in the NPRM but was not finalized in the rule. The route required additional coordination within the Southern California Metroplex Environmental Assessment with no changes made to the proposed route. The environmental study has been finalized with no comments addressing the establishment of T-326.

    The Rule

    The FAA is amending Title 14, Code of Federal Regulations (14 CFR) part 71 by establishing U.S. RNAV T-route T-326 beginning at the Mission Bay, CA, VORTAC (MZB) to the Imperial, CA, VORTAC (IPL) to transition from the San Diego area to the east. The route will be used to de-conflict airway traffic from arrivals and departures at San Diego International Airport. The route enhances safety through de-confliction of airway traffic and provides routing in limited airspace between mountainous terrain and Mexico's border

    Regulatory Notices and Analyses

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

    Environmental Review

    The FAA has determined that this action establishing one low altitude RNAV T-route in the western U.S. to function as a transition from the San Diego area to points east, qualifies for categorical exclusion from full environmental impact review under the National Environmental Policy Act in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, Paragraph 5-6.5a for Rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points). This action is not expected to cause any potentially significant environmental impacts. In accordance with FAAO 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, this action has been reviewed for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis, and it is determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment.

    List of Subjects in 14 CFR Part 71

    Airspace, Incorporation by reference, Navigation (air).

    Adoption of the Amendment

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

    PART 71—DESIGNATION OF CLASS A, B, C, D, AND E AIRSPACE AREAS; AIR TRAFFIC SERVICE ROUTES; AND REPORTING POINTS 1. The authority citation for part 71 continues to read as follows: Authority:

    49 U.S.C. 106(f), 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

    § 71.1 [Amended]
    2. The incorporation by reference in 14 CFR 71.1 of FAA Order 7400.11A, Airspace Designations and Reporting Points, dated August 3, 2016, and effective September 15, 2016, is amended as follows: Paragraph 6011 United States Area Navigation Routes. T-326 Mission Bay, CA to Imperial, CA (New) Mission Bay, CA (MZB) VORTAC (Lat. 32°46′55.93″ N., long. 117°13′31.49″ W.) HAILE, CA WP (Lat. 32°46′45.70″ N., long. 117°00′51.71″ W.) BLLYJ, CA WP (Lat. 32°49′38.06″ N., long. 116°45′56.45″ W.) STAXS, CA WP (Lat. 32°52′16.70″ N., long. 116°32′17.69″ W.) GILYY, CA WP (Lat. 32°52′12.12″ N., long. 116°21′05.24″ W.) KUMBA, CA WP (Lat. 32°45′43.18″ N., long. 116°03′13.37″ W.) Imperial, CA (IPL) VORTAC (Lat. 32°44′55.92″ N., long. 115°30′30.90″ W.) Issued in Washington, DC, on December 21, 2016. Leslie M. Swann, Acting Manager, Airspace Policy Group.
    [FR Doc. 2016-31901 Filed 1-4-17; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission 18 CFR Parts 375 and 388 [Docket Nos. RM16-15-000, RM15-25-001] Regulations Implementing FAST Act Section 61003—Critical Electric Infrastructure Security and Amending Critical Energy Infrastructure Information; Availability of Certain North American Electric Reliability Corporation Databases to the Commission; Correction AGENCY:

    Federal Energy Regulatory Commission.

    ACTION:

    Final rule; correction.

    SUMMARY:

    This document contains corrections to the final rule (RM16-15-000, RM15-25-001) which published in the Federal Register on Wednesday, December 21, 2016 (81 FR 93732). The final rule amended the Commission's regulations to implement provisions of the Fixing America's Surface Transportation Act that pertain to the designation, protection and sharing of Critical Electric Infrastructure Information.

    DATES:

    Effective January 5, 2017, and is applicable beginning December 21, 2016.

    FOR FURTHER INFORMATION CONTACT: Nneka Frye, Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-6029, [email protected] Christopher MacFarlane, Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-6761, [email protected] Mark Hershfield, Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-8597, [email protected]
    SUPPLEMENTARY INFORMATION:

    On November 17, 2016, the Commission issued a final rule in the above-captioned proceeding. This document corrects Footnote 6 in FR Doc 2016-28322, published in the Federal Register of December 21, 2016 (81 FR 93732), by adding the following citation on page 93733, in the first column: FERC Stats. & Regs. ¶ 32,715.

    Issued: December 22, 2016. Nathaniel J. Davis, Sr., Deputy Secretary.
    [FR Doc. 2016-31541 Filed 1-4-17; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF COMMERCE International Trade Administration 19 CFR Part 360 RIN 0625-AB09 Steel Import Monitoring and Analysis System AGENCY:

    Enforcement and Compliance, International Trade Administration, Department of Commerce.

    ACTION:

    Final rule.

    SUMMARY:

    The Department of Commerce (the Department) is extending the Steel Import Monitoring and Analysis (SIMA) system until March 21, 2022. The purpose of the SIMA system is to provide to the public statistical data on steel imports entering the United States roughly five weeks earlier than it would otherwise be available. Aggregate data collected from the steel import licenses are made available to the public on a weekly basis following review by the Department.

    DATES:

    Effective March 21, 2017.

    FOR FURTHER INFORMATION CONTACT:

    For information about the SIMA system, please contact Julie Al-Saadawi (202) 482-1930 or Michael Rollin (202) 482-4978.

    SUPPLEMENTARY INFORMATION:

    Background

    The SIMA system has operated under its current authority since March 21, 2005. Prior to that date, authority for steel import licensing and monitoring was derived from Proclamation 7529 of March 5, 2002 (67 FR 10553). Pursuant to sections 201 and 203 of the 1974 Trade Act, 19 U.S.C. 2251, 2253, Proclamation 7529 implemented safeguard measures with respect to certain imported steel products, placing temporary tariffs on these steel imports and providing the steel industry time to restructure. The monitoring system outlined in Proclamation 7529 required all importers of steel products to obtain a license from the Department prior to completing their customs entry summary documentation. This provided a monitoring tool to ensure that the effectiveness of the steel safeguard measures was not undermined by large quantities of imports originating from countries that were excluded from the tariffs.

    In Proclamation 7741 of December 4, 2003 (68 FR 68483), the President terminated the steel safeguard measures, but directed the Secretary of Commerce to continue the monitoring system until the earlier of March 21, 2005, or such time as the Secretary of Commerce established a replacement program. On December 9, 2003, the Department published a notice stating that the system would continue in effect as described in Proclamation 7741 until March 21, 2005 (68 FR 68594). On August 25, 2004, the Department published an advance notice of proposed rulemaking soliciting comments from the public on whether to continue the monitoring system beyond March 21, 2005 (69 FR 52211). The Department changed the program's name from the Steel Import Licensing and Surge Monitoring program to the Steel Import Monitoring and Analysis (SIMA) system. The name change was notified in the publication of the August 2004 advance notice (69 FR 52211). On March 11, 2005, the Department published an interim final rule responding to the comments received from the public and implementing a slightly expanded version of SIMA until March 21, 2009. That interim final rule was followed by the publication of the final rule on December 5, 2005 (70 FR 72373).

    On December 12, 2008, a proposed rule was published in the Federal Register (73 FR 75624) seeking an extension of the SIMA system through March 21, 2013 and asking for comments from the public. The Department received twelve submissions, all of which expressed support for the extension. On March 18, 2009, the Department issued the final rule (74 FR 11474) to extend the application of the SIMA system until March 21, 2013. On November 13, 2012 (77 FR 67593), the Department published a proposed rule seeking comments on an extension of the SIMA system through March 21, 2017. The Department received three submissions, all of which expressed support for the extension. The Department issued the final rule to extend the application of the SIMA system until March 21, 2017 (78 FR 11090). On October 13, 2016, the Department published a proposed rule seeking comments on an extension of the SIMA system through March 21, 2022 (81 FR 70650). The Department received two submissions, both of which expressed support for the extension. The Department is issuing this final rule to extend the application of the SIMA system until March 21, 2022. The sole change included in this final rule was extending the program's lifespan to five years (the program's previous lifespan was four years—at which time an extension of the program must be proposed).

    The purpose of the SIMA system is to provide steel producers, steel consumers, importers, and the general public with accurate and timely information on anticipated imports of certain steel products. Import licenses, obtained through the Internet-based SIMA licensing system, are required for U.S. imports of basic steel mill products. Aggregate import data obtained from the licenses are updated weekly and posted on the SIMA Web site monitor. Details of the current system can be found at http://enforcement.trade.gov/steel/license/.

    Response to Comments

    Submissions received during the public comment period established in the proposed rule have been considered in preparing this final rule. Two submissions were received, one from a coalition of nine steel trade groups (referred to as the “industry”), and one from a large steel-producing company in the United States, AK Steel Corporation. Both of the submissions supported the five-year extension and agreed that the system is a critical tool that helps the industry closely monitor steel imports. The comments are summarized below. The two submissions received are posted on the Federal rulemaking portal at www.Regulations.gov as well as on the SIMA Web site at http://enforcement.trade.gov/steel/license/.

    Comment 1: Commenters strongly support the extension of the SIMA system for an additional five years. They state that given the current global overcapacity in steel that is fueling surges in steel imports, the SIMA system gives the public access to the timeliest information possible regarding import patterns and changes, particularly increases in volumes. They also view the system as an important and transparent tool to support rational decision-making by all interested parties—steel producers, steel consumers, importers and U.S. government officials.

    Response: The Department agrees that the SIMA system provides the public valuable and timely information on steel mill imports. The Department also agrees that making aggregate import volume and pricing data drawn from the licenses publicly available provides all interested stakeholders with a more informed understanding of changing market conditions in a transparent manner.

    Comment 2: Commenters state that there is no significant burden on the steel importing community to comply with the licensing requirements of the SIMA system, and that this has been confirmed over the last 12 years in its current format, which remains unchanged by the proposed rule.

    Response: The Department agrees that there is no significant burden on steel importers arising out of SIMA system licensing requirements. The web-based licensing system is automatic and free of charge. The Department estimates that it continues to take no longer than ten minutes to complete the automated license form, and for most applicants, the time spent is much less.

    Comment 3: Commenters suggest that the Department make the SIMA system permanent rather than extend it for another five years. They state that the system has proven its effectiveness as an important analytical tool for both steel producers and consumers.

    Response: Broad authority to collect information on imports is granted to the Secretary of Commerce and delegated to the Director of the Bureau of the Census. When the original safeguard authority for the SIMA system granted by the President expired in March 2005, the system was continued pursuant to this Department of Commerce information collection authority (13 U.S.C. 301(a) and 302). For purposes of administering the SIMA system, this authority was temporarily transferred from the Director of the Census Bureau to the Under Secretary for International Trade for four years. One of the conditions of the temporary transfer of authority to the Under Secretary for International Trade was that any future periodic extension of the SIMA system be notified to the Secretary and subject to review. Therefore, establishment of a permanent system is not possible under current authority.

    For the reasons discussed above, the proposed rule (19 CFR part 360) is made final without changes.

    Classification Executive Order 12866

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

    Executive Order 13132

    This rule does not contain policies with federalism implications as that term is defined in Executive Order 13132.

    Regulatory Flexibility Act.

    The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration at the proposed rule stage, that this rule, if adopted, would not have a significant economic impact on a substantial number of small entities as that term is defined in the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. The factual basis for the certification is found in the proposed rule and is not repeated here. No comments were received on the certification or the economic impacts of this action. As a result, no final regulatory flexibility analysis is required and none was prepared.

    Paperwork Reduction Act

    This final rule contains collection-of-information requirements subject to review and approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act (PRA). These requirements have been approved by OMB (OMB No. 0625-0245; Expiration Date: 1/31/2018). Public reporting for this collection of information is estimated to be less than ten minutes per response, including the time for reviewing instructions and completing and reviewing the collection of information. All responses to this collection of information are voluntary, and will be provided confidentially to the extent allowed by law.

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

    List of Subjects in 19 CFR Part 360

    Administrative practice and procedure, Business and industry, Imports, Reporting and recordkeeping requirements, Steel.

    Dated: December 23, 2016. Paul Piquado, Assistant Secretary for Enforcement & Compliance.

    For reasons discussed in the preamble, 19 CFR part 360 is amended as follows:

    PART 360—STEEL IMPORT MONITORING AND ANALYSIS SYSTEM 1. The authority citation for part 360 continues to read as follows: Authority:

    13 U.S.C. 301(a) and 302.

    2. Section 360.105 is revised to read as follows:
    § 360.105 Duration of the steel import licensing requirement.

    The licensing program will be in effect through March 21, 2022, but may be extended upon review and notification in the Federal Register prior to this expiration date. Licenses will be required on all subject imports entered during this period, even if the entry summary documents are not filed until after the expiration of this program. The licenses will be valid for 10 business days after the expiration of this program to allow for the final filing of required Customs documentation.

    [FR Doc. 2016-31667 Filed 1-4-17; 8:45 am] BILLING CODE 3510-DS-P
    PEACE CORPS 22 CFR Part 305 RIN 0420-AA26 Eligibility and Standards for Peace Corps Volunteer Service AGENCY:

    Peace Corps.

    ACTION:

    Final rule.

    SUMMARY:

    The Peace Corps issues this final rule to restate and update the requirements for eligibility for Peace Corps Volunteer service, and the factors considered in the assessment and selection of eligible applicants for training and service. The requirements and factors for eligibility and selection were last published in 1984. A revision of the regulation is necessary to conform to changes in Federal laws and regulations, particularly with respect to those prohibiting discrimination on the basis of disability, and to reflect policy changes made by the Peace Corps.

    DATES:

    The final rule is effective on January 5, 2017.

    FOR FURTHER INFORMATION CONTACT:

    Anthony F. Marra, Associate General Counsel, Peace Corps, 1111 20th Street NW., Washington, DC 20526.

    SUPPLEMENTARY INFORMATION:

    I. Background

    Under the Peace Corps Act (22 U.S.C. 2501 et seq.), the Peace Corps is authorized to enroll qualified U.S. citizens and nationals as Volunteers to serve abroad, under conditions of hardship if necessary, (i) to help the people of interested countries meet their need for trained manpower, particularly in meeting the basic needs of those living in the poorest areas of such countries, (ii) to help promote a better understanding of the American people on the part of the people served, and (iii) to help promote a better understanding of other peoples on the part of the American people. The Peace Corps is authorized to establish the terms and conditions of enrollment of Volunteers, as well as the terms and conditions of service. The Peace Corps published a proposed rule on July 31, 2015 (80 FR 45620) to revise and update the 30 year-old regulation concerning eligibility and selection standards for Peace Corps Volunteer service. The comment period for the proposed rule ended on August 31, 2015, and the Peace Corps received three comments.

    II. Summary of Rulemaking

    The revised rule will make the following changes:

    (1) Introduction. The introductory section (22 CFR 305.1) provides new definitions for the three stages (Applicant, Trainee, and Volunteer) that an individual who is interested in service as a Volunteer passes through. It also provides a definition of the term “enrollment”, which is used in connection with an individual's service as a Volunteer. The section includes a general statement explaining the process the Peace Corps follows in the selection of Volunteers and provides notice to applicants regarding the importance of submitting complete and accurate information in the application process. The section eliminates the recitation of the various anti-discrimination statutes that the Peace Corps is obligated to follow and replaces it with a clear statement that the Peace Corps does not discriminate on various grounds in the selection of Volunteers. Note that with regard to prohibiting discrimination on the basis of disability in the programs and activities of the Peace Corps, the agency is in the process of developing its section 504 implementing regulation and plans to coordinate the regulation's development with the Department of Justice pursuant to the requirements of Executive Order 12250. The section advises that applicants may be disqualified, and Volunteers and Trainees may be separated, if the Peace Corps determines they provided materially false, misleading, inaccurate, or incomplete information during the Peace Corps application process.

    (2) Eligibility. The eligibility section (22 CFR 305.2) is simplified to address only the existing citizenship and age criteria for Volunteer applicants. Other eligibility factors in the current § 305.2 are moved to succeeding sections, where they are updated and expanded.

    (3) Selection Standards. A revised § 305.3 incorporates the selection factors that previously appeared in § 305.4. The revision restates the attributes that an applicant must meet for Volunteer service. It revises the description of the various personal attributes that are taken into account when evaluating applicants. The revised § 305.3 explains that the Peace Corps assesses each applicant's personal, professional, educational, and legal qualifications in order to select those applicants most likely to be successful in a Peace Corps assignment, serving under conditions of hardship if necessary, to achieve the goals of the Peace Corps. Meeting the several qualifications does not in and of itself entitle any individual to serve in the Peace Corps, because the revision states that the Peace Corps endeavors to select the best qualified individuals from among all eligible applicants.

    (4) Medical Status. The revised part 305 creates a new § 305.4 that replaces the provision on the medical qualifications of applicants that previously appeared in § 305.2. The revised section implements, in relation to applications for Volunteer service, Section 504 of the Rehabilitation Act. It states that an applicant must have the physical and mental capacity required to meet the essential eligibility requirements for a Volunteer and sets out those essential eligibility requirements, which include the capability to:

    A revised § 305.4(a)(1)(i)-(iii) addresses medical stat.

    It also requires that, in order for an applicant to be medically qualified for Volunteer service, the Peace Corps must have the capability to provide necessary or appropriate health care for the applicant. It includes a requirement that the Peace Corps consider reasonable accommodations in determining whether an applicant has the physical and mental capacity required to meet the essential eligibility requirements for a Volunteer and whether the Peace Corps has the capability to provide necessary or appropriate health care for the applicant.

    A new provision provides that an applicant must not pose a direct threat, which is defined as a significant risk to the health and safety of others that cannot be eliminated by reasonable accommodation, removal of architectural, communication, or transportation barriers, or the provision of auxiliary aids or services.

    The revisions include a requirement that an applicant's medical eligibility be based on an individualized assessment of the factors applicable to reasonable accommodations. An applicant determined not to be medically qualified for Volunteer service has a right to obtain a further review of the determination by a physician and, ultimately, by a review panel. In any case involving review of issues of mental health, at least one professional staff person from the Counseling and Outreach Unit also participates as a voting member of the review panel. The decision of the review panel, which is reviewed by the General Counsel for legal sufficiency, constitutes a final agency action and is not subject to further appeal.

    (5) Legal Status. A new § 305.5 changes the eligibility qualifications for an applicant who is on parole or probation, previously covered in § 305.2(d), and reframes the eligibility standard in terms of the existence of an arrest or conviction record. The revision provides the Peace Corps with greater flexibility to consider the nature of the offense, how long ago the offense occurred, whether the applicant was acquitted of the offense, the terms of any applicable parole or probation, and other relevant facts or indications of rehabilitation. Specific standards will be established for drug and alcohol related offenses. An applicant rejected because of an arrest or conviction will have a right to have a review of the rejection by a more senior Peace Corps official outside of the office that made the original eligibility determination. The new provision will also eliminate the requirement that an applicant not have any court established financial or other obligation that cannot be satisfied or postponed during a Peace Corps service period.

    (6) Intelligence Background. The Peace Corps has a longstanding policy to exclude from Volunteer service individuals who have engaged in intelligence activity or related work or who have been employed by or connected with an intelligence agency, either for a specific period of time or permanently (depending on the agency). This policy is founded on the premise that it is crucial to the Peace Corps in carrying out its mission that there be a complete and total separation of the Peace Corps from the intelligence activities of the United States Government or any foreign government, both in reality and appearance.

    The previous regulation contained a one-sentence statement in § 305.2(e) regarding the eligibility of applicants having a background with an intelligence agency or intelligence activities. It referred applicants to provisions of the Peace Corps Manual for more details. The new § 305.6 provides greater transparency for applicants regarding this policy.

    The policy covers both employment (defined broadly) by an intelligence agency and engagement in intelligence activities. It applies to an employee of an intelligence agency even if the employee was not engaged in intelligence activities for the intelligence agency. An applicant who was employed by an intelligence agency (other than the CIA) or engaged in intelligence activities is barred from Peace Corps service for a minimum of 10 years. An applicant who was employed by the CIA is barred from Peace Corps service permanently.

    The policy also applies to an applicant whose background discloses a relationship to an intelligence agency or intelligence activity, but who was not employed by an intelligence agency or engaged in intelligence activities. Such a relationship might be one based on familial, personal or financial connections to an intelligence agency or intelligence activities. In these cases, the period of ineligibility will be determined by the General Counsel based on a number of stated factors.

    Serious doubts about an applicant's connection with intelligence agencies or activities are to be resolved in favor of exclusion. An applicant rejected based on an intelligence background criteria has a right to appeal the rejection to the Peace Corps Director.

    (7) Special Circumstances. A new § 305.7 addresses special circumstances involving some applicants, which were previously covered in § 305.2(f), (g) and (h).

    The former § 305.2(f) placed restrictions on Peace Corps Volunteer service for applicants who are married and who wish to serve without their spouse. These restrictions have been removed as they are no longer relevant to eligibility for Volunteer service. In addition, a new § 305.7(a) expressly provides that two applicants who are married or are in a same sex or opposite sex domestic partnership or committed relationship may apply to serve together. This codifies in regulation the Peace Corps policy on placement of couples, including its recent policy to accept same-sex and opposite-sex couple applicants on an equal basis whether married, or unmarried and in a committed relationship/domestic partnership.

    The former § 305.2(g) places restrictions on the ability of an applicant who has dependent children under the age of 18 to serve as a Peace Corps Volunteer. These restrictions have been removed because they are not relevant to the ability of an individual to serve as a Volunteer. However, a new provision has been added that generally prohibits dependents and other family members from accompanying a Volunteer during service. This provision permits the Peace Corps to make exceptions from time to time either on a case-by-case basis or for particular categories of Volunteers to the extent permitted by Federal law.

    The previous policy on military service obligations of applicants that was contained in § 305.2(h) is continued in § 305.7(c), but the written statement from a commanding officer is no longer required.

    (8) Background Investigation. Section 22 of the Peace Corps Act requires that applicants be investigated to ensure that their assignment “is consistent with the national interest.” The Peace Corps previously satisfied this statutory requirement under § 305.3, which required a National Agency Check (NAC) and background investigation for all applicants. A NAC is a clearance conducted by the Federal Investigations Services of the U.S. Office of Personnel Management (OPM) and is the minimum clearance required for all civilian Federal employees. Peace Corps has required that Volunteer applicants be cleared through a NAC investigation for many years, in large part because it was initially the only feasible way to comply with Section 22 of the Peace Corps Act. However, there are now other commercial, non-governmental investigative entities approved by the General Services Administration that can provide equivalent clearance services for Volunteer applicants.

    The revision of part 305 includes a new § 305.8, replacing the former § 305.3. It retains the requirement that all an appropriate background investigation be completed for all Applicants who are invited to serve in the Peace Corps. However, it does not specify that the background investigation be OPM's Federal Investigations Services background investigation for Federal employment positions. This change gives Peace Corps flexibility to use other contractors to conduct background investigations, as well OPM's Federal Investigative Services.

    III. Changes From Proposed to Final Rule

    The Peace Corps has made the following non-substantive changes to the final rule.

    (1) It has eliminated the provision for the enrollment of persons who are non-citizens but who have made satisfactory arrangements to be naturalized. This provision of the proposed rule aligns with the Peace Corps Act, which stipulates that enrollment as a Volunteer is limited to U.S. citizens and nationals. Furthermore, this provision has not in practice been necessary or appropriate, as all applicants are required to have U.S. passports prior to travel overseas for pre-service training.

    (2) It has amended the age requirement to make clear that Applicants must reach the age of 18 prior to becoming a Trainee (as opposed to at the time of enrollment). This correction is needed for the eligibility requirement so that only adults can become Trainees. The age of 18 is the standard for adulthood under the laws of most states.

    (3) The specific number of medical personnel required to staff the Pre-Service Review Board has been deleted as unnecessarily detailed and overly constraining on the Peace Corps' decisions on how to staff the Board.

    (4) The requirement for an affidavit in connection with applying for service as a member of an unmarried couple has been replaced with a requirement for a sworn statement, to allow for greater ease in electronic submission of this information.

    IV. Responses to Comments

    The Peace Corps received three comments on the proposed rule.

    Comment 1: One commenter had a number of thoughtful suggestions about the order of the presentation of various topics in the Peace Corps application for Volunteer service, presumably on the assumption that the order of the topics in the proposed rule would be the same order in the application.

    Response: The application is a separate document and is periodically revised and does not necessarily follow the order of presentation of topics in the proposed rule. The commenter's suggestions will be useful for a future revision of the application.

    Comment 2: Another commenter objected to the provision in the proposed rule that would give the Peace Corps the flexibility to have the statutorily required background investigation performed by outside contractors, rather than the Federal Investigations Services of the U.S. Office of Personnel Management. The commenter cited concerns about the reliability of investigations performed by outside contractors.

    Response: The Peace Corps recognizes the commenter's concerns and will address them by limiting the use of outside contractors to those approved to conduct background investigations by the General Services Administration.

    Comment 3: A third commenter recommended that any Volunteer who ends service, before completion of the full 27 months of service, except for medical reasons, should have to pay back to the Peace Corps some proportionate amount related to the actual amount spent by the Peace Corps to train and transport the Volunteer to the country of service.

    Response: The Peace Corps appreciates the commenter's position, but does not view the proposal as workable. Peace Corps service is entirely voluntary and there are many valid reasons, in additional to medical, for a Volunteer to terminate his or her service before the normal 27 month service period. Furthermore, the threat of the imposition of an exit fee would likely reduce interest in Peace Corps service.

    Statement of Effects Executive Order 12866

    The Office of Management and Budget (OMB) has reviewed the proposed regulatory action under Executive Order 12866 and has determined that it is not a significant regulatory action within the meaning of the Executive Order. Consistent with the Executive Order, the Peace Corps is providing an explanation of the need for the regulatory action and an assessment of the potential costs and benefits of the regulatory action.

    (1) Need for Regulatory Action. Under Section 5(a) of the Peace Corps Act (22 U.S.C. 2504(a)), the Peace Corps is entitled to enroll qualified citizens and nationals into Peace Corps service and is delegated authority to establish the terms and conditions of enrollment. The Peace Corps last published its terms and conditions of enrollment in 1984 and those rules are outdated and need to reflect current laws and policies that have been implemented over the past 30 years. In addition, the structure of the current regulation needs to be revised to simplify the description of the information required in order to apply to the Peace Corps, as well as the explanation of the Peace Corps selection process as described in the Supplementary Information section.

    (2) Potential Costs and Benefits. It is difficult to precisely quantify the costs and benefits of the new regulation that is designed to reflect current law and regulations and to make it easier for American citizens to apply for service as a Peace Corps Volunteer. However, the Peace Corps has concluded that the current regulatory structure, and the accompanying application form, is seen as a daunting, confusing and time-consuming process, which has discouraged many Americans who might otherwise be interested in and well-qualified for Volunteer service. The new regulation will improve the possibility of the most suitable candidates being selected as a Volunteer, decrease the barriers to service and broaden the rights of applicants. This will be a substantial benefit to all Americans who want to serve as Volunteers, as well as being a benefit to the Peace Corps which is interested in creating a large, diverse pool of qualified, suitable candidates to serve abroad as Volunteers. The Peace Corps estimates that agency staff will spend less time reviewing each individual application, because the application itself will be shorter. For 2016, the Peace Corps anticipates that use of the new application will result in a savings of $95.00 per application, compared to the former application. With 22,000 expected applications for the year, the new application is expected to provide a savings of $1,384,000 resulting from the reduction in staff time spent reviewing applications. However, the agency expects that the total number of completed applications will increase, and that the agency will not realize immediate cost savings from these changes.

    The former regulation listed nine factors as relevant to the determination of eligibility. These factors include citizenship, age, medical status, legal status, intelligence background, marital status, dependents, military service, and failure to disclose requested information. This listing combined factors that are basic, clear-cut requirements for Peace Corps service, such as the citizenship requirement (under the Peace Corps Act only citizens and nationals can be Volunteers), with factors that are more relevant to whether an applicant is suitable for Volunteer service, where an applicant could effectively serve, or whether the applicant has the requisite qualifications to serve as a Volunteer, which involve more judgmental and situational issues. As a result, the Peace Corps has found that many potential applicants, after reviewing the nine requirements, make self-judgments that they are not eligible to apply for Volunteer service. In addition, the application form that had been in use until June 30, 2014 was over 61 Web pages long and took approximately eight hours to complete. This was an added deterrence to many potential applicants. Approximately 75 percent of the annual 40,000 individuals who started the application never finished it due to its length and density. The Peace Corps has recently introduced a new application, which is 9 Web pages rather than the former 61 pages. It is estimated that each applicant will save approximately 7 hours with the shorter application form. The shorter application will clearly benefit applicants, because it will result in a reduced paperwork burden on applicants. The Peace Corps estimates that the shorter application form will result in a savings to the public of approximately $5,840,000. This is based on (i) an assumed hourly wage equivalent of $37.94 derived from the median wage earnings, including overhead and benefits, for persons age 25 or over who have attained a bachelor's degree, (ii) the reduction of 7 hours spent on the application, and (iii) 22,000 applications in 2015.

    The shorter application should also increase the pool of individuals who complete an application from the current 10,000 per year to over 20,000 per year. Although the Peace Corps is able to simplify the application form without regard to a regulatory change, the new regulation is needed to accurately reflect the current laws and policies that relate to the Volunteer selection process.

    The new regulatory action addresses deficiencies in the current regulation that have deterred potential applicants and reduced the applicant pool. The new regulation specifies only two baseline eligibility requirements for applying to the Peace Corps. An applicant must be a citizen or national of the United States and at least 18 years of age. The regulation clearly enumerates the suitability and qualification standards that are used by the Peace Corps in determining who should be invited to enroll as a Volunteer. It explains that an applicant must demonstrate suitability for Peace Corps service generally and for the particular assignment for which the applicant is being considered. It describes the medical qualifications that are applied, taking into account Section 504 of the Rehabilitation Act of 1973.

    The new regulation gives the Peace Corps greater flexibility in accepting applicants with arrest or conviction records. It provides a more complete description of how the Peace Corps considers applicants who have worked for intelligence agencies or engaged in intelligence activities. The former regulation merely stated that an applicant with an intelligence background may be disqualified, without an explanation of the criteria for disqualification in the regulation. As a result, applicants could have initiated and completed the lengthy application process only to be informed that they are not eligible for Volunteer service because of having worked for intelligence agencies or having engaged in intelligence activities. Other applicants may have been deterred from applying because they concluded that any connection to an intelligence background disqualifies an applicant. By explaining the intelligence background criteria front-end, applicants will be more informed about whether they meet Peace Corps selection standards and whether it is worth their time to initiate the application process.

    The new regulation also reflects the new policy of the Peace Corps to accept same sex and opposite sex couple applicants on an equal basis whether married or unmarried in a committed relationship. It removes some of the restrictions on applicants who have dependent children under the age of 18. Finally, the new regulation incorporates appeal rights when an applicant has been rejected on grounds relating to medical status, an arrest or conviction record, or for having a background in intelligence activities. Any applicant in an expanded list of protected categories who thinks that he or she had been discriminated against is given the option for review and consideration by the Office of Civil Rights and Diversity at the Peace Corps. These changes to the Volunteer application process will provide an easier, clearer, faster and more equitable and consistent process for potential applicants, and result in a greater number of well-qualified applicants available for Peace Corps Volunteer service.

    Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b))

    The Director of the Peace Corps certifies that this regulatory action will not have a significant adverse impact on a substantial number of small entities. The regulation only applies to individuals who are interested in service as a Volunteer and has no application to small entities.

    Unfunded Mandates Act of 1995 (Sec. 202, Pub. L. 104-4)

    This regulatory action does not contain a Federal mandate that will result in the expenditure by State, local, and tribal governments, in aggregate, or by the private sector of $100 or more in any one year.

    Paperwork Reduction Act of 1995 (44 U.S.C., Chapter 35)

    This regulatory action does not contain any paperwork or recordkeeping requirements and does not require clearance under the Paperwork Reduction Act. The Peace Corps Volunteer application form for Volunteer service referenced in the regulation has been approved by the Office of Management and Budget (Control Number 0420-0005).

    Federalism (Executive Order 13132)

    This regulatory action does not have Federalism implications, as set forth in Executive Order 13132. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

    Executive Order 12291

    This document is not a major rule as described in Executive Order 12291.

    Lists of Subjects in 22 CFR Part 305

    Aged, Citizenship and naturalization, Civil rights, Discrimination, Equal employment opportunity, Foreign aid, Health, Individuals with disabilities, Intelligence, Nondiscrimination, Political affiliation, Volunteers.

    For the reasons set out in the preamble, the Peace Corps revises 22 CFR Part 305 to read as follows: PART 305—ELIGIBILITY AND STANDARDS FOR PEACE CORPS VOLUNTEER SERVICE Sec. 305.1 Purpose and general guidelines. 305.2 Eligibility. 305.3 Selection standards. 305.4 Medical status eligibility standards. 305.5 Legal status eligibility standards. 305.6 Applicants with an intelligence background. 305.7 Special circumstances. 305.8 Background investigation. Authority:

    22 U.S.C. 2503, 2504 2521; 29 U.S.C. 794; E.O. 12137, 44 FR 29023, 3 CFR, 1979 Comp., p. 389; E.O. 13160, 65 FR 39775, 3 CFR, 2000 Comp., p. 1461.

    § 305.1 Purpose and general guidelines.

    This part states the requirements for eligibility for Peace Corps Volunteer service and the factors considered in the assessment and selection of eligible applicants for Peace Corps Volunteer service.

    (a) Definitions. For purposes of this part:

    (1) Applicant means an individual for enrollment as a Volunteer, who has completed and submitted the Peace Corps Volunteer application form.

    (2) Trainee means an individual for enrollment as a Volunteer during any period of training occurring prior to such enrollment.

    (3) Volunteer means an individual who has taken the prescribed oath and enrolled for service in the Peace Corps.

    (4) Enrollment means the act by which an individual becomes a Volunteer upon successful completion of training and taking the prescribed oath of office pursuant to Section 5 of the Peace Corps Act, 22 U.S.C. 2504.

    (5) Dependent means an individual for whom an applicant or Volunteer has a legal or familial obligation to provide financial support.

    (6) Family member means any individual related by blood or affinity whose close association with the applicant or Volunteer is the equivalent of a family relationship.

    (b) Selection. Invitations to serve in the Peace Corps are the result of a highly competitive application process. Many more individuals apply for Peace Corps Volunteer service than can be accepted. Because the Peace Corps cannot accept all eligible and qualified applicants who wish to serve, it evaluates applicants to select the best qualified among eligible applicants. The Peace Corps determines Applicants' eligibility, and assesses their relative skills, qualifications, and personal attributes, such as motivation, aptitude, fitness for service, emotional maturity, adaptability, productive competence, and ability to serve effectively as a Volunteer in a foreign country and culture.

    (c) Authority. Under section 5(a) of the Peace Corps Act, 22 U.S.C. 2504(a), the President may enroll in the Peace Corps for service abroad qualified citizens and nationals of the United States. The terms and conditions of the enrollment of Volunteers are exclusively those set forth in the Peace Corps Act and those consistent therewith which the President may prescribe. The President has delegated his authority under section 5(a) of the Peace Corps Act to the Director of the Peace Corps pursuant to Executive Order 12137 (May 16, 1979), as amended.

    (d) Non-discrimination. The Peace Corps does not discriminate against any person on account of race, color, religion, sex (including but not limited to gender identity and gender expression), national origin, age (40 and over), disability, sexual orientation, gender identity, gender expression, pregnancy, marital status, parental status, political affiliation, union membership, genetic information, or history of participation in the EEO process, any grievance procedure or any authorized complaint procedure. Anyone who feels he or she has been discriminated against should contact the Office of Civil Rights and Diversity, 202.692.2139, [email protected], Peace Corps, 1111 20th Street NW., Washington, DC 20526.

    (e) Failure to disclose requested information. In order for the Peace Corps to be able to make appropriate selection and placement decisions, it is critical that Applicants provide complete and accurate information throughout the application process, including information provided for a mandatory background investigation. The Peace Corps may disqualify an Applicant or separate a Volunteer or Trainee from Peace Corps service at any time if the Peace Corps determines that the Applicant, Volunteer, or Trainee provided materially false, misleading, inaccurate or incomplete information during the Peace Corps application process.

    § 305.2 Eligibility.

    In order to be eligible for enrollment as a Volunteer, Applicants must meet mandatory citizenship and age requirements.

    (a) Citizenship. The Applicant must be a citizen or national of the United States prior to entering on duty as a Trainee.

    (b) Age. The Applicant must be at least 18 years old at the time of entry on duty as a Trainee.

    § 305.3 Selection standards.

    (a) General. To qualify for selection for overseas service as a Volunteer, an Applicant must demonstrate that he or she is suitable, possessing the requisite personal and professional attributes required for Peace Corps service generally, and for the particular Volunteer assignment for which he or she is considered. The Peace Corps assesses each Applicant's personal, professional, educational, and legal qualifications in order to select those Applicants most likely to be successful in a Peace Corps assignment, serving under conditions of hardship if necessary to achieve the goals of the Peace Corps. Meeting these qualifications does not in and of itself entitle any individual to serve in the Peace Corps. The Peace Corps endeavors to select the best qualified individuals from among all eligible Applicants.

    (b) Personal attributes. Applicants must adequately demonstrate the following personal attributes to Peace Corps:

    (1) Motivation. A sincere desire to carry out the goals of Peace Corps service, and a commitment to serve a full term as a Volunteer.

    (2) Productive competence. The intelligence and professional experience or educational background to meet the needs of the individual's assignment.

    (3) Emotional maturity and adaptability. The maturity, flexibility, cultural sensitivity, and self-sufficiency to adapt successfully to life in another culture, and to interact and communicate with other people regardless of cultural, social, and economic differences.

    (4) Skills. In addition to any educational, professional or other qualifications and prerequisites that an individual must possess in order to be selected for a given assignment, a Trainee must demonstrate competence in the following areas by the end of pre-service training:

    (i) Language. The ability to communicate effectively in the appropriate language or languages of the country of service with the fluency required to meet the needs of the overseas assignment.

    (ii) Technical competence. Proficiency in the technical skills needed to carry out the Trainee's assignment as a Volunteer.

    (iii) Knowledge. Adequate knowledge of the culture and history of the country of assignment to ensure a successful adjustment to, and acceptance by, the host country society, as well as an appropriate understanding of the history and government of the United States which qualifies the individual to represent the United States abroad.

    (c) Failure to meet standards. Failure to meet initial selection standards, failure to attain any of the selection standards by the completion of training, or failure to maintain these standards during service, may be grounds for de-selection and disqualification from Peace Corps service.

    § 305.4 Medical status eligibility standard.

    (a) Requirements. Under the Peace Corps Act (22 U.S.C. 2504(e)), the Peace Corps is responsible for ensuring that Peace Corps Volunteers receive all necessary or appropriate health care during their service. To ensure that the Peace Corps will be capable of doing so, Applicants must be medically qualified for Peace Corps Volunteer service. An Applicant who is otherwise qualified must meet the following requirements:

    (1) The Applicant, with or without reasonable accommodation, removal of architectural, communication or transportation barriers, or the provision of auxiliary aids or services, must have the physical and mental capacity required to meet the essential eligibility requirements for a Volunteer. In this context, the essential eligibility requirements for a Volunteer include, without limitation, the capability to:

    (i) Live and work independently in an isolated location overseas at the same socio-economic level and in similar conditions as members of the community to which the Applicant is assigned;

    (ii) Perform the job to which the Applicant is assigned; and

    (iii) Complete a specified tour of service without undue disruption.

    (2) The Peace Corps must be capable of providing the Applicant with such health care as the Peace Corps deems to be necessary or appropriate.

    (3) The Applicant must not pose a direct threat (as defined in paragraph (c) of this section).

    (b) Individualized assessment. In determining whether an Applicant is medically qualified, an individualized assessment is required regarding each of the requirements set forth in paragraph (a) of this section.

    (c) Direct threat. (1) A “direct threat” is a significant risk to the health or safety of others that cannot be eliminated by a reasonable accommodation to policies, practices or procedures, removal of architectural, communication or transportation barriers, or the provision of auxiliary aids or services.

    (2) In determining whether an applicant poses a direct threat, the Peace Corps will make an individualized assessment based on reasonable judgment that relies on current medical knowledge or on the best available objective evidence to ascertain:

    (i) The nature, duration and severity of the risk;

    (ii) The probability that the potential injury will actually occur; and

    (iii) Whether reasonable accommodations, removal of architectural, communication or transportation barriers, or the provision of auxiliary aids or services will mitigate the risk.

    (d) Reasonable accommodation. (1) The term “accommodation” means modifications to the Peace Corps' policies, practices or procedures.

    (2) An accommodation is not reasonable if:

    (i) It would modify the essential eligibility requirements for a Volunteer;

    (ii) It would modify, among other things, the Applicant's Volunteer assignment or the Peace Corps' medical program in a way that would result in a fundamental alteration in the nature of the service, program, or activity; or

    (iii) It would impose an undue financial and administrative burden on the operations of the Peace Corps, including its medical program.

    (3) In determining whether an accommodation would impose an undue financial and administrative burden on the operations of the Peace Corps, the Peace Corps may take into account, among other things:

    (i) The size and composition of the Peace Corps staff at the post of assignment;

    (ii) The adequacy of local medical facilities and the availability of other medical facilities;

    (iii) The nature and cost of the accommodation compared to the overall number of Volunteers and the overall size of the Peace Corps budget; and

    (iv) The capacities of the host country agency and of the host community to which the Applicant would be assigned.

    (e) Medical status eligibility review. (1) An Applicant who is determined by medical screening staff not to be medically qualified for Peace Corps Volunteer service may request review of that decision by submitting any relevant information to the Office of Medical Services (OMS). The information submitted by the Applicant will be reviewed by a physician, and, unless the physician determines that the Applicant is medically qualified, by a Pre-Service Review Board (PSRB) composed of medical personnel in OMS and advised by the General Counsel. Procedures for such review are subject to approval by the General Counsel.

    (2) The PSRB will include as voting members at least one physician as well as other medical professionals in OMS. In any case involving review of issues involving mental health, at least one mental health professional from the Counseling and Outreach Unit will also participate as a voting member.

    (3) The decision of the PSRB will be reviewed by the General Counsel for legal sufficiency. Subject to that review, it will constitute the final agency action.

    § 305.5 Legal status eligibility standard.

    (a) General requirements. The existence of an arrest or conviction record may, but will not automatically, exclude an Applicant from consideration for Peace Corps service. The Peace Corps will consider the nature of the offense, how long ago the offense occurred, whether the Applicant was acquitted of the offense, the terms of any applicable parole or probation, and other relevant facts or indications of rehabilitation.

    (b) Drug and alcohol related offenses. (1) An Applicant with any drug-related conviction, with a conviction for public intoxication, driving under the influence (DUI), or driving while intoxicated (DWI), with a conviction for reckless driving after having been initially charged with DUI or DWI, or with a similar alcohol-related conviction, is not eligible to have his or her application for Peace Corps service considered until 12 months has passed from the date of the incident.

    (2) An Applicant who, at any time on or prior to the day of departure for Peace Corps service, is arrested for any drug offense or for public intoxication, DUI, DWI or any similar alcohol-related offense will have any pending application or invitation for Peace Corps service withdrawn. If the charges are dismissed, an Applicant whose application or invitation for Peace Corps service was terminated may immediately reapply. If the applicant is convicted of the offense, he or she may reapply after 12 months from the date of the incident.

    (c) Review process. An Applicant who is rejected for a Volunteer position because of an arrest or conviction may request a review of that decision by submitting any relevant information to the Associate Director of the Office of Volunteer Recruitment and Selection (VRS). The Associate Director will review the information submitted and consult with the General Counsel. The decision of the Associate Director will be the final agency decision. The Associate Director may delegate authority to conduct such a review to another senior member of VRS, but not to the supervisor of the office making the original eligibility determination.

    (d) Subsequent application. An Applicant rejected for service due to failure to meet the legal status eligibility standard may reapply at a later date, but not sooner than 12 months after the final agency decision.

    § 305.6 Applicants with an intelligence background.

    (a) General. It has been the longstanding policy of the Peace Corps to exclude from Volunteer service any individuals who have engaged in intelligence activity or related work or who have been employed by or connected with an intelligence agency, either for a specific period of time or permanently (depending on the agency). This policy is founded on the premise that it is crucial to the Peace Corps in carrying out its mission that there be a complete and total separation of Peace Corps from the intelligence activities of the United States Government or any foreign government, both in reality and appearance. Any semblance of a connection between the Peace Corps and the intelligence community would seriously compromise the ability of the Peace Corps to develop and maintain the trust and confidence of the people of the host countries. To ensure that there is not the slightest basis for the appearance of any connection between the Peace Corps and the intelligence community, this policy contains certain temporary and permanent bars to Peace Corps service. Serious doubts about an Applicant's connection with intelligence activities are to be resolved in favor of exclusion.

    (b) Definitions. For purposes of this section:

    (1) Intelligence activity includes any activities or specialized training involving or related to the clandestine collection of information, or the analysis or dissemination of such information, intended for use by the United States Government or any foreign government in formulating or implementing political or military policy in regard to other countries. The term “intelligence activity” includes any involvement in covert actions designed to influence events in foreign countries. The fact that the name of an employer or the description of a person's work uses or does not use the term “intelligence” does not, in and of itself, mean that the person has or has not engaged in intelligence activity or related work.

    (2) Intelligence agency includes:

    (i) Any agency, division of an agency, or instrumentality of the United States Government that is a member of the United States Intelligence Community; and

    (ii) Any other agency, division of an agency, or instrumentality of the United States Government or any foreign government, a substantial part of whose mission has been determined by the General Counsel to include intelligence activities.

    (3) Employment, employee or employed refer to the existence of a relationship of employer and employee, whether full-time or part-time, permanent or temporary, whether or not the individual is engaged in intelligence activity for an employer, without regard to the length of time the relationship existed or is proposed to exist, and includes individuals performing duties as volunteers, fellows, interns, consultants, personal services contractors, contractors (non-personal services contractors), and employees of contractors who were assigned to work for an intelligence agency or to engage in intelligence activities. Employees of contractors who were or are not themselves assigned to work for an Intelligence Agency or to engage in intelligence activities are not considered to have been or to be employed by an intelligence agency.

    (c) Employment by an intelligence agency or engagement in intelligence activities. (1) An Applicant currently or formerly employed by the Central Intelligence Agency (CIA) is permanently ineligible for Peace Corps Volunteer service.

    (2) An Applicant who has been employed by an intelligence agency other than the CIA is ineligible for a minimum of 10 years from the last day of employment by such intelligence agency. This bar on an Applicant who is or was employed by an intelligence agency applies whether or not the Applicant was engaged in intelligence activity for the intelligence agency.

    (3) An Applicant who has been engaged in intelligence activities is ineligible for service as a Volunteer for a period of 10 years from the last date on which the Applicant engaged in intelligence activities.

    (4) An Applicant may be ineligible for service for a period in excess of 10 years if the General Counsel determines that the Applicant's background or work history with regard to intelligence activities warrants such action.

    (d) Relationship to intelligence agency or activity. (1) An Applicant whose background discloses a relationship to an intelligence agency or intelligence activity may be ineligible to serve as a Peace Corps Volunteer. The term “relationship” means any association with an intelligence agency or with an intelligence activity, if such association could be the basis for an inference or the appearance that an Applicant was engaged in an intelligence activity. The association could include, but not be limited to, one based upon a familial, personal or financial connection to an intelligence agency or with an intelligence activity.

    (2) Determinations of the eligibility or periods of ineligibility of such Applicants will be made by the General Counsel on a case by case basis using the criteria set forth below. Examples of the type of relationships among others that could lead to ineligibility are Applicants whose spouses, domestic partners, or parents are or were involved in actual intelligence activities, or members of the immediate family of prominent highly placed officials in an intelligence agency who might be the target of harassment or violence overseas as the result of family connections. Employment by an organization that has been funded by an intelligence agency may also lead to ineligibility.

    (3) In determining whether an Applicant's relationship to an intelligence agency or intelligence activity makes the Applicant ineligible for service, or in determining the duration of any ineligibility, the General Counsel will consider the following factors as appropriate:

    (i) Nature of the relationship.

    (ii) The intelligence agency with which the Applicant has the relationship.

    (iii) Duration of the relationship.

    (iv) Length of time that has elapsed since the last connection to the intelligence agency.

    (v) Where the intelligence activity or work was performed.

    (vi) Nature of the connection with intelligence activity or work.

    (vii) Whether or not the intelligence activity or work involved contact with foreign nationals.

    (viii) Whether the connection was known or unknown to the Applicant at the time it occurred.

    (ix) Training received, if any.

    (x) Regularity of the contact with foreign nationals, and nature of duties, if any.

    (xi) Public knowledge of the activity or connection.

    (xii) Any other information which bears on the relationship of the Applicant to an intelligence agency or intelligence activity.

    (e) Determination. VRS is responsible for the initial screening of Peace Corps Volunteer applications for compliance with the provisions of this policy. In cases where that office is unable to make a decision regarding the eligibility of an Applicant under this policy, the individual's application will be referred to the General Counsel, who will make the determination on eligibility.

    (f) Appeal. VRS will inform all Applicants promptly and in writing of any decision to disqualify them based on an intelligence background and the reasons for that decision. Applicants have 15 days from the date of receipt of the letter from VRS to appeal the decision to the Director of the Peace Corps. The decision of the Director of the Peace Corps will be the final agency decision.

    (g) Post Peace Corps employment by United States intelligence agencies. Pursuant to agreements between the Peace Corps and certain intelligence agencies, those intelligence agencies will not employ former Volunteers for a specified period after the end of their Peace Corps service and will not use former Volunteers for certain purposes or in certain positions. Information regarding such agreements may be obtained from the Office of the General Counsel.

    § 305.7 Special circumstances.

    (a) Couples. Two Applicants who are married to one another or two unmarried Applicants who are in a same-sex or opposite-sex domestic partnership or other committed relationship are eligible to apply for service as a couple. In the case of an unmarried couple, each member of the couple must provide a sworn statement, in a form acceptable to the Peace Corps, attesting to their domestic partnership status or committed relationship (as the case may be) and their request to be considered for assignment as a couple. In all cases, both members of the couple must apply and qualify for assignment at the same location.

    (b) Serving with dependents and other family members. In general, dependents and other family members may not accompany a Volunteer during service. However, the Peace Corps may from time to time make exceptions either on a case-by-case basis or for particular categories of Volunteers to the extent permitted by Federal law.

    (c) Military service. The Peace Corps welcomes applications from veterans, reservists, and active duty military personnel who are interested in Peace Corps service after completion of their military service. After receiving an invitation for Peace Corps service, applicants with reserve obligations are reminded to comply with all requirements to notify their reserve component that they will be unavailable for drills and annual training because of their Peace Corps service. Such applicants are urged to obtain written confirmation from their reserve component that they have complied with these requirements.

    § 305.8 Background investigation.

    Section 22 of the Peace Corps Act requires that each Applicant be investigated to ensure that enrollment of the Applicant as a Volunteer is consistent with the national interest. The Peace Corps therefore obtains an appropriate background investigation for all Applicants who are invited to serve in the Peace Corps. Information revealed by the background investigation may be grounds for disqualification from Peace Corps service. Under the Peace Corps Act, if a background investigation regarding an Applicant develops any data reflecting that the Applicant is of questionable loyalty or is a questionable security risk, the Peace Corps must refer the matter to the Federal Bureau of Investigation for a full field investigation. The results of that full field investigation will be furnished to the Peace Corps for information and appropriate action.

    Dated: December 13, 2016. William Stoppel, Acting Associate Director, Management.
    [FR Doc. 2016-30442 Filed 1-4-17; 8:45 am] BILLING CODE 6051-01-P
    DEPARTMENT OF DEFENSE Office of the Secretary 32 CFR Part 154 [Docket ID: DOD-2016-OS-0121] RIN 0790-AJ55 Department of Defense Personnel Security Program Regulation AGENCY:

    Office of the Under Secretary for Intelligence, DoD.

    ACTION:

    Final rule.

    SUMMARY:

    This final rule removes DoD's regulation concerning personnel security. The codified rule is outdated and no longer accurate or applicable as written. The rule does not impose obligations on members of the public that are not already imposed by statute. It paraphrases and summarizes relevant sources of law and does not substantively deviate from them.

    DATES:

    This rule is effective on January 5, 2017.

    FOR FURTHER INFORMATION CONTACT:

    Patricia Toppings at 571-372-0485.

    SUPPLEMENTARY INFORMATION:

    DoD internal guidance concerning personnel security will continue to be published in DoD Manual 5200.02. Once the revision of DoD Manual 5200.02 is signed, a copy will be made available at http://www.dtic.mil/whs/directives/corres/pub1.html.

    It has been determined that publication of this CFR part removal for public comment is impracticable, unnecessary, and contrary to public interest since it is based on removing DoD internal policies and procedures that are publically available on the Department's issuance Web site.

    The removal of this rule will be reported in future status updates of DoD's retrospective review plan in accordance with the requirements in Executive Order 13563. DoD's full plan can be accessed at: http://www.regulations.gov/#!docketDetail;D=DOD-2011-OS-0036.

    List of Subjects in 32 CFR Part 154

    Classified information, Government employees, Investigations, Security measures.

    PART 154—[REMOVED] Accordingly, by the authority of 5 U.S.C. 301, 32 CFR part 154 is removed. Dated: December 27, 2016. Aaron Siegel, Alternate OSD Federal Register Liaison Officer, Department of Defense.
    [FR Doc. 2016-31756 Filed 1-4-17; 8:45 am] BILLING CODE 5001-06-P
    DEPARTMENT OF DEFENSE Office of the Secretary 32 CFR Part 286 [DOD-2007-OS-0086; 0790-AI24] DoD Freedom of Information Act (FOIA) Program AGENCY:

    Department of Defense.

    ACTION:

    Interim final rule.

    SUMMARY:

    This part revises the Department of Defense (DoD) Freedom of Information Act (FOIA) regulation to implement the FOIA and incorporate the provisions of the OPEN Government Act of 2007 and the FOIA Improvement Act of 2016. This part promotes uniformity in the Department of Defense (DoD) FOIA Program. It takes precedence over all DoD Component issuances that supplement and implement the DoD FOIA Program.

    DATES:

    Effective date: This rule is effective January 5, 2017. Comment date: Comments must be received by March 6, 2017.

    FOR FURTHER INFORMATION CONTACT:

    James Hogan, 571-372-0462.

    SUPPLEMENTARY INFORMATION: Executive Summary

    This rule revises 32 CFR part 286 to implement section 552 of title 5, United States Code (U.S.C.) and incorporate the provisions of the OPEN Government Act of 2007 and the FOIA Improvement Act of 2016. This part promotes uniformity in the DoD FOIA Program across the entire Department.

    The FOIA, 5 U.S.C. 552, requires agencies to “promulgate regulations, pursuant to notice and receipt of public comment, specifying the schedule of fees applicable to the processing of requests [the FOIA] and establishing procedures and guidelines for determining when such fees should be waived or reduced.” Additionally, according to the FOIA, an agency may, in its regulation, designate those components that can receive FOIA requests, provide for the aggregation of certain requests, and provide for multitrack processing of requests. Finally, the FOIA requires agencies to “promulgate regulations . . . providing for expedited processing of requests for records.”

    This rule implements changes to conform to the requirements of the following amendments to the FOIA: The OPEN Government Act of 2007, Public Law 110-175 and the FOIA Improvement Act of 2016, Public Law 114-185. These changes include the roles of the FOIA Public Liaison in § 286.4, § 286.5, § 286.8, § 286.9, and § 286.12; the roles of the FOIA Requesters Service Centers in § 286.3, § 286.4, § 286.5, § 286.8, § 286.9, § 286.11, and § 286.12; the processing of FOIA requests, § 286.7; the timing of responses to FOIA requests, § 286.8; and the fees schedules, Subpart E.

    This regulatory action imposes monetary costs to the DoD and the public. The average cost to the DoD to implement the FOIA for the past five years is over $82,000,000. The benefit of this regulatory action to the public is that it promotes uniformity in the DoD FOIA Program across the entire Department and provides notice of DoD's FOIA policies and procedures to the public.

    The revisions to this rule will be reported in future status updates as part of DoD's retrospective plan under Executive Order 13563 completed in August 2011. DoD's full plan can be accessed at: http://www.regulations.gov/#!docketDetail;D=DOD-2011-OS-0036.

    Justification for Interim Final Rule

    The DoD is issuing this rule as an interim final rule with a request for comments to comply with a statutory deadline in the FOIA Improvement Act of 2016. Section 3 of the Act requires agencies to review and issue regulations in accordance with the amendments in the Act no later than 180 days after the enactment of the Act. The FOIA Improvement Act of 2016 was signed by the President on June 30, 2016; therefore, agencies need to issue regulations no later than the end of December 2016.

    Additionally, this rule implements amendments made in the OPEN Government Act of 2007. The DoD's issuance of its revised FOIA regulation was previously delayed due to reorganization, process changes, and re-coordination requirements based on the inclusion of the new legislative amendments and Presidential guidance.

    Public Comments on Proposed Rule

    The DoD published a proposed FOIA rule for comment on September 3, 2014 (79 FR 52500-52524) that was not promulgated as a final rule. Just after that time, the Office of Information Policy, Department of Justice (DOJ) published its Guidance for Agency FOIA Regulations along with a recommended template to be used by agencies in the development of their regulations. Accordingly, the DoD made the decision to revise its regulation at 32 CFR part 286 so that, to the practical extent possible, it aligned with the template recommended by DOJ. The sections of the previous proposed rule that are not included in this interim rule will be in a separate internal manual, DoD Manual 5400.07. This manual contains DoD FOIA processing guidance that is internal to the department and is not legally required to be in this rule.

    During the previous public comment period on the proposed rule, the DoD received a number of comments that are related to this interim rule and our incorporation of the OPEN Government Act of 2007 amendments. Those comments, and the Department's adjudication of those comments, follow.

    Comment: The previous proposed rule contained the following definition of consultation: The “process whereby a federal agency transfers a FOIA responsive document to another federal agency or non-government entity, in certain situations, to obtain recommendations on the releasability of the document.” One commenter states that this definition fails to set parameters for determining when consultation is appropriate.

    This commenter “believes that a `consultation' should occur only when another agency, agency component, or non-government entity has a `substantial interest' in any of the responsive records or portions thereof. While FOIA is silent as to the meaning of the term `substantial interest,' the Office of Information Policy (`OIP') suggests a `substantial interest' exists when records either `originate[] with another agency' or the records contain `information that is of interest to another agency or component.' For its part, the Department of Justice's FOIA regulations provide that `consultation' (or `referral') is appropriate when another agency originated the record or, more generally, is `better able to determine whether the record is exempt from disclosure.' ”

    This commenter further “proposes that DoD redefine `consultation' accordingly: Consultation. The process whereby a federal agency transfers a FOIA responsive record to another federal agency, agency component, or non-government entity, when such party has a substantial interest in the responsive record, in order to obtain recommendations on the releasability of the record. After review, the record is returned to the original agency for response to the FOIA requester or further review.”

    This commenter also asks the DoD to introduce a definition of “substantial interest” as follows: “Substantial interest. Another agency, agency component, or nongovernment entity possesses a `substantial interest' in a FOIA responsive record, such that consultation may be appropriate, whenever (1) the responsive record originates with that same agency, agency component, or non-government entity, or (2) when the agency, agency component, or non-government entity is better positioned to judge the proper application of the FOIA exemptions, given the circumstances of the request or its familiarity with the facts necessary to judge the proper withholding of exempt material.”

    Response: Our interim rule adopts the definition of “consultation” from the DOJ FOIA rule template, and we believe this is the appropriate definition. It does not contain the phrase “substantial interest.” Furthermore, we are not adding a definition of “substantial interest.” The proposed definition is too narrow and unnecessarily restricts the discretionary decision-making authority of DoD officials when determining what other agencies or DoD Components should review a requested document prior to release under the FOIA.

    Comment: One commenter appreciates our definition because it tracks the new statutory definition codified by the OPEN Government Act of 2007 and explicitly abandons the outdated “organized and operated” standard proposed in guidance by the Office of Management and Budget in 1987. They go on to say that the proposed definition could be improved by explaining the manner in which “alternative media shall be considered to be news-media entities.” Accordingly, they requested we amend the definition of “representative of the news media” by incorporating the entirety of the statutory standard or by adding some short indication of the application of the fee category to non-traditional news media forms and requesters. They believe that the proposed definition itself should refer to the important role of technology vis-a-vis the news media requester fee category, potentially utilizing as a starting point the examples provided in the statute.

    Response: We appreciate the comment concerning the definition of “representative of the news media”. With our new interim rule, we are now adopting the definition as published in the DOJ FOIA regulation template. We believe that this definition accurately reflects the Act.

    Comment: Another commenter claims our proposed definition is deeply flawed because it states that news is information that is about current events or that would be of current interest to the public.

    They go on to say that “news can and frequently does concern historic past events. For example, there are any number of news stories that unveil the truth about important events of the past, perhaps because they were classified or restricted or secret in some manner. There are reporters who focus on important news stories about previously unknown aspects of World War II or Korea or Vietnam or the Persian Gulf Conflicts. There is important reporting on atomic veterans, Agent Orange exposure, chemical weapons testing, and so on. Why would important reporting on those past events not be considered news?”

    “Limiting the definition to current events means that the government agency would be taking on the role of editor to decide what is important, and suggests that any news coverage about past events is not newsworthy. This definition is particularly disturbing because many of the important news stories involving DoD records concern past events and are precisely the type of news reporting that should be recognized as news for purposes of the Freedom of Information Act.”

    “I understand that the definition could be interpreted to stretch to cover past events. But unless it is stated explicitly, there are components which may misinterpret the definition, and adhere to a narrower definition of news.”

    “Therefore, I propose that the definition be amended to include the sentence: `This may include historic past events.' ”

    Response: Because we believe the phrase “would be of current interest to the public” adequately addresses the commenter's concern, we did not accept this recommendation. Furthermore, this section of the definition of “representative of the news media” mirrors the Act and the DOJ FOIA regulation template word for word.

    Comment: One commenter mentions that the list of tasks for the FOIA Public Liaison omits two important tasks for the FOIA Public Liaison. “First, there is explaining the status of an overdue request. Second, the Public Liaison can help to coordinate opportunities for a requester to clarify or narrow the scope of a request. This clarification or narrowing may require some two way discussion for the requester to understand how they may best clarify or narrow the request, including a discussion of specific impediments to the processing of the request.”

    Response: We rejected this recommendation because it is our intention here to list only the statutory duties of the FOIA Public Liaison. We agree this list is not all-inclusive, and accordingly there could be a number other duties that FOIA Public Liaisons will perform. However, these other duties, to include those that the commenter mentions, are included within the scope of the statutory duties of the FOIA Public Liaison.

    Comment: One commenter recommends a change to the section concerning Confidential Commercial Information. Specifically, the DoD mirrors the language of Executive Order 12600, which says that when providing the submitter of commercial information the opportunity to provide comment on the agency's release of its information under the FOIA, DoD Components should provide the submitter with a reasonable amount of time to comment. The commenter recommends, instead, that the submitter be given ten business days to respond to the notice with reasons for withholding disclosure. If the submitter fails to respond within the allotted ten days, the Agency must conclude that the submitter has no objection to disclosure of the requested information.

    Response: We appreciate this comment, and agree that ten business days is a very reasonable time frame. However, because of the wide diversity of acquisition environments within the Department of Defense, it may be the case a longer period of time would be more reasonable. The DoD Components have very different acquisition environments; we have contracts concerning, for example, uniforms, office supplies, landscaping, complex information technology systems, satellites, healthcare, construction, and food. Accordingly, we believe that the individual components are best situated to determine the reasonable time for submitter response for their unique situations.

    Comment: Once commenter recommends that upon submission of confidential information by the submitter to the DoD, the DoD should require the submitter to designate with good-faith effort any portions of the submission the submitter considers to be exempt under Exemption 4. A good-faith effort designation can be useful because it allows the DoD to work with information submitted beforehand that would help in its determination on whether to disclose information submitted by the submitter. They further suggest that the submitter's designation expire ten years after the date of submission unless the submitter requests, and provides justification for, a longer designation period. They state that the proposed section should be added as follows: “Designation of confidential business information. In the event a FOIA request is made for confidential business information previously submitted to the Government by a commercial entity or on behalf of it (referred to as a `submitter'), the regulations in this section apply. When submitting confidential business information, the submitter must use a good-faith effort to designate, by use of appropriate markings, at the time of submission or at a reasonable time thereafter (generally, within 30 days), any portions of the submitter's submission the submitter considers to be exempt from disclosure under FOIA Exemption 4, 5 U.S.C. 552(b)(4). The submitter's designation will expire ten years after the date of submission unless the submitter requests, and provides justification for, a longer designation period.”

    Response: Some DoD Components have adopted a similar practice, and we believe that given the wide variety of DoD contracts (as described in the previous response), this procedure is best left with the components to determine whether it's appropriate for them. Additionally, this is actually an acquisition and not a FOIA policy recommendation; therefore, this rule is not the appropriate place for the policy. Furthermore, this policy (of proactively determining the confidential business information without a FOIA request) suffers from a defect. When a FOIA request is received for this type of information, the FOIA provides the “push” to the Agency to release the information, and Executive Order 12600 provides the submitter the opportunity to protect it. With the FOIA, the Agency has the legal authority to release information over the objections of the submitter, and with the Executive Order the submitter can prevent such a release under the Administrative Procedures Act. However, in the process recommended by this commenter, if the submitter asks the Agency to protect information that the Agency clearly believes is not protectable under Exemption 4, it has no recourse to persuade or convince the submitter to made a more reasonable determination. The inevitable, yet unintended, consequence would be less contract information being released to the public; in effect, less transparency.

    Comment: A commenter discussed our proposed rule's reference to the FOIA exclusions, 5 U.S.C. 552(c)(1)-(3). They believe that this allows the DoD to make a misrepresentation regarding the actual existence of records to the requester. Specifically, they objected to the following wording: Because of the possibility of the existence of excluded records, DoD law enforcement components will respond to all FOIA requests when no records are located or when located records fall within an exclusion by stating that no records responsive to the FOIA were found.

    This commenter believes “the justification the proposed regulation provides for misrepresentation—`the possibility of the existence of excluded records'—is insufficient. The FOIA contemplates a need for nondisclosure in cases of records the release of which could threaten the efficacy of law enforcement, but in no way does it countenance lying to requesters. Law enforcement may reasonably demand flexibility in the principles of open government that the FOIA seeks to advance, but it cannot require complete abdication of those principles. It is also unclear from the proposed regulations whether the DoD would believe itself authorized to make misrepresentations to Legislatures as to the existence of (b)(7) records.”

    This commenter recommends instead that the agency follow the approach set out in the Department of Justice's guidelines regarding exclusions. The agency should have internal accountability mechanisms to ensure that exclusions are not overused. It should also include language in all FOIA responses informing the requester of the existence of exclusions and should also post information about exclusions on its public Web site.

    Response: The procedures that we had in the proposed rule were appropriate and in accordance with the Act and DOJ procedural guidance. However, we have deleted much of the procedural guidance for exclusions and now our section on this topic mirrors the DOJ FOIA regulation template.

    Comment: One commenter appreciated the requirement that a FOIA Requester Service Center must provide a requester with an estimated date of completion for their FOIA request when the requester enquires about the status of a request. However, the commenter also indicated that there is not a good accountability measure listed to ensure that dates given are given in good faith.

    Response: We are not sure what the commenter means by “accountability measure,” or how it would apply to this rule. Therefore, we did not adopt their recommendation.

    Comment: One commenter recommend that in the section concerning expedited processing, we should provide examples of compelling need, imminent loss of due process rights, and humanitarian need.

    Response: We appreciate this comment; however, for the sake of brevity, we are not including examples. Furthermore, in this case the use of examples risks the possibility of adding confusion to the understanding of the issue.

    Comment: One commenter is concerned that we were separating the definition of compelling need from the main body of the regulation.

    Response: We appreciate this comment. Our previous proposed rule had a definitions section separate from the body of the rule. Now that we are publishing our rule according to the DOJ FOIA regulation template, the definition is located within the body of the rule.

    Comment: In the fees section of our proposed rule, and in our current rule, we have a “business as usual approach” concerning the costs associated with the processing of electronic records. Specifically, the proposed rule said that a “business as usual approach exists when the DoD Component has the capability to process a FOIA request for electronic records without a significant expenditure of monetary or personnel resources. DoD Components are not required to conduct a search that does not meet this business as usual criterion.” A commenter mentions that this has no foundation in law, and obfuscates the true reasonableness standard for electronic searches set out in 5 U.S.C. 552(a)(3)(C). They propose that it should be eliminated.

    Response: We agree with the commenter and have removed the “business as usual” criterion.

    Comment: One commenter is concerned about the absence of “substantial interest” in the discussion of consultations with and referrals to other agencies, agency components, or non-government entities. They mention the proposed rule contains varying references to “substantial interest,” “equity interest,” and “interest or equity.” This commenter recommends that DoD standardize its language by using “substantial interest” to avoid confusion. It also should provide a clear statement that consultation ought never to occur with an entity that does not possess a substantial interest in responsive records.

    Response: Because we have adopted the DOJ FOIA regulation template, we have standardized the use of the word “interest,” it is not further modified by “substantial” or “equity”.

    Comment: One commenter recommends that DoD revise the practice of not advising FOIA requesters that a consultative process has been undertaken “unless information is withheld by the consulted agency.” This commenter believes that “transparency and an open government—hallmarks of FOIA—mandate that agencies provide requesters with this information.”

    Response: Because we have adopted the DOJ FOIA regulation template, which does not include this practice, the interim final rule also does not include guidance to not inform FOIA requesters of consultations.

    Comment: Concerning the procedure of advising FOIA requesters of their appeal rights, one commenter states that the time limits on submission of administrative appeals should recognize the Justice Department's statements on the possibility of lengthy delays on mail reaching government agencies due to security screening. They suggest that the postmark of the letter can be used to satisfy the appeal deadline for an administrative appeal, as is permitted in most legal situations.

    Response: With our adoption of the DOJ FOIA regulation template, we have now adopted this procedure.

    Comment: One commenter mentions the language in our proposed rule which concerns commercial requesters. It indicates that a “representative of the news media could make a FOIA request that is for commercial use (e.g., a magazine publisher asking for duty addresses of DoD personnel to solicit them to buy subscriptions to the magazine).” The commenter notes that while it is theoretically possible that if a FOIA request could be submitted to DoD by a member of the news media for such a purpose, such a scenario is unlikely and, at the very least, uncommon. This commenter further contents that a FOIA request is submitted by a member of the news media, there should be a strong presumption that the requestor is entitled to classification as a “representative of the news media” for fee purposes.

    Response: We agree, and with our adoption of the DOJ FOIA regulation template, this subsection was deleted.

    Comment: One commenter mentions that our proposed subsection on fees discusses examples of news media entities such as publishers of periodicals who make their products available for purchase or subscription by the general public. This commenter believes that this requirement fails to include the large variety and number of online news organizations, many of which provide their products free of charge to internet readers. Therefore, they propose that the subsection should be adjusted to recognize this reality. They ask that we “remove the requirement that a publisher of periodicals must make their products available for purchase or subscription, as that requirement unnecessarily impedes the qualification of many legitimate news media entities at the present time.”

    Response: Because we are adopting the DOJ FOIA regulation template, this phrase is no longer in our regulation.

    Comment: Another commenter had a similar issue with this section. “[The] FOIA states that examples of news-media entities include `publishers of periodicals . . . who make their products available for purchase by or subscription by or free distribution to the general public.' The Proposed Rule, on the other hand, inexplicably truncates the definition to exclude publishers that make their publications available for `free distribution to the general public.' There are countless media entities that provide their services to the public for free or through an advertisement-based model, including the overwhelming majority of broadcast and online news outlets. ABC News, National Public Radio, CBS News, Slate, NBC News, Politico, Pro Publica, and PBS are just a handful of examples of organizations that provide news to the public for free. It would be absurd for the DoD not to recognize these and other news organizations that provide free or advertising-supported journalism as representatives of the news media.”

    “Furthermore, the authority under which the DoD is empowered to promulgate regulations regarding its implementation of FOIA, 5 U.S.C. 552(a)(4)(A)(i), states that [s]uch agency regulations shall provide that . . . [e]xamples of news-media entities are . . . publishers of periodicals (but only if such entities qualify as disseminators of `news') who make their products available for purchase by or subscription by or free distribution to the general public.”

    “While the statute says such examples are `not all-inclusive,' the DoD cannot promulgate regulations that are less inclusive than what Congress has indicated. As the Supreme Court has held with regard to an agency's construction of a statute which it administers, `[i]f the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.' Therefore, [we urge] the DoD to expand its definition of news-media entities to include publishers who make their products available for free to the public, in accordance with the express direction of Congress in the 2007 OPEN Government Act.”

    Response: Our adoption of the DOJ FOIA regulation template revises this subsection to satisfactorily adopt this commenter's recommendation.

    Comment: One commenter requests that DoD elaborate on the meaning of “alternative media.” Specifically, they state: “While DoD has followed FOIA's instruction to consider evolving `methods of news delivery' and `alternative media' formats when defining a news media entity, the proposed section would benefit from some examples that could provide guidance to FOIA officers when considering fee category requests. Specifically, [we are] concerned that nascent news media organizations, which have yet to demonstrate a large readership or a history of reporting and dissemination, could be excluded.”

    “Ensuring an expanded definition of `alternative media' is entirely consistent with judicial precedent. For example, the U.S. Court of Appeals for the District of Columbia Circuit has noted that FOIA's legislative history demonstrates `it is critical that the phrase `representative of the news media' be broadly interpreted if the act is to work as expected. . . . In fact, any person or organization which regularly publishes or disseminates information to the public . . . should qualify . . . as a `representative of the news media.' The U.S. District Court for the District of Columbia has similarly construed DoD's current fee category regulation, 32 CFR 286.28(e)(7)(i), to include, for example, regular publishers of periodicals, even when those periodicals are simply disseminated by email or posted on a frequently visited Web site.”

    “The legislative history of FOIA also suggests the need for improvement in the treatment of `alternative media.' Senator Patrick Leahy, co-sponsor of the OPEN Government Act, stated that the changes to the definition of `representative of the news media' would ensur[e] that anyone who gathers information to inform the public, including . . . bloggers, may seek a fee waiver[.]' He also stated that the new definition covered `Internet blogs and other Web-based forms of media . . . free newspapers and individuals performing a media function who do not necessarily have a prior history of publication.' Co-sponsor Senator John Cornyn affirmed Senator Leahy's view that the new definition `grants the same privileged FOIA fee status currently enjoyed by traditional media outlets to bloggers and others who publish reports on the Internet.' ”

    “Accordingly, [we request] that DoD expand the proposed definition of `representative of the news media' by incorporating the entirety of the statutory standard and by adding some short indication of the application of fee category to non-traditional news media forms and requesters.”

    Response: We understand and appreciate this recommendation; however, we are not revising this subsection as requested. We do not believe that an expanded definition of “alternative media” is necessary. Any such elaboration or definition risks excluding some types of alternative media. Additionally, the DOJ FOIA regulation template, which we have adopted, does not contain any such expanded definition.

    Comment: This same commenter requests “that DoD provide further explanation of how it will determine whether potential news media requesters possess the editorial skill to use responsive records to create a `distinct work' and the sufficient intent to `distribute[] that work to an audience.' News media requesters often prove this skill and intent with varying levels of specificity. DoD should clarify the standard of proof it will apply to these requests. Moreover, it should clarify the extent to which information about the requester that is not contained in the request will be used to determinate the veracity of a requester's claims. For example, DoD should explain whether it is appropriate to examine the history of an organization, its past practices with regard to FOIA records, and the detail of its planned use of responsive records, subject to editorial considerations and the content of the production. [We recommend] that DoD permit after-the-fact factual considerations, but that it remind FOIA offices that news media requester status is not static, so as to accommodate nascent news media persons or entities and others transitioning into news reporting.”

    Response: We appreciate this recommendation; however, we do not believe that this rule is the appropriate place for a further explanation of how we should determine whether a potential news media requester meets the statutory standard or not. DOJ has not provided guidance in this area, and if they do we will pass it to the DoD Components.

    Comment: This commenter also points out that the proposed rule states, in part, that “[f]reelance journalists may be regarded as working for a news organization. . . .” This commenter contends that “this language appears to largely mirror the language in the 2007 OPEN Government Act, which was codified at 5 U.S.C. 552(a)(4)(A)(iii). However, the language of the Proposed Rule changes the imperative `shall' of FOIA to a permissive `may.' As stated above, the authority under which the DoD is empowered to promulgate regulations regarding its implementation of FOIA, 5 U.S.C. 552(a)(4)(A)(i), states that `[s]uch agency regulations shall provide that . . . [a] freelance journalist shall be regarded as working for a news-media entity. . . .' The DOD has no power to modify a clear and essential term contained in a statute through the regulatory process. The Proposed Rule must be changed such that it properly reflects the will of Congress.”

    Response: The DOJ FOIA regulation template, which we adopted, uses the term “will” which we believe has the same imperative force as “shall”.

    Comment: This commenter also is concerned that a subsection of the proposed rule may be interpreted too narrowly by FOIA officers. The proposed rule states that “[a] person or entity that merely disseminates documents received pursuant to the FOIA to an audience would not qualify as a representative of the news media because, in this case, the person or entity is not using editorial skills to turn raw materials into a distinct work.” The commenter contends “While it is true that FOIA defines `a representative of the news media' as a person or entity that gathers information and uses its editorial skills to turn such information into a distinct work for distribution, the Proposed Rule would benefit from clarifying language instructing FOIA officers that it should be interpreted liberally in favor of the requestor. A person or entity that meets the definition of `a representative of the news media' may, in certain circumstances, disseminate documents received pursuant to a FOIA request in full, oftentimes publishing such documents online alongside or as a supplement to a news article or other commentary. This practice is beneficial, and should not lead to the denial of media fee status.”

    Response: We believe that this paragraph does not contradict the FOIA; it is very clear that the Act requires a representative of the news media to use “editorial skills.” However, since this sentence is not in the DOJ FOIA regulation template, we do not have it in our interim rule.

    Regulatory Procedures Executive Order 12866, “Regulatory Planning and Review” and Executive Order 13563, “Improving Regulation and Regulatory Review”

    Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This interim final rule has been designated a “significant regulatory action,” although not economically significant, under section 3(f) of Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget (OMB) under the requirements of these Executive Orders.

    Public Law 104-4, “Unfunded Mandates Reform Act” (2 U.S.C. Ch. 25)

    This interim final rule is not subject to the Unfunded Mandates Reform Act because it does not contain a federal mandate that may result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100M or more in any one year.

    Public Law 96-354, “Regulatory Flexibility Act” (5 U.S.C. Ch. 6)

    It has been certified that this interim final rule is not subject to the Regulatory Flexibility Act because it does not have a significant economic impact on a substantial number of small entities. The rule implements the procedures for processing FOIA requests within the Department of Defense, which do not create such an impact.

    Public Law 96-511, “Paperwork Reduction Act” (44 U.S.C. Ch. 35)

    This interim final rule does not impose reporting or recordkeeping requirements under the Paperwork Reduction Act of 1995.

    Executive Order 13132, “Federalism”

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

    List of Subjects in 32 CFR Part 286

    Freedom of Information Act.

    Accordingly, 32 CFR part 286 is revised to read as follows: Subpart A—General Provisions Sec. 286.1 Purpose. 286.2 Applicability. Subpart B—FOIA Requests 286.3 General information. 286.4 FOIA Public Liaisons and the Office of Government Information Services. 286.5 Description of records sought. 286.6 Preservation of records. Subpart C—FOIA Request Processing 286.7 General provisions. 286.8 Timing of responses to requests. 286.9 Responses to requests. 286.10 Confidential Commercial Information. Subpart D—Appeals 286.11 Processing of appeals. Subpart E—Fees 286.12 Schedule of fees. 286.13 Fees for technical data. Authority:

    5 U.S.C. 552.

    PART 286—DOD FREEDOM OF INFORMATION ACT (FOIA) PROGRAM Subpart A—General Provisions
    § 286.1 Purpose.

    This part contains the rules that the public follows in requesting information from the Department of Defense (DoD) in accordance with the FOIA, as amended, 5 U.S.C. 552, and how those requests will be processed by the DoD. These rules should be read in conjunction with the text of the FOIA and the Uniform Freedom of Information Fee Schedule and Guidelines published by the Office of Management and Budget (“OMB Guidelines”). Requests made by individuals for records about themselves under the Privacy Act of 1974, as amended, 5 U.S.C. 552a, are processed in accordance with 32 Code of Federal Regulations (CFR) part 310. Additionally, the Directorate for Oversight and Compliance maintains a DoD FOIA Handbook for the public to use in obtaining information from the DoD. This handbook contains information about specific procedures particular to the DoD with respect to the public requesting DoD records. This handbook includes descriptions of DoD Components and the types of records maintained by different DoD Components. It is available at http://open.defense.gov/Transparency/FOIA/FOIAHandbook.aspx.

    § 286.2 Applicability.

    This part applies to the Office of the Secretary of Defense (OSD), the Military Departments, the Office of the Chairman of the Joint Chiefs of Staff and the Joint Staff, the Combatant Commands, the Office of the Inspector General of the Department of Defense, the Defense Agencies, the DoD Field Activities, and all other organizational entities within the DoD (referred to collectively in this part as the “DoD Components”).

    Subpart B—FOIA Requests
    § 286.3 General information.

    (a) The DoD has a decentralized system for responding to FOIA requests, with each DoD Component designating at least one FOIA Requester Service Center (RSC) to process records from that component. All DoD RSCs have the capability to receive requests electronically either through email or a web portal. To make a request for records, a requester should write directly to the DoD Component that maintains the records being sought. A request will receive the quickest possible response if it is addressed to the RSC of the DoD Component that maintains the records sought. Addresses and contact information for the RSCs are available at http://www.foia.gov/report-makerequest.html. This Web site has the contact information for the following DoD Components: The OSD and the Office of the Chairman of the Joint Chiefs of Staff and the Joint Staff, Department of the Army, Department of the Navy, Department of the Air Force, Armed Services Board of Contract Appeals, Defense Commissary Agency, Defense Contract Audit Agency, Defense Contract Management Agency, Defense Finance and Accounting Service, Defense Health Agency, Defense Information Systems Agency, Defense Intelligence Agency, Defense Logistics Agency, Defense Security Service, Defense Technical Information Center, Defense Threat Reduction Agency, Joint Personnel Recovery Agency, DoD Education Activity, National Geospatial-Intelligence Agency, National Guard Bureau, National Reconnaissance Office, National Security Agency/Central Security Service, Office of the Inspector General of the Department of Defense, United States Africa Command, United States Central Command, United States European Command, United States Northern Command, United States Pacific Command, United States Special Operations Command, United States Strategic Command, and United States Transportation Command.

    (b) The OSD/Joint Staff FOIA RSC also processes FOIA requests for the Criminal Investigation Task Force, Defense Acquisition University, Defense Advanced Research Projects Agency, Defense Equal Opportunity Management Institute, Defense Legal Services Agency, Defense Microelectronics Activity, Defense Media Activity, Defense POW/MIA Accounting Agency, Defense Security Cooperation Agency, Defense Technology Security Administration, Defense Travel Management Office, DoD Human Resources Activity, DoD Test Resource Management Center, Joint Improvised-Threat Defeat Agency, Missile Defense Agency, National Defense University, Office of Economic Adjustment, Pentagon Force Protection Agency, Uniform Services University of the Health Sciences, Washington Headquarters Services and White House Military Office.

    (c) A requester who is making a request for records about himself or herself, regardless of whether the records are in a Privacy Act system of records, must comply with the verification of identity requirements as determined by the DoD Component in accordance with 32 CFR part 310.

    § 286.4 FOIA Public Liaisons and the Office of Government Information Services.

    (a) Each DoD Component has at least one FOIA Public Liaison. FOIA Public Liaisons are responsible for working with requesters that have any concerns about the service received from a FOIA RSC, reducing delays in the processing of FOIA requests, increasing transparency and understanding of the status of requests, and assisting in the resolution of disputes. Contact information for DoD Component FOIA Public Liaisons is available at http://www.foia.gov/report-makerequest.html.

    (b) Engaging in dispute resolution services provided by OGIS. Mediation is a voluntary process. If a requester seeks dispute resolution services from the Office of Government Information services (OGIS), the DoD will actively engage as a partner to the process in an attempt to resolve the dispute.

    § 286.5 Description of records sought.

    (a) Requesters must reasonably describe the records sought and provide sufficient detail to enable personnel to locate those records with a reasonable amount of effort. To the extent possible, requesters should include specific information that may assist personnel in identifying the requested records, such as the date, title or name, author, recipient, subject matter of the record, case number, file designation, or reference number. Before submitting their requests, requesters may contact the DoD Component's FOIA RSC or FOIA Public Liaison to discuss the records they are seeking and to receive assistance in describing the records. If after receiving a request the DoD Component determines that it does not reasonably describe the records sought, the DoD Component shall inform the requester what additional information is needed or why the request is otherwise insufficient. Requesters who are attempting to reformulate or modify such a request may discuss their request with the DoD Component's FOIA contact or FOIA Public Liaison. Requesters are encouraged to make every effort to reasonably describe the requested records in order to avoid any delays in the processing of their requests.

    (b) Requesters may specify the preferred form or format (including electronic formats) for the requested records. DoD Components will accommodate the request if the record is readily reproducible in that form or format.

    (c) Requesters must provide contact information, such as a telephone number, email address, and/or mailing address, to assist the DoD Component in communicating and providing released records.

    § 286.6 Preservation of records.

    Each DoD Component shall preserve all correspondence pertaining to the requests that it receives under this part, as well as copies of all requested records, until disposition or destruction is authorized pursuant to title 44 of the United States Code or the General Records Schedule 4.2 of the National Archives and Records Administration (NARA). Records shall not be disposed of or destroyed while they are the subject of a pending request, appeal, or lawsuit under the FOIA.

    Subpart C—FOIA Request Processing
    § 286.7 General provisions.

    (a) Responsibilities. The DoD Component receiving a FOIA request for a record that it maintains is responsible for making a determination on the request and responding to the FOIA requester. In determining which records are responsive to a request, a DoD Component ordinarily will include only records in its possession as of the date that it begins its search. If any other date is used, the DoD Component shall inform the requester of that date. A record that is excluded from the requirements of the FOIA pursuant to 5 U.S.C. 552(c), is not considered responsive to a request.

    (b) Authority to deny requests. DoD Components will designate one or more Initial Denial Authorities (IDA) with the authority to deny any requests for records that are maintained by that agency.

    (c) Re-routing of misdirected requests. DoD Components receiving a misdirected FOIA request for records clearly originating with another DoD Component (e.g. the Air Force receives a FOIA request for a Navy contract) will route the FOIA request to the appropriate DoD Component and inform this DoD Component of the date the FOIA request was initially received. Additionally, it will advise the FOIA requester of the routing of the request. This routing requirement only applies to those FOIA requests directed to a DoD Component that seek documents for which the DoD is responsible. If it is known that responsibility for the requested records rests with a non-DoD Federal agency (e.g., Department of State), then the DoD Component need only advise the FOIA requester to submit the FOIA request to the proper Federal agency. DoD Components will not route misdirected FOIA requests to a Defense Criminal Investigation Organization or Intelligence Community component without first contacting the other component or agency for guidance.

    (d) Consultation, referral, and coordination. When reviewing records located in response to a request, the DoD Component may determine that another DoD Component or Federal agency also should determine whether the record is exempt from disclosure under the FOIA. As to any such record, the DoD Component shall proceed in one of the following ways:

    (1) Consultation. When records originating with a DoD Component that is initially processing a request contain information of interest to another DoD Component or other Federal agency, the DoD Component initially processing the request should typically consult with all interested DoD Components or other Federal agencies prior to making a release determination. The DoD Component initially processing the request, under these circumstances, will ultimately respond to the requester and release any responsive material. The consulted DoD Component will notify the sending DoD Component or other Federal agency when the consultation is received and the consultation tracking number.

    (2) Referral. (i) When the DoD Component initially processing the request believes that a different DoD Component or other Federal agency is best able to determine whether to disclose the record, the DoD Component typically should refer the responsibility for responding to the request regarding that record to that agency. Ordinarily, the agency that originated the record will be presumed to be best able to make the disclosure determination. Under these circumstances, the DoD Component or other Federal agency receiving the referral will ultimately make a release determination on the records and respond to the requester.

    (ii) Whenever a DoD Component refers a record to another DoD Component or Federal agency, it will document the referral, refer a copy of the referred record, and notify the requester of the referral, informing the requester of the name and FOIA address of the DoD Component or Federal agency to which the record was referred.

    (3) Coordination. The standard referral procedure is not appropriate where disclosure of the identity of the DoD Component or agency to which the referral would be made could harm an interest protected by an applicable exemption, such as the exemptions that protect personal privacy or national security interests. Under these circumstances, the consultation process is the appropriate means for coordination. See § 286.7(d)(1). For example, if a non-law enforcement agency responding to a request for records on a living third party locates within its files records originating with a law enforcement agency, and if the existence of that law enforcement interest in the third party was not publicly known, then to disclose that law enforcement interest could cause an unwarranted invasion of the personal privacy of the third party. Similarly, if a DoD Component locates within its files material originating with an Intelligence Community agency, and the involvement of that agency in the matter is classified and not publicly acknowledged, then to disclose or give attribution to the involvement of that Intelligence Community agency could cause national security harms. In such instances, in order to avoid harm to an interest protected by an applicable exemption, the DoD Component that received the request should coordinate with the originating DoD Component or agency to seek its views the disclosure of the record. The release determination for the record should then be conveyed to the requester by the DoD Component that originally received the request.

    (4) Timing of responses to consultations and referrals. All consultations and referrals received by the DoD Component will be processed according to the date that the FOIA request was initially received by a Federal agency.

    (5) Agreements regarding consultations and referrals. DoD Components may establish written agreements with other DoD Components or other Federal agencies to eliminate the need for consultations or referrals with respect to particular types of records, providing these agreements do not conflict with this rule, or another law, rule, or regulation.

    § 286.8 Timing of responses to requests.

    (a) In general. DoD Components ordinarily will respond to requests on a first-in/first-out basis according to their order of receipt. In instances involving misdirected requests that are re-routed pursuant to § 286.7(c), the response time will commence on the date that the request is received by the appropriate DoD Component's FOIA RSC, but in any event not later than 10 working days after the request is first received by any DoD Component's FOIA RSC that is designated to receive requests.

    (b) Multitrack processing. All DoD Components must designate a specific track for requests that are granted expedited processing in accordance with the standards set forth in the FOIA and paragraph (e) of this section. DoD Components may also designate additional processing tracks that distinguish between simple and more complex requests based on the estimated amount of work or time needed to process the request. Among the factors a DoD Component may consider are the number of records requested, the number of pages involved in processing the request and the need for consultations or referrals. DoD Components should advise requesters of the track into which their request falls and, when appropriate, shall offer the requesters an opportunity to narrow or modify their request so that it can be placed in a different processing track.

    (c) Unusual circumstances. Whenever the statutory time limit for processing a request cannot be met because of “unusual circumstances,” as defined in the FOIA, and the DoD Component extends the time limit on that basis, the DoD Component must, before expiration of the 20-day period to respond, notify the requester in writing of the unusual circumstances involved and of the date by which processing of the request can be expected to be completed. See 5 U.S.C. 552(a)(6)(B). Where the extension exceeds 10 working days, the DoD Component shall, in accordance with the FOIA, provide the requester with an opportunity to modify the request or arrange an alternative time period for processing the original or modified request. Furthermore, the requester will be advised that the DoD Component FOIA Public Liaison is available for this purpose and of their right to seek dispute resolution services from OGIS.

    (d) Aggregating requests. For the purposes of satisfying unusual circumstances under the FOIA, DoD Components may aggregate requests in cases where it reasonably appears that multiple requests, submitted either by a requester or by a group of requesters acting in concert, constitute a single request that would otherwise involve unusual circumstances. DoD Components will not aggregate multiple requests that involve unrelated matters.

    (e) Expedited processing. (1) The FOIA establishes two reasons for expediting the processing of initial FOIA requests: Compelling need and other cases determined by the agency. See 5 U.S.C. 552(a)(6)(E). Administrative appeals may be expedited for the same reasons. The DoD Components must make expedited processing determinations within 10 calendar days after receipt of a request that meets the criterion of reasonably describing the requested records in § 286.5(a). Once the DoD Component decides to grant expedited processing, the request is processed as soon as practicable. Adverse actions by DoD Components on requests for expedited processing, or a failure to respond to those requests in a timely manner, are subject to judicial review.

    (i) Compelling need. Expedited processing is granted to a requester upon a specific request for such and when the requester demonstrates a compelling need for the information. A compelling need exists when:

    (A) The failure to obtain requested records on an expedited basis could reasonably be expected to pose an imminent threat to the life or physical safety of an individual, or

    (B) The information is urgently needed by an individual primarily engaged in disseminating information in order to inform the public concerning actual or alleged government activity.

    (ii) DoD additional expedited processing circumstances. If the DoD Component decides to expedite the request for either of the following reasons, the request will be processed in the expedited track behind those requests qualifying for expedited processing as a compelling need.

    (A) Imminent loss of due process rights. Expedited processing is granted to a requester if loss of substantial due process rights is imminent.

    (B) Humanitarian need. Expedited processing is granted when the failure to obtain the requested information on an expedited basis could reasonably be expected to harm substantial humanitarian interests.

    (2) A request for expedited processing may be made at any time. Requests for expedited processing must be submitted to the DoD Component that maintains the records. When making a request for expedited processing of an administrative appeal, the request should be submitted to the DoD Component's appellate authority.

    (3) A requester who seeks expedited processing must submit a statement, certified to be true and correct, explaining in detail the basis for making the request for expedited processing. For requesters seeking expedited processing under paragraph (e)(1)(i)(B) of this section, a requester who is not a full-time member of the news media must establish that the requester is a person whose primary professional activity or occupation is information dissemination, and not an incidental or secondary activity, though it need not be the requester's sole occupation. Such a requester also must establish a particular urgency to inform the public about the government activity involved in the request—one that extends beyond the public's right to know about government activity generally. The existence of numerous articles published on a given subject can be helpful in establishing the requirement that there be an “urgency to inform” the public on the topic. Requests for expedited processing under paragraph (e)(1)(ii)(A) of this section must include a description of the due process rights that would be lost. This statement must be with the request for expedited processing for it to be considered and responded to within the 10 calendar days required for decisions on expedited access.

    (4) A DoD Component shall notify the requester within 10 calendar days of the receipt of a request for expedited processing of its decision whether to grant or deny expedited processing. If expedited processing is granted, the request shall be placed in the processing track for expedited requests, and processed as soon as practicable. If a request for expedited processing is denied, any appeal of that decision shall be acted upon expeditiously.

    § 286.9 Responses to requests.

    (a) In general. DoD FOIA RSCs will, to the extent practicable, communicate with requesters having access to the Internet using electronic means, such as email or web portal.

    (b) Acknowledgments of requests. DoD Components will acknowledge requests in writing and assign individualized tracking numbers. DoD Components will include these tracking numbers and any tracking numbers used by FOIA requesters in all correspondence.

    (c) Estimated dates of completion and interim responses. Upon request, the DoD Component will provide an estimated date by which the DoD Component expects to provide a response to the requester. If a request involves a voluminous amount of material or searches in multiple locations, the DoD Component may provide interim responses, releasing the records on a rolling basis.

    (d) Grants of requests. Once a DoD Component makes a determination to grant a request in full or in part, it shall notify the requester in writing. The DoD Component also shall inform the requester:

    (1) Of any fees charged under § 286.12; and

    (2) That they may contact the DoD Component FOIA Public Liaison for further assistance.

    (e) Adverse determinations of requests. A DoD Component making an adverse determination denying a request in any respect will notify the requester of that determination in writing. Adverse determinations, or denials of requests, include decisions that the requested record is exempt, in whole or in part; the request does not reasonably describe the records sought; the information requested is not a record subject to the FOIA; the requested record does not exist, cannot be located, or has been destroyed; or the requested record is not readily reproducible in the form or format sought by the requester. Adverse determinations also include denials involving fees or fee waiver matters or denials of requests for expedited processing.

    (f) Content of denial. The denial will include:

    (1) The name and title or position of the IDA;

    (2) A brief statement of the reasons for the denial, including any FOIA exemption applied by the DoD Component in denying the request;

    (3) An estimate of the volume of any records or information withheld, such as the number of pages or some other reasonable form of estimation, although such an estimate is not required if the volume is otherwise indicated by deletions marked on records that are disclosed in part or if providing an estimate would harm an interest protected by an applicable exemption;

    (4) For any information denied under Exemption 1, the applicable section or sections of the appropriate Executive order on classification that establishing continued classification of the information;

    (5) For any information denied under Exemption 3, the specific statute relied upon to deny the information along with a short description of the statute;

    (6) A statement that the requester must appeal no later than 90 days after the date of the denial and along with instructions on how to appeal to the DoD Component appellate authority. The instructions will include the appellate authority's duty title, the mailing address for the appeal, and instructions on how the requester can appeal electronically; and

    (7) A statement advising the requester of their right to seek dispute resolution services from the DoD Component FOIA Public Liaison or OGIS.

    (g) Markings on released documents. Records disclosed in part will be marked clearly to show the amount of information deleted and the exemption under which the deletion was made unless doing so would harm an interest protected by an applicable exemption. The location of the information deleted also will be indicated on the record, if technically feasible.

    (h) Use of record exclusions. (1) In the event that a DoD Component identifies records that may be subject to exclusion from the requirements of the FOIA pursuant to 5 U.S.C. 552(c), the DoD Component should confer with the Directorate for Oversight and Compliance, which will confer with the Department of Justice, Office of Information Policy (OIP), to obtain approval to apply the exclusion.

    (2) A DoD Component invoking an exclusion shall maintain an administrative record of the process of invocation and approval of the exclusion by OIP.

    § 286.10 Confidential Commercial Information.

    (a) Definitions.

    (1) Confidential commercial information means commercial or financial information obtained by the DoD Component from a submitter that may be protected from disclosure under Exemption 4 of the FOIA, 5 U.S.C. 552(b)(4).

    (2) Submitter means any person or entity, including a corporation, State, or foreign government, but not including another Federal Government entity, that provides confidential commercial information, either directly or indirectly to the Federal Government.

    (b) Designation of confidential commercial information. A submitter of confidential commercial information must use good faith efforts to designate by appropriate markings, at the time of submission, any portion of its submission that it considers to be protected from disclosure under Exemption 4. These designations shall expire 10 years after the date of submission unless the submitter requests and provides justification for a longer designation period.

    (c) When notice to submitters is required. (1) The DoD Component shall promptly provide written notice to the submitter of confidential commercial information whenever records containing such information are requested under the FOIA if the DoD Component determines that it may be required to disclose the records, provided:

    (i) The requested information has been designated in good faith by the submitter as information considered protected from disclosure under Exemption 4; or

    (ii) The DoD Component has a reason to believe that the requested information may be protected from disclosure under Exemption 4, but has not yet determined whether the information is protected from disclosure.

    (2) The notice shall include a copy of the requested records or portions of records containing the information. In cases involving a voluminous number of submitters, the DoD Component may post or publish a notice in a place or manner reasonably likely to inform the submitters of the proposed disclosure, instead of sending individual notifications.

    (d) Exceptions to submitter notice requirements. The notice requirements of this section shall not apply if:

    (1) The DoD Component determines that the information is exempt under the FOIA, and therefore will not be disclosed;

    (2) The information has been lawfully published or has been officially made available to the public;

    (3) Disclosure of the information is required by a statute other than the FOIA or by a regulation issued in accordance with the requirements of Executive Order 12600 of June 23, 1987; or

    (4) The designation made by the submitter under paragraph (b) of this section appears obviously frivolous. In such case, the agency shall give the submitter written notice of any final decision to disclose the information within a reasonable number of days prior to a specified disclosure date.

    (e) Opportunity to object to disclosure. (1) The DoD Component shall specify a reasonable time period within which the submitter must respond to the notice referenced in paragraph (c) of this section.

    (2) If a submitter has any objections to disclosure, it should provide the DoD Component a detailed written statement that specifies all grounds for withholding the particular information under any exemption of the FOIA. In order to rely on Exemption 4 as basis for nondisclosure, the submitter must explain why the information constitutes a trade secret or commercial or financial information that is confidential.

    (3) A submitter who fails to respond within the time period specified in the notice shall be considered to have no objection to disclosure of the information. The DoD Component is not required to consider any information received after the date of any disclosure decision. Any information provided by a submitter under this section may itself be subject to disclosure under the FOIA.

    (f) Analysis of objections. The DoD Component shall consider a submitter's objections and specific grounds for nondisclosure in deciding whether to disclose the requested information.

    (g) Notice of intent to disclose. Whenever the DoD Component decides to disclose information over the objection of a submitter, the DoD Component shall provide the submitter written notice, which shall include:

    (1) A statement of the reasons why each of the submitter's disclosure objections was not sustained;

    (2) A description of the information to be disclosed or copies of the records as the DoD Component intends to release them; and

    (3) A specified disclosure date, which shall be a reasonable time after the notice.

    (h) Notice of FOIA lawsuit. Whenever a requester files a lawsuit seeking to compel the disclosure of confidential commercial information, the DoD Component shall promptly notify the submitter.

    (i) Requester notification. The DoD Component shall notify a requester whenever it provides the submitter with notice and an opportunity to object to disclosure; whenever it notifies the submitter of its intent to disclose the requested information over the submitter's objections; and whenever a submitter files a lawsuit to prevent the disclosure of the information.

    Subpart D—Appeals
    § 286.11 Processing of appeals.

    (a) Requirements for making an appeal. A requester may appeal any adverse determinations to the DoD Component's appellate authority. Examples of adverse determinations are provided in § 286.9(e). Appeals can be submitted by mail or online in accordance with the requirements provided in the DoD Component's final response. Requesters that are not provided with appeal requirements should contact the FOIA RSC processing their request to obtain the requirements. The requester must make the appeal in writing and to be considered timely it must be postmarked, or in the case of electronic submissions, transmitted, within 90 calendar days after the date of the response. The appeal should clearly identify the determination that is being appealed and the assigned request number. To facilitate handling, the requester should mark both the appeal letter and envelope, or subject line of the electronic transmission, “Freedom of Information Act Appeal.”

    (b) Adjudication of appeals. (1) The Heads of the following DoD Components will serve as, or appoint an appropriate official to serve as, the component's appellate authority: Department of the Army, Department of the Navy, Department of the Air Force, Defense Commissary Agency, Defense Contract Audit Agency, Defense Contract Management Agency, Defense Finance and Accounting Service, Defense Health Agency, Defense Information Systems Agency, Defense Intelligence Agency, Defense Logistics Agency, Defense Security Service, Defense Threat Reduction Agency, National Geospatial-Intelligence Agency, National Reconnaissance Office, National Security Agency/Central Security Service, and the Office of the Inspector General of the Department of Defense.

    (2) The Deputy Chief Management Officer (DCMO) will serve as the appellate authority for the OSD and the Office of the Chairman of the Joint Chiefs of Staff and the Joint Staff, Armed Services of Contract Appeals, Defense Technical Information Center, Joint Personnel Recovery Agency, DoD Education Activity, National Guard Bureau, United States Africa Command, United States Central Command, United States European Command, United States Northern Command, United States Pacific Command, United States Special Operations Command, United States Strategic Command, and United States Transportation Command. The DCMO may delegate this authority to an appropriate official of the DCMO staff.

    (3) An appeal will normally not be adjudicated if the request becomes a matter of FOIA litigation. This decision should be made after consultation with the Department of Justice attorney responsible for the litigation.

    (c) Decisions on appeals. A decision on an appeal must be made in writing and signed by the appellate authority. A decision that upholds a DoD Component's determination in whole or in part will contain a statement that identifies the reasons for the affirmance, including any FOIA exemptions applied. The decision will provide the requester with notification of the statutory right to file a lawsuit. If a decision is remanded or modified on appeal, the requester will be notified of that determination in writing. The DoD Component will thereafter further process the request in accordance with that appeal determination and respond directly to the requester.

    (d) When an appeal is required. A requester generally must first submit a timely administrative appeal before seeking review by a court of a DoD Component's adverse determination.

    Subpart E—Fees
    § 286.12 Schedule of fees.

    (a) In general. DoD Components shall charge for processing requests under the FOIA in accordance with the provisions of this section and with the OMB Guidelines. For purposes of assessing fees, the FOIA establishes three categories of requesters: Commercial; non-commercial scientific or educational institutions or news media; and all other requesters. Different fees are assessed depending on the category. Requesters may seek a fee waiver. DoD Components shall consider such requests in accordance with the requirements in paragraph (m) of this section. In order to resolve any fee issues that arise under this section, a DoD Component may contact a requester for additional information. DoD Components shall ensure that searches, review, and duplication are conducted in the most efficient and least expensive manner. Requesters must pay fees by check or money order made payable to the Treasury of the United States.

    (b) Definitions. For purposes of this section:

    (1) Commercial use request is a request that asks for information for a use or purpose that furthers a commercial, trade, or profit interest, which can include furthering those interests through litigation. A DoD Component's decision to place a requester in the commercial use category will be made on a case-by-case basis based on the requester's intended use of the information. DoD Components will notify requesters of their placement in this category.

    (2) Direct costs are those expenses that a DoD Component incurs in searching for and, in the case of commercial use requests, reviewing records in order to respond to a FOIA request. DoD direct costs for human activity are at Table 1.

    Table 1—FOIA Hourly Processing Fees Type Grade Hourly rate Administrative E-9/GS-8 and below $24 Professional Contractor/O-1 to O-6/W-1 to W-5/GS-9 to GS-15 48 Executive O-7 and above and Senior Executive Service 110

    (3) Duplication is reproducing a copy of a record, or of the information contained in it, necessary to respond to a FOIA request.

    (4) Educational institution is any school that operates a program of scholarly research. A requester in this fee category must show that the request is made in connection with his or her role at the educational institution. DoD Components may seek verification from the requester that the request is in furtherance of scholarly research and will advise requesters of their placement in this category.

    (5) Noncommercial scientific institution is an institution that is not operated on a “commercial” basis, as defined in paragraph (b)(1) of this section and that is operated solely for the purpose of conducting scientific research the results of which are not intended to promote any particular product or industry. A requester in this category must show that the request is authorized by and is made under the auspices of a qualifying institution and that the records are sought to further scientific research and are not for a commercial use. DoD Components will advise requesters of their placement in this category.

    (6) Representative of the news media is any person or entity that gathers information of potential interest to a segment of the public, uses its editorial skills to turn raw materials into a distinct work, and distributes that work to an audience. The term “news” means information that is about current events or that would be of current interest to the public. Examples of news media entities include television or radio stations that broadcast “news” to the public at large and publishers of periodicals that disseminate “news” and make their products available through a variety of means to the general public, including news organizations that disseminate solely on the Internet. A request for records supporting the news-dissemination function of the requester shall not be considered to be for a commercial use. “Freelance” journalists who demonstrate a solid basis for expecting publication through a news media entity shall be considered as a representative of the news media. A publishing contract would provide the clearest evidence that publication is expected; however, DoD Components shall also consider a requester's past publication record in making this determination. DoD Components will advise requesters of their placement in this category.

    (7) Review is the examination of a record located in response to a request in order to determine whether any portion of it is exempt from disclosure. Review time includes processing any record for disclosure, such as doing all that is necessary to prepare the record for disclosure, including the process of redacting the record and marking the appropriate exemptions. Review costs are properly charged even if a record ultimately is not disclosed. Review time also includes time spent both obtaining and considering any formal objection to disclosure made by a confidential commercial information submitter under § 286.11, but it does not include time spent resolving general legal or policy issues regarding the application of exemptions.

    (8) Search is the process of looking for and retrieving records or information responsive to a request. Search time includes page-by-page or line-by-line identification of information within records and the reasonable efforts expended to locate and retrieve information from electronic records.

    (c) Fee category. Fees are assessed based on the category determined to be appropriate for the requester's category. The fee category of a requester that is an attorney or any other agent representing a client is determined by the fee category of the attorney's client. If the fee category of the client is not clear, then the DoD Components should ask the requester for clarification. If an attorney does not provide enough information to determine the fee category of the client, then the DoD Component may assign commercial fee category to the requester.

    (d) Charging fees. In responding to FOIA requests, DoD Components will charge the following fees unless a waiver or reduction of fees has been granted under paragraph (m) of this section. Because the fee amounts provided below already account for the direct costs associated with a given fee type, DoD Components should not add any additional costs to charges calculated under this section.

    (1) Search. (i) Requests made by educational institutions, noncommercial scientific institutions, or representatives of the news media are not subject to search fees. Search fees shall be charged for all other requesters, subject to the restrictions of paragraph (e) of this section. DoD Components may properly charge for time spent searching even if they do not locate any responsive records or if they determine that the records are entirely exempt from disclosure.

    (ii) For each quarter hour spent by personnel searching for requested records, including electronic searches that do not require new programming, the fees shall be charged as listed at Table 1.

    (iii) Requesters will be charged the direct costs associated with conducting any search that requires the creation of a new computer program to locate the requested records. These costs will not include the time it takes to run the program and extract data. Requesters will be notified of the costs associated with creating such a program and must agree to pay the associated costs before the costs may be incurred.

    (iv) For requests that require the retrieval of records stored by a DoD Component at a Federal records center operated by NARA, additional costs will be charged in accordance with the Transactional Billing Rate Schedule established by NARA.

    (2) Duplication. Duplication fees will be charged to all requesters, subject to the restrictions of paragraph (e) of this section. DoD Components will honor a requester's preference for receiving a record in a particular form or format where it is readily reproducible by the DoD Component in the form or format requested. Where photocopies are supplied, DoD Components will provide one copy per request at $.15 per page. For copies of records produced on tapes, disks, or other media, or other forms of duplication, DoD Components will charge the direct costs of producing the copy, including operator time in accordance with Table 1. DoD Components will charge record reproduction fees at the hourly rates in Table 1 if the creation of the electronic copies requires unique security procedures incurring considerable operator time, costing more than printing paper copies.

    (3) Review. Review fees will be charged to requesters who make commercial use requests. Review fees shall be assessed in connection with the initial review of the record, i.e., the review conducted by a DoD Component to determine whether an exemption applies to a particular record or portion of a record. No charge will be made for review at the administrative appeal stage of exemptions applied at the initial review stage. However, if a particular exemption is deemed to no longer apply, any costs associated with a DoD Component's re-review of the records in order to consider the use of other exemptions may be assessed as review fees. Review fees will be charged at the same rates as those charged for a search under paragraph (d)(1)(ii) of this section.

    (e) Restrictions on charging fees. (1) When a DoD Component determines that a requester is an educational institution, non-commercial scientific institution, or representative of the news media, and the records are not sought for commercial use, no search fees will be charged.

    (2) If a DoD Component fails to comply with the time limits in which to respond to a request it may not charge search fees, or, in the instances of requests from requesters described in paragraph (e)(1) of this section, may not charge duplication fees except as described in (e)(2)(i) through (iii).

    (i) When a DoD Component determines that unusual circumstances, as those terms are defined by the FOIA, apply to the processing of the request, and provides timely written notice to the requester, then the DoD Component is granted an additional ten days until the fee restriction in paragraph (e)(2) of this section applies.

    (ii) When a DoD Component determines that unusual circumstances apply and more than 5,000 pages are necessary to respond to the request, provides timely written notice to the requester, and has discussed with the requester (or made three good faith attempts to do so) on how the requester can effectively limit the scope of the request, the fee restriction in paragraph (e)(2) of this section does not apply.

    (iii) If a court has determined that exceptional circumstances exist, as defined by the FOIA, a failure to comply with the time limits shall be excused for the length of time provided by the court order.

    (3) No search or review fees will be charged for a quarter-hour period unless more than half of that period is required for search or review.

    (4) Except for requesters seeking records for a commercial use, DoD Components shall provide without charge:

    (i) The first 100 pages of duplication (or the cost equivalent for other media); and

    (ii) The first two hours of search.

    (5) No fee will be charged when the total fee, after deducting the 100 free pages (or its cost equivalent) and the first two hours of search, is equal to or less than $25.

    (f) Notice of anticipated fees in excess of $25.00. (1) When a DoD Component determines or estimates that the fees to be assessed in accordance with this section will exceed $25.00, the DoD Component shall notify the requester of the actual or estimated amount of the fees, including a breakdown of the fees for search, review or duplication, unless the requester has indicated a willingness to pay fees as high as those anticipated. If only a portion of the fee can be estimated readily, the DoD Component will advise the requester accordingly. If the requester is a noncommercial use requester, the notice shall specify that the requester is entitled to the statutory entitlements of 100 pages of duplication at no charge and, if the requester is charged search fees, two hours of search time at no charge, and will advise the requester whether those entitlements have been provided.

    (2) When a requester is notified that the actual or estimated fees are in excess of $25.00, the request will not be considered received and further work will not be completed until the requester commits in writing to pay the actual or estimated total fee, or designates some amount of fees the requester is willing to pay, or in the case of a noncommercial use requester who has not yet been provided with the requester's statutory entitlements, designates that the requester seeks only that which can be provided by the statutory entitlements. The requester must provide the commitment or designation in writing, and must, when applicable, designate an exact dollar amount the requester is willing to pay. DoD Components are not required to accept payments in installments.

    (3) If the requester has indicated a willingness to pay some designated amount of fees, but the DoD Component estimates that the total fee will exceed that amount, the DoD Component will toll the processing of the request when it notifies the requester of the estimated fees in excess of the amount the requester has indicated a willingness to pay. The DoD Component will inquire whether the requester wishes to revise the amount of fees the requester is willing to pay or modify the request. Once the requester responds, the time to respond will resume from where it was at the date of the notification.

    (4) DoD Components will make available their FOIA Public Liaison or other FOIA professional to assist any requester in reformulating a request to meet the requester's needs at a lower cost.

    (g) Charges for other services. Although not required to provide special services, if a DoD Component chooses to do so as a matter of administrative discretion, the direct costs of providing the service shall be charged. Examples of such services include certifying that records are true copies, providing multiple copies of the same document, or sending records by means other than first class mail.

    (h) Charging interest. DoD Components may charge interest on any unpaid bill starting on the 31st day following the date of billing the requester. Interest charges shall be assessed at the rate provided in 31 U.S.C. 3717 and will accrue from the billing date until payment is received by the DoD Component. DoD Components shall follow the provisions of the Debt Collection Act of 1982 (Pub. L. 97-365, 96 Stat. 1749), as amended, and its administrative procedures, including the use of consumer reporting agencies, collection agencies, and offset.

    (i) Aggregating requests. When a DoD Component reasonably believes that a requester or a group of requesters acting in concert is attempting to divide a single request into a series of requests for the purpose of avoiding fees, the DoD Component may aggregate those requests and charge accordingly. DoD Components may presume that multiple requests of this type made within a 30-day period have been made in order to avoid fees. For requests separated by a longer period, DoD Components will aggregate them only where there is a reasonable basis for determining that aggregation is warranted in view of all the circumstances involved. Multiple requests involving unrelated matters shall not be aggregated.

    (j) Advance payments. (1) For requests other than those described in paragraphs (k)(2) or (3) of this section, a DoD Component shall not require the requester to make an advance payment before work is commenced or continued on a request.

    (2) When a DoD Component determines or estimates that a total fee to be charged under this section will exceed $250.00, it may require that the requester make an advance payment up to the amount of the entire anticipated fee before beginning to process the request. A DoD Component may elect to process the request prior to collecting fees when it receives a satisfactory assurance of full payment from a requester with a history of prompt payment.

    (3) Where a requester has previously failed to pay a properly charged FOIA fee to any agency within 30 calendar days of the billing date, a DoD Component may require that the requester pay the full amount due, plus any applicable interest on that prior request, and the DoD Component may require that the requester make an advance payment of the full amount of any anticipated fee before the DoD Component begins to process a new request or continues to process a pending request or any pending appeal. Where a DoD Component has a reasonable basis to believe that a requester has misrepresented the requester's identity in order to avoid paying outstanding fees, it may require that the requester provide proof of identity.

    (4) In cases in which a DoD Component requires advance payment, the request shall not be considered received and further work will not be completed until the required payment is received. If the requester does not pay the advance payment within 30 calendar days after the date of the DoD Component's fee determination, the request will be closed.

    (k) Other statutes specifically providing for fees. The fee schedule of this section does not apply to fees charged under any statute that specifically requires an agency to set and collect fees for particular types of records. In instances where records responsive to a request are subject to a statutorily-based fee schedule program, the DoD Component shall inform the requester of the contact information for that program.

    (l) Requirements for waiver or reduction of fees. (1) Requesters may seek a waiver of fees by submitting a written application specifically demonstrating how disclosure of the requested information is in the public interest because it is likely to contribute significantly to public understanding of the operations or activities of the government and is not primarily in the commercial interest of the requester.

    (2) A DoD Component will furnish records responsive to a request without charge or at a reduced rate when it determines, based on all available information, that the following three factors are satisfied:

    (i) Disclosure of the requested information would shed light on the operations or activities of the government. The subject of the request must concern identifiable operations or activities of the Federal Government with a connection that is direct and clear, not remote or attenuated.

    (ii) Disclosure of the requested information would be likely to contribute significantly to public understanding of those operations or activities. This factor is satisfied when the following criteria are met:

    (A) Disclosure of the requested records must be meaningfully informative about government operations or activities. The disclosure of information that already is in the public domain, in either the same or a substantially identical form, would not be meaningfully informative if nothing new would be added to the public's understanding.

    (B) The disclosure must contribute to the understanding of a reasonably broad audience of persons interested in the subject, as opposed to the individual understanding of the requester. A requester's expertise in the subject area as well as the requester's ability and intention to effectively convey information to the public shall be considered. DoD Components will presume that a representative of the news media satisfies this criterion.

    (iii) The disclosure must not be primarily in the commercial interest of the requester. To determine whether disclosure of the requested information is primarily in the commercial interest of the requester, DoD Components shall consider the following criteria:

    (A) DoD Components will identify whether the requester has any commercial interest that would be furthered by the requested disclosure. A commercial interest includes any commercial, trade, or profit interest. Requesters will be given an opportunity to provide explanatory information regarding this consideration.

    (B) If there is an identified commercial interest, the DoD Component will determine whether that is the primary interest furthered by the request. A waiver or reduction of fees is justified when the requirements of paragraphs (m)(2)(i) and (ii) of this section are satisfied and any commercial interest is not the primary interest furthered by the request. DoD Components ordinarily will presume that when a news media requester has satisfied the factors in paragraphs (m)(2)(i) and (ii) of this section, the request is not primarily in the commercial interest of the requester. Disclosure to data brokers or others who merely compile and market government information for direct economic return shall not be presumed to primarily serve the public interest.

    (3) Where only some of the records to be released satisfy the requirements for a waiver of fees, a waiver shall be granted for those records.

    (4) Requests for a waiver or reduction of fees should be made when the request is first submitted to the DoD Component and should address the criteria referenced in paragraphs (l)(1) and (2) of this section. A requester may submit a fee waiver request at a later time so long as the underlying record request is pending or on administrative appeal. When a requester who has committed to pay fees subsequently asks for a waiver of those fees and that waiver is denied, the requester is required to pay any costs incurred up to the date the fee waiver request was received.

    (m) Tracking of costs. DoD Components will track processing costs for each FOIA request on DD Form 2086, “Record of Freedom of Information (FOI) Processing Cost,” or by using DD Form 2086-2, “Freedom of Information (FOI) Consultation and Request Summary”.

    § 286.13 Fees for technical data.

    (a) Technical data shall be released to a requester after all reasonable costs of search, review, and duplication are paid by the requester as authorized by 10 U.S.C. 2328.

    (b) Technical data means information (regardless of the form or method of the recording) of a scientific or technical nature (including computer software documentation) relating to the supplies procured by the DoD. This includes information in the form of blueprints, drawings, photographs, plans, instructions or documentation. This term does not include computer software or financial, administrative, cost or pricing, or management data or other information incidental to contract administration. Examples of technical data include research and engineering data, engineering drawings, and associated lists, specifications, standards, process sheets, manuals, technical reports, catalog item identification, and computer software documentation.

    (1) All reasonable costs as used in this sense are the full costs to the Federal Government of rendering the service, or fair market value of the service, whichever is higher. Fair market value shall be determined in accordance with commercial rates in the local geographical area. In the absence of a known market value, charges shall be based on recovery of full costs to the Federal Government. The full costs shall include all direct and indirect costs to conduct the search and to duplicate the records responsive to the request. Costs will be tracked on DD Form 2086-1, “Record of Freedom of Information (FOI) Processing Cost for Technical Data” (available at http://www.dtic.mil/whs/directives/infomgt/forms/eforms/dd2086-1.pdf).

    (2) The DoD Components will retain the fees received by the release of technical data under the FOIA, and will merge it with and make it available for the same purpose and the same time period as the appropriation from which the costs were incurred in complying with the FOIA request.

    (3) Table 2 will be used to determine document production fees.

    Table 2—FOIA Document Production Fees—Technical Data Type Cost Aerial Photographs, Specifications, Permits, Charts, Diagrams, Technical Drawings, Blueprints, and Other Technical Documents (per page or copy) $2.50 Engineering Data: Aperture Cards, per card 3.00 Silver Duplicate Negative 3.50 When Keypunched and Verified 1.00 Diazo Duplicate Negative 3.50 When Keypunched and Verified 3.00 35 mm Roll Film, per frame 1.00 16 mm Roll Film, per frame 0.65 Paper Prints (engineering drawings), each (per square foot) 0.30 Paper Reprints of Microfilm Images, each 0.10 Other Technical Data Records: Paper Copy (standard size paper up to 81/2 x 14, photocopier or printer) 0.15 CD/DVD 5.00 Microfiche Produced, each 3.50 Certification and Validation with Seal, each document 50.00

    (c) The DoD Components will waive the payment of costs required in paragraph (a) of this section that are greater than the costs that would be required for release of this same information under § 286.12 if:

    (1) The FOIA request is made by a U.S. citizen or a U.S. corporation, and such citizen or corporation certifies that the technical data requested is required to enable it to submit an offer, or to determine whether it is capable of submitting an offer, to provide the product to which the technical data relates to the United States or a U.S. contractor. However, the DoD Components may require the citizen or corporation to pay a deposit in an amount equal to but not more than the cost of complying with the FOIA request, which will be refunded upon submission of an offer by the citizen or corporation;

    (2) The release of technical data is requested in order to comply with the terms of an international agreement; or

    (3) The DoD Component determines, in accordance with paragraph (m) of § 286.12, that such a waiver is in the interest of the United States.

    Dated: December 23, 2016. Aaron Siegel, Alternate OSD Federal Register Liaison Officer, Department of Defense.
    [FR Doc. 2016-31686 Filed 1-4-17; 8:45 am] BILLING CODE 5001-06-P
    POSTAL SERVICE 39 CFR Part 20 International Mailing Services: Mailing Services Price Changes AGENCY:

    Postal ServiceTM.

    ACTION:

    Notice of approval of price changes for mailing services.

    SUMMARY:

    On October 17, 2016, the Postal Service published a notice of proposed price adjustments to reflect a notice of price adjustments filed with the Postal Regulatory Commission (PRC). The PRC has found that price adjustments contained in the Postal Service's notice may go into effect on January 22, 2017. The Postal Service will revise Notice 123, Price List to reflect the new prices.

    DATES:

    Effective date: January 22, 2017.

    FOR FURTHER INFORMATION CONTACT:

    Paula Rabkin at 202-268-2537.

    SUPPLEMENTARY INFORMATION: I. Proposed Rule and Response

    On October 12, 2016, the Postal Service filed a notice of mailing services price adjustments with the Postal Regulatory Commission (PRC) for products and services covered by Mailing Standards of the United States Postal Service, International Mail Manual (IMM®), to be effective on January 22, 2017. In addition, on October 17, 2016, the USPSTM published a notice of proposed price changes in the Federal Register entitled “International Mailing Services: Proposed Price Changes” (81 FR 71427). The notice included price changes that we would adopt for products and services covered by Mailing Standards of the United States Postal Service, International Mail Manual (IMM®) and publish in Notice 123, Price List, on Postal Explorer® at pe.usps.com. We received no comments.

    II. Decision of the Postal Regulatory Commission

    As set forth in the PRC's Order No. 3610 issued on November 15, 2016, as well as in the PRC's Order No. 3670 issued on December 15, 2016, the PRC determined that the international prices in the Postal Service's Notice may go into effect on January 22, 2017. The new prices will accordingly be posted in Notice 123, on Postal Explorer at pe.usps.com.

    Stanley F. Mires, Attorney, Federal Compliance.
    [FR Doc. 2016-31525 Filed 1-4-17; 8:45 am] BILLING CODE 7710-12-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R04-OAR-2016-0468; FRL-9957-52-Region 4] Air Plan Approval; Georgia: Procedures for Testing and Monitoring Sources of Air Pollutants AGENCY:

    Environmental Protection Agency.

    ACTION:

    Direct final rule.

    SUMMARY:

    The Environmental Protection Agency (EPA) is taking direct final action to approve portions of State Implementation Plan (SIP) revisions submitted by the State of Georgia, through the Georgia Department of Natural Resources' Environmental Protection Division (GA EPD), on April 11, 2003, November 29, 2010, July 25, 2014, November 23, 2015, and November 29, 2016. The SIP submittals include changes to GA EPD's air quality rules that modify definitions. The portions of the SIP revisions that EPA is approving are consistent with the requirements of the Clean Air Act (CAA or Act).

    DATES:

    This direct final rule is effective March 6, 2017 without further notice, unless EPA receives adverse comment by February 6, 2017. If EPA receives such comments, it will publish a timely withdrawal of the direct final rule in the Federal Register and inform the public that the rule will not take effect.

    ADDRESSES:

    Submit your comments, identified by Docket ID No. EPA-R04-OAR-2016-0468 at http://www.regulations.gov. Follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov. EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. EPA will generally not consider comments or comment contents located outside of the primary submission (i.e. on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit http://www2.epa.gov/dockets/commenting-epa-dockets.

    FOR FURTHER INFORMATION CONTACT:

    Sean Lakeman, Air Regulatory Management Section, Air Planning and Implementation Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303-8960. Mr. Lakeman can be reached by phone at (404) 562-9043 or via electronic mail at [email protected]

    SUPPLEMENTARY INFORMATION: I. Background

    On April 11, 2003, November 29, 2010, July 25, 2014, November 23, 2015, and November 29, 2016, GA EPD submitted SIP revisions to EPA for review and approval into the Georgia SIP that contain changes to a number of Georgia's air quality rules. The only change that EPA is approving into the SIP today modifies portions of Rule 391-3-1-.01—“Definitions” with respect to procedures for testing and monitoring sources of air pollutants. The change requested by Georgia is discussed below. EPA is not taking action on any other changes in Georgia's submittals provided on April 11, 2003, November 29, 2010, July 25, 2014, November 23, 2015, and November 29, 2016, because these changes either do not address rule sections that are incorporated into the SIP or are being or have already been considered in a separate action.

    II. EPA's Analysis of the State's Submission Regarding Rule 391-3-1-.01(nnnn)—“Procedures for Testing and Monitoring Sources of Air Pollutants”

    In the November 29, 2016, submittal, Georgia is amending the definition of “Procedures for Testing and Monitoring Sources of Air Pollutants” at Rule 391-3-1-.01(nnnn) to reference the February 29, 2016, version of the Georgia Department of Natural Resources document entitled “Procedures for Testing and Monitoring Sources of Air Pollutants.” The purpose of that document is to identify the procedures used for testing and monitoring the air pollutant sources. The November 23, 2015, submittal revised the date of the document to reflect the then-current version of the document, dated January 5, 2015; the July 25, 2014, submittal revised the date of the document to reflect the then-current version of the document, dated February 8, 2013; the November 29, 2010, submittal revised the date to the then-current version, dated March 1, 2010; and the April 11, 2003, submittal revised the date to the then-current version, January 29, 2003. However, the more current November 29, 2016, SIP submittal revised the date to reflect the February 29, 2016, version of the document, and this revision supersedes the revisions submitted on April 11, 2003, November 29, 2010, July 25, 2014, and November 23, 2015. This change to the SIP is approvable because it merely updates the date of the “Procedures for Testing and Monitoring Sources of Air Pollutants” document referenced in the SIP-approved version of Rule 391-3-1-.01(nnnn). The revision to this rule in the November 23, 2015, SIP submittal became state-effective on August 14, 2016.

    III. Incorporation by Reference

    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 Georgia Rule 391-3-1-.01(nnnn) “Procedures for Testing and Monitoring Sources of Air Pollutants,” effective on August 3, 2015. Therefore, this material has been approved by EPA for inclusion in the SIP, has been incorporated by reference by EPA into that plan, is 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.1 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).

    1 62 FR 27968 (May 22, 1997).

    IV. Final Action

    EPA is taking direct final action to approve the changes to the Georgia SIP specifically identified in Section II, above, because these changes are consistent with the CAA. 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 March 6, 2017 without further notice unless the Agency receives adverse comments by February 6, 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 public 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 March 6, 2017 and no further action will be taken on the proposed rule.

    V. Statutory and Executive Order Reviews

    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).

    The SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it 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 March 6, 2017. Filing a petition for econsideration 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).

    List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Particulate matter, Volatile organic compounds.

    Dated: December 15, 2016. Heather McTeer Toney, Regional Administrator, Region 4.

    40 CFR part 52 is amended as follows:

    PART 52—APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS 1. The authority citation for part 52 continues to read as follows: Authority:

    42 U.S.C. 7401 et seq.

    Subpart L—Georgia 2. In § 52.570, the table in paragraph (c) is amended by revising the entry “391-3-1-.01” to read as follows:
    § 52.570 Identification of plan.

    (c) * * *

    EPA Approved Georgia Regulations State citation Title/subject State effective date EPA approval date Explanation 391-3-1-.01 Definitions 8/14/2016 1/5/2017, [insert Federal Register citation] *         *         *         *         *         *         *
    [FR Doc. 2016-31753 Filed 1-4-17; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 180 [EPA-HQ-OPP-2016-0682; FRL-9956-54] Propiconazole; Extension of Tolerance for Emergency Exemptions AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Final rule.

    SUMMARY:

    This regulation extends a time-limited tolerance for combined residues of the fungicide propiconazole and its metabolites in or on avocado at 10 parts per million (ppm) for an additional 3-year period. This tolerance will expire and is revoked on December 31, 2019. This action is in response to EPA's granting of an emergency exemption under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) authorizing use of the pesticide on avocado trees. In addition, the Federal Food, Drug, and Cosmetic Act (FFDCA) requires EPA to establish a time-limited tolerance or exemption from the requirement for a tolerance for pesticide chemical residues in food that will result from the use of a pesticide under an emergency exemption granted by EPA under FIFRA.

    DATES:

    This regulation is effective January 5, 2017. Objections and requests for hearings must be received on or before March 6, 2017, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION).

    ADDRESSES:

    The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2016-0682, is available at http://www.regulations.gov or at the Office of Pesticide Programs Regulatory Public Docket (OPP Docket) in the Environmental Protection Agency Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334, 1301 Constitution Ave. NW., Washington, DC 20460-0001. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the OPP Docket is (703) 305-5805. Please review the visitor instructions and additional information about the docket available at http://www.epa.gov/dockets.

    FOR FURTHER INFORMATION CONTACT:

    Michael L. Goodis, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address: [email protected]

    SUPPLEMENTARY INFORMATION: I. General Information A. Does this action apply to me?

    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).

    B. How can I get electronic access to other related information?

    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.

    C. How can I file an objection or hearing request?

    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-2016-0682 in the subject line on the first page of your submission. All requests must be in writing, and must be received by the Hearing Clerk on or before March 6, 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-2016-0682, 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.

    II. Background and Statutory Findings

    EPA originally issued a final rule, published in the Federal Register of May 11, 2011 (76 FR 27261) (FRL-8873-2), which announced that on its own initiative under FFDCA section 408, 21 U.S.C. 346a, it established a time-limited tolerance for the combined residues of propiconazole and its metabolites in or on avocado at 10 ppm, with an expiration date of December 31, 2013. Subsequently, EPA published a final rule in the Federal Register of December 27, 2013 (78 FR 78746) (FRL-9904-15) to extend (revise) the expiration date for this tolerance to December 31, 2016. EPA established the tolerance because FFDCA section 408(l)(6) requires EPA to establish a time-limited tolerance or exemption from the requirement for a tolerance for pesticide chemical residues in food that will result from the use of a pesticide under an emergency exemption granted by EPA under FIFRA section 18. Such tolerances can be established without providing notice or period for public comment.

    In 2014, EPA received a request to extend the use of propiconazole on avocado for an additional 3 years (under a quarantine exemption) due to the disease situation remaining an emergency condition, warranting authorization of use of propiconazole under a quarantine exemption. After having reviewed the submission, EPA concurred that emergency conditions exist. EPA authorized under FIFRA section 18 the use of propiconazole on avocado trees for control of laurel wilt disease in Florida.

    EPA assessed the potential risks presented by residues of propiconazole in or on avocado. In doing so, EPA considered the safety standard in FFDCA section 408(b)(2), and decided that the necessary tolerance under FFDCA section 408(l)(6) would be consistent with the safety standard and with FIFRA section 18. The data and other relevant material have been evaluated and discussed in the final rule published in the Federal Register of May 11, 2011. Based on that data and information considered, the Agency reaffirms that extension of the time-limited tolerance will continue to meet the requirements of FFDCA section 408(l)(6). Therefore, the time-limited tolerance is extended for an additional 3-year period. EPA will publish a document in the Federal Register to remove the revoked tolerance from the Code of Federal Regulations (CFR). Although this tolerance will expire and is revoked on December 31, 2019, under FFDCA section 408(l)(5), residues of the pesticide not in excess of the amounts specified in the tolerance remaining in or on avocado after that date will not be unlawful, provided the pesticide is applied in a manner that was lawful under FIFRA and the application occurred prior to the revocation of the tolerance. EPA will take action to revoke this tolerance earlier if any experience with, scientific data on, or other relevant information on this pesticide indicate that the residues are not safe.

    III. International Residue Limits

    In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level.

    The Codex has not established a MRL for propiconazole on avocado.

    IV. Statutory and Executive Order Reviews

    This action establishes 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 tolerance 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).

    V. Congressional Review Act

    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).

    List of Subjects in 40 CFR Part 180

    Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.

    Dated: December 20, 2016. Daniel J. Rosenblatt, Acting Director, Registration Division, Office of Pesticide Programs.

    Therefore, 40 CFR chapter I is amended as follows:

    PART 180—[AMENDED] 1. The authority citation for part 180 continues to read as follows: Authority:

    21 U.S.C. 321(q), 346a and 371.

    2. In § 180.434, revise the entry for “avocado” in the table under paragraph (b) to read as follows:
    § 180.434 Propiconazole; tolerances for residues.

    (b) * * *

    Commodity Parts per million Expiration/
  • revocation date
  • Avocado 10 12/31/19 *    *    *    *    *
    [FR Doc. 2016-31827 Filed 1-4-17; 8:45 am] BILLING CODE 6560-50-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES 42 CFR Part 10 RIN 0906-AA89 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation AGENCY:

    Health Resources and Services Administration, Department of Health and Human Services (HHS).

    ACTION:

    Final rule.

    SUMMARY:

    The Health Resources and Services Administration (HRSA) administers section 340B of the Public Health Service Act (PHSA), referred to as the “340B Drug Pricing Program” or the “340B Program.” This final rule will apply to all drug manufacturers that are required to make their drugs available to covered entities under the 340B Program. This final rule sets forth the calculation of the 340B ceiling price and application of civil monetary penalties (CMPs).

    DATES:

    This rule is effective March 6, 2017.

    FOR FURTHER INFORMATION CONTACT:

    CAPT Krista Pedley, Director, Office of Pharmacy Affairs (OPA), Healthcare Systems Bureau (HSB), HRSA, 5600 Fishers Lane, Mail Stop 08W05A, Rockville, MD 20857, or by telephone at 301-594-4353.

    SUPPLEMENTARY INFORMATION: I. Background

    Section 602 of Public Law 102-585, the “Veterans Health Care Act of 1992,” enacted section 340B of the PHSA, “Limitation on Prices of Drugs Purchased by Covered Entities,” codified at 42 U.S.C. 256b. The 340B Program permits covered entities “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” H.R. REP. No. 102-384(II), at 12 (1992). Eligible covered entity types are defined in section 340B(a)(4) of the PHSA. Section 340B of the PHSA instructs HHS to enter into a pharmaceutical pricing agreement (PPA) with certain drug manufacturers. When a drug manufacturer signs a PPA, it is opting into the 340B Program and it agrees to the statutory requirement that the prices charged for covered outpatient drugs to covered entities will not exceed defined 340B ceiling prices, which are based on quarterly pricing data obtained from the Centers for Medicare & Medicaid Services (CMS). Section 7102 of the Patient Protection and Affordable Care Act (Pub. L. 111-148) as amended by section 2302 of the Health Care and Education Reconciliation Act (Pub. L. 111-152) (HCERA) (hereinafter referred to as the “Affordable Care Act”), added section 340B(d)(1)(B)(vi) of the PHSA, which provides for the imposition of sanctions in the form of civil monetary penalties, which—

    (I) shall be assessed according to standards established in regulations to be promulgated by the Secretary;

    (II) shall not exceed $5,000 for each instance of overcharging a covered entity that may have occurred; and

    (III) shall apply to any manufacturer with an agreement under Section 340B of the PHSA that knowingly and intentionally charges a covered entity a price for purchase of a drug that exceeds the maximum applicable price under subsection 340B(a)(1).

    The Affordable Care Act also added section 340B(d)(1)(B)(i)(I) of the PHSA, which requires “[d]eveloping and publishing through an appropriate policy or regulatory issuance, precisely defined standards and methodology for the calculation of ceiling prices . . .” CMPs provide a critical enforcement mechanism for HHS if manufacturers do not comply with statutory pricing obligations under the 340B Program. HHS is also finalizing this rule to provide increased clarity in the marketplace for all 340B Program stakeholders as to the calculation of the 340B ceiling price.

    Since 1992, HHS has administratively established the terms and certain elements of the 340B Program through guidelines published in the Federal Register, typically after publication of a notice in the Federal Register and opportunity for public comment. In September 2010, HHS published an advanced notice of proposed rulemaking (ANPRM) in the Federal Register, “340B Drug Pricing Program Manufacturer Civil Monetary Penalties” (75 FR 57230, September 20, 2010). After consideration of the comments received on the ANPRM, HHS published a notice of proposed rulemaking (NPRM) in the Federal Register (80 FR 34583, June 17, 2015) entitled, “340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation” to implement CMPs for manufacturers who knowingly and intentionally charge a covered entity more than the 340B ceiling price for a covered outpatient drug and to provide increased clarity on the requirements of manufacturers to calculate the 340B ceiling price on a quarterly basis. The public comment period closed on August 17, 2015, and HHS received approximately 35 comments. HHS reopened the comment period (81 FR 22960, April 19, 2016) to invite additional comment on several specific areas of the NPRM: 340B ceiling price calculations that result in a ceiling price that equals zero (penny pricing), the methodology that manufacturers utilize when estimating the ceiling price for a new covered outpatient drug, and the definition of the knowingly and intentionally standard for manufacturer CMPs. The additional comment period closed on May 19, 2016, and HHS received approximately 70 comments during this additional comment period. The following section presents a summary of the comments received, grouped by subject, and a response to each grouping. All comments on the proposals included in the NPRM and the reopening Notice were considered in developing this final rule, and changes were made as described. Other changes were also made to improve clarity and readability.

    II. Summary of Proposed Provisions and Analysis and Responses to Public Comments

    The revisions to 42 CFR part 10 of the final rule are described according to the applicable section of the final rule. This final rule replaces § 10.1, § 10.2, § 10.3, and § 10.10, adds a new § 10.11, and eliminates § 10.20 and § 10.21.

    General Comments

    Comments received during both comment periods addressed general issues. We have summarized those comments and have provided a response below.

    Comment: Several commenters urge HHS to specify that the effective date of the final rule be prospective and at least two quarters after the final rule's publication in the Federal Register. In addition, the commenters urge HHS to build in a significant grace period with respect to manufacturer compliance to give manufacturers sufficient time to put the necessary system capabilities in place. Other commenters asked HHS to revise the effective date of the final rule to 180 days after March 23, 2010, which would allow HHS to impose CMPs retroactively.

    Response: The final rule is effective March 6, 2017. HHS recognizes that the effective date falls in the middle of a quarter. As such, HRSA plans to begin enforcing the requirements of this final rule at the start of the next quarter, which begins April 1, 2017. Manufacturers that offer 340B ceiling prices as of the quarter beginning April 1, 2017, must comply with the requirements of this final regulation. HHS believes that this timeframe provides manufacturers sufficient time to adjust systems and update their policies and procedures. HHS disagrees that the rule should be implemented retroactively. An attempt to apply the final rule retroactively would be administratively burdensome and difficult to implement for all stakeholders.

    Comment: Several commenters urge HHS to defer the final rule pending the issuance of additional substantive program guidance. The commenters state that the issuance of substantive guidance first is more consistent with fundamental fairness in a civil penalty enforcement context, inasmuch as program stakeholders should understand their substantive obligations prior to any enforcement activity. The commenters also request that HHS finalize the information collection request (ICR) and gain experience first with administering the 340B ceiling price reporting system.

    Response: HHS does not believe that the issuance of additional guidance is needed in order to implement this final rule. The provisions of this final rule will be effectively implemented independent of other programmatic regulations and guidances. Current policies under the 340B Program provide stakeholders with sufficient guidance regarding programmatic compliance. Regarding the ICR, HHS submitted an ICR pertaining to the collection of information for the 340B ceiling price reporting system in compliance with section 3507(a)(1)(D) of the Paperwork Reduction Act of 1995. The Office of Management and Budget (OMB) approved the ICR on September 28, 2015, after a formal notice and comment process (80 FR 22207, April 21, 2015). This final rule contains specific information related to the calculation of the 340B ceiling price and the imposition of CMPs against manufacturers who knowingly and intentionally overcharge a covered entity; therefore, it is not necessary to implement the 340B ceiling price reporting system prior to finalizing this rule.

    Comment: A commenter requests that HHS provide login credentials to state Medicaid staff to facilitate dissemination of 340B ceiling price information. Alternatively, HHS could develop a different means of providing states with quarterly updates of 340B ceiling price calculations (e.g., via designated state technical contacts).

    Response: We appreciate the commenters concern, and HRSA and CMS are jointly working on alternative ways to share this information with states.

    Comment: Several commenters argue that HHS does not have rulemaking authority to issue a binding ceiling price regulation, as it does not have general rulemaking authority with respect to the 340B Program. Regarding 340B ceiling prices, commenters point out that Congress directed HHS under section 340B(d)(1)(B)(i)(I) of the PHSA to establish “precisely defined standards and methodology for the calculation of ceiling prices” via “an appropriate policy or regulatory issuance.” They argue, however, that in other parts of the statute, Congress more clearly directs HHS to issue regulations. For instance, under section 340B(d)(1)(B)(vi)(I), Congress directed HHS to implement civil monetary penalties pursuant to “standards established in regulations.” Commenters argue that Congress intended to confer a different level of authority and did not give HHS authority to issue regulations in this area.

    Response: HHS has the statutory authority under section 340B(d)(1)(B)(i)(I) of the PHSA to develop and publish through appropriate policy or a regulatory issuance, such as this final rule, the precisely defined standards and methodology for the calculation of 340B ceiling prices. The fact that Congress limited HHS to proceed by rulemaking with regard to other authorities in the statute does not negate the choice that Congress expressly provided to HHS in section 340B(d)(1)(B)(i)(I) to proceed through either policy or regulation.

    Comment: Some commenters suggest that the rule should require manufacturers to provide background information to HHS regarding 340B sales, including information such as the identity of the 340B covered entity billed for a given drug and the shipping location of the drug.

    Response: HHS appreciates these comments; however, they are beyond the scope of this final rule.

    Comment: Commenters noted that the rule only addressed one of the 340B Program integrity improvements required by the Affordable Care Act—CMPs for manufacturers. They suggested that HHS should not finalize this rule and should instead issue a new, comprehensive NPRM that addresses all the improvements as required by the Affordable Care Act. For instance, the commenters opposed the implementation of CMP procedures absent HHS's creation of an Administrative Dispute Resolution (ADR) process.

    Response: HHS is choosing to issue separate rulemakings for the different areas of the 340B Program integrity improvements that the Affordable Care Act mandates and for which HHS has rulemaking authority. HHS is addressing the administrative dispute resolution process and issued an NPRM August 12, 2016, in the Federal Register (81 FR 53381). HHS anticipates finalizing the administrative dispute resolution regulation after the comments have been reviewed and considered.

    Comment: Commenters note that the Affordable Care Act requires manufacturers to report to HHS the 340B ceiling price each quarter as well as any prior period lagged price concessions that could affect prior quarter 340B ceiling prices by changed average manufacturer price (AMP), Best Price, and unit rebate amounts (URA). The commenter further notes that the proposed rule did not address this circumstance. They suggested that HHS establish a secure protocol to submit pricing and publish for comment its proposed process for manufacturer reporting of such submissions.

    Response: Section 340B(d)(1)(B) of the PHSA requires HHS to develop a system to verify the accuracy of 340B ceiling prices calculated by manufacturers and charged to covered entities. HHS recognizes the utility of the type of policy mentioned in the comments and plans to publish guidance on the particular components of the 340B ceiling price reporting system.

    Subpart A—General Provisions A. Purpose and Summary of 340B Drug Pricing Program—§ 10.1 and § 10.2

    Section 10.1 and § 10.2 of the rule provide general information concerning section 340B of the PHSA, “Limitation on Prices of Drugs Purchased by Covered Entities.” Section 10.1 provides the purpose of part 10 and § 10.2 provides a summary of section 340B of the PHSA, which instructs the Secretary of Health and Human Services to enter into agreements with manufacturers of covered outpatient drugs under which the amount to be paid to manufacturers by certain statutorily defined covered entities does not exceed the 340B ceiling price. Manufacturers participating in the 340B Program are required to provide these discounts on all covered outpatient drugs sold to participating 340B covered entities. HHS did not receive any comments with respect to these sections and is finalizing these sections as proposed.

    B. Definitions—§ 10.3

    In the proposed rule, HHS sought to define several terms that were used throughout the regulation. These terms included: “340B Drug,” “Average Manufacturer Price,” “Ceiling price,” “CMS,” “Covered entity,” “Covered outpatient drug,” “Manufacturer,” “National Drug Code,” “Pharmaceutical Pricing Agreement,” “Quarter,” “Secretary,” and “Wholesaler.” HHS did not receive comment on the following terms, which are finalized in this rule as proposed: “Average Manufacturer Price,” “Ceiling Price,” “CMS,” “National Drug Code,” “Pharmaceutical Pricing Agreement,” and “Secretary.” For the remaining terms, HHS received specific comments and have summarized those comments below.

    1. 340B Drug

    Proposed § 10.3 set forth a definition of the term “340B drug” as a covered outpatient drug, as defined in section 1927(k) of the Social Security Act (SSA), purchased by a covered entity at or below the 340B ceiling price required pursuant to a PPA with the Secretary. Based on the comments received, HHS is removing this definition from the final rule, as HHS believes that the definition is unnecessary. HHS received the following comment regarding the definition of a 340B drug.

    Comment: Several commenters suggest that HHS remove the proposed definition of a “340B drug” as the term is not used in the 340B statute or proposed regulations and as drafted could lead to confusion and uncertainty. The proposed definition also narrowly defines the circumstances under which a 340B covered entity can acquire the drug.

    Response: After consideration of the comments received with respect to this definition and in light of the definition of covered outpatient drug as set forth in section 1927(k) of the SSA, which is also defined in this final rule, HHS does not believe the definition is necessary and is, therefore, removing the definition of a 340B drug from this final rule.

    2. Covered Entity

    The proposed rule defined the term covered entity as an entity that is listed in section 340B(a)(4) of the PHSA, meets the requirements under section 340B(a)(5) of the PHSA, and is registered and listed in the 340B database. HHS received several comments regarding the proposed definition of covered entity and have summarized them below.

    Comment: Several commenters supported the proposed definition of “covered entity” as it included both registration and database listing requirements. They explain that HHS's proposal will improve the integrity of the Program, assist manufacturers in meeting their obligations, and strengthen manufacturer Medicaid compliance. Commenters urge HHS to include in the definition of covered entity that an organization must both: (1) Be in compliance with the duplicate discount and diversion prohibitions; and (2) be registered and appear on the 340B database as a participating entity during the quarter in which the transaction is made.

    Response: The term covered entity is defined, in accordance with section 340B(a)(4) of the PHSA, to mean an entity that is listed in the statute and meets all of the requirements in section 340B(a)(5) pertaining to diversion and duplicate discounts. As the definition imposed in this final rule already includes that a covered entity must comply with section 340B(a)(5), it is not necessary for the definition to specify compliance with the requirements pertaining to diversion and duplicate discounts The process for appearing on the 340B database is separate and distinct from compliance with the requirements in section 340B(a)(5), and all covered entities listed on the 340B database are expected to be in compliance with this provision of the statute.

    3. Covered Outpatient Drug

    The term covered outpatient drug was defined in the proposed rule as having the meaning set forth in section 1927(k) of the SSA. HHS received several comments on the proposed definition and has summarized them below.

    Comment: A few commenters recommended that HHS limit the definition of “covered outpatient drug” to only the definition at section 1927(k)(2) of the SSA, and not include the “limiting definition” of covered outpatient drugs in section 1927(k)(3) of the SSA to prevent manufacturers from limiting 340B pricing to drugs that are reimbursed separately, as opposed to those reimbursed under bundled payment methodologies. Commenters note that CMS is increasingly moving towards the use of bundled payments and other types of value-based purchasing models with the goal of 50 percent of all Medicaid payments being made under alternative payment models by 2018. Therefore, they argue, it is highly likely that an increasing number of covered entities will no longer be eligible for 340B pricing for Medicaid patients if section 1927(k)(3) of the SSA is incorporated into this regulation. Commenters urge the development of a definition of “covered outpatient drug” that is specific to the 340B Program and does not track with the Medicaid statute, which is limited to the Medicaid Drug Rebate Program (MDRP).

    Response: Section 340B(b)(1) of the PHSA states that the term “covered outpatient drug” has the meaning set forth in section 1927(k) of the SSA. Section 1927(k) includes the limiting definition and HHS does not believe that the interpretation of covered outpatient drug is contrary to the purpose of the 340B Program. We disagree that covered entities will not be eligible for the 340B Program as a result of this provision.

    4. Manufacturer

    HHS defined the term manufacturer in the proposed rule as having the meaning set forth in section 1927(k) of the SSA. HHS received several comments on the proposed definition and has summarized them below.

    Comment: For the term “manufacturer,” commenters urge HHS to incorporate its long-standing guidance that a manufacturer “must hold legal title to or possession of the national drug code (NDC) for the covered outpatient drugs.” The commenter explains that the PPA has reflected this provision. This is important because there could be distinct legal entities that own distinct NDCs and are different manufacturers for purposes of the 340B Program.

    Response: Section 340B(b)(1) of the PHSA defines the term as having the meaning set forth in section 1927(k) of the SSA. Given the 340B statute's direct reference to section 1927(k) of the SSA, HHS does not believe that this term needs to be further defined in this final rule. However, for 340B Program purposes, a manufacturer would be the entity holding legal title or possessing the NDC in question.

    Comment: Commenters urged HHS to clarify the distinction between “manufacturers” and “wholesalers.” They suggest HHS specify that “traditional” wholesale distribution operations and contract packaging and repackaging operations do not make an entity a “manufacturer” that can be subject to CMPs.

    Response: The definition of “manufacturer” is finalized at § 10.3. To the extent that a wholesale distributor meets the definition of “manufacturer,” it would need to meet the requirements for manufacturers as defined in this rule.

    5. Quarter

    The term quarter is defined in the proposed rule as a calendar quarter, unless otherwise specified. HHS received several comments on this term, which are summarized below.

    Comment: Several commenters support that 340B ceiling prices are calculated based on calendar quarters. However, the commenters argue that the proposed rule does not recognize the two-quarter lag between when a sales transaction occurs and when the applicable 340B ceiling price becomes effective. They urge HHS to clarify that 340B ceiling price calculations are based on sales transactions from two prior calendar quarters. They feel this is supported because calculating the 340B ceiling price for a particular calendar quarter in the immediate preceding quarter is not possible because AMP and Best Price for the quarter are not calculated and reported to CMS until 30 days after the end of a quarter.

    Response: HHS agrees with the commenters. HHS notes that the 340B ceiling price is calculated based on data received from CMS that incorporates the quarterly pricing lag. For purposes of this final rule, HHS is interpreting the 340B ceiling price calculation provision at section 340B(a)(1) to be the AMP reported from the preceding calendar quarter minus the URA. Section 10.10(a) of this final rule, pertaining to the calculation of the 340B ceiling price, has been modified to align with the 340B statute pertaining to AMP calculations made in the preceding calendar quarter. For instance, the pricing data from the first quarter in any given year is not due to be reported to CMS until 30 days into the second quarter. Therefore, the pricing data from the first quarter cannot be used to price drugs until the third quarter. The definition of quarter will be finalized as proposed.

    6. Wholesaler

    The proposed rule defines wholesaler as the term as set forth in 42 U.S.C. 1396r-8(k)(11). HHS received several comments, which are summarized and responded to below.

    Comment: Commenters suggest that HHS uniformly refer to the applicable sections of the SSA (as opposed to the reference to the United States Code) for purposes of consistency and to avoid any potential confusion. Other commenters note that the term “wholesaler” as defined in section 1927(k)(11) of the SSA is focused on the distribution to retail community pharmacies, which are entities that cannot qualify as 340B covered entities. They state further that while retail community pharmacies may serve as contract pharmacies, not all 340B covered entities maintain contract pharmacy arrangements. The commenters do not think it is appropriate to utilize a definition that focuses on drug distribution and retail community pharmacies. In addition, commenters urge HHS to ensure that specialty pharmacies, including radio pharmacies and nuclear pharmacies, are not included in the term “manufacturer” or “wholesaler” and, therefore, that the 340B ceiling price is not required to be offered by specialty pharmacies, although they may elect to do so. Unlike “specialty distribution,” which can be an entity that performs the same function as a wholesaler, specialty pharmacies are pharmacies that receive, rather than distribute drugs.

    Response: After consideration of the comments received on the term wholesaler, HHS is removing this term from the final rule. The term “wholesaler” as defined at section 1927(k)(11) of the SSA is not appropriate for 340B Program purposes for the reasons cited by commenters and it is not necessary to define this term in the final rule. With respect to “specialty distribution” or “specialty pharmacy,” HHS notes that it is the manufacturer's responsibility to ensure compliance with 340B Program requirements, including the requirements set forth in this final rule.

    Comment: Commenters urge HHS to clarify that (1) traditional wholesale distribution operations (e.g., purchasing or holding for resale or distribution) and (2) contract packaging and repackaging operations (i.e., where the product does not bear the repackages labeler code) will not cause an entity to be a “manufacturer” that is potentially subject to CMPs. Instead, manufacturers subject to the 340B Program's pricing obligations (and potentially CMPs) should be limited to entities whose NDC labeler code appears on a drug product, as this approach is consistent with CMS and the MDRP.

    Response: Although HRSA recognizes that wholesalers often act as independent entities, a manufacturer's failure to ensure that covered entities receive the 340B ceiling price through its distribution arrangements with wholesalers may be grounds for assessment of civil monetary penalties as set forth in this final rule.

    Subpart B—340B Ceiling Price A. Ceiling Price for a Covered Outpatient Drug—Calculation of 340B Ceiling Price—§ 10.10(a)

    In the proposed rule, HHS recognized that the 340B ceiling price for a covered outpatient drug is equal to AMP minus the URA, and will be calculated using six decimal places. HRSA proposed to publish the 340B ceiling price rounded to two decimal places.

    HHS received numerous comments on this provision in the proposed rule. In this final rule, HHS has decided to remove the terms “package size” and “case package size” and plans to address these operational elements concerning the 340B ceiling price calculation in future guidance associated with the 340B Program ceiling price reporting system. HHS has addressed specific comments with respect to this issue below.

    Comment: Several commenters expressed concern that the terms “package size” and “case package size” are confusing and not in the 340B statute. Commenters argue that “case package size” is not a metric tabulated or reported under other price reporting programs or currently used by manufacturers. Commenters suggest HHS clarify the terms to assist stakeholders in understanding how 340B ceiling prices are calculated and to ensure consistency in the methodology used by manufacturers to calculate 340B ceiling prices. Commenters also urge HHS to refrain from introducing new variables without analysis and an understanding of the overall ceiling price calculation. Other commenters stated that case/package size was proposed in an effort to assist HHS in providing sales prices for an 11-digit NDC; however if the unit type and units per package are consistent with the units in the 11-digit NDC, then the sales price can be derived without using any other value.

    Response: After consideration of the comments received, HHS has decided to remove “package size” and “case package size” from the final rule as the statute only speaks to the 340B ceiling price calculation as being AMP minus URA. HHS does plan to further elaborate on the manner that the terms relate to the 340B ceiling price calculation, and its use by the market, in future guidance associated with the 340B Program ceiling price reporting system.

    Comment: Some commenters noted that the proposed rule would require calculation of the ceiling price to six decimal points and that the necessity of this added complexity is unclear. They suggested that the ceiling prices be reported and calculated in dollars and cents with two decimal places. Several commenters support and appreciate that HHS plans to publish the ceiling price rounded to two decimal places, which makes it easier for covered entities to determine if manufacturers are charging them appropriately.

    Response: HHS has concluded that the data utilized for the 340B ceiling price calculation should be in the same format as reported to CMS. CMS has indicated in Manufacturer Release No. 82 (November 1, 2010) that when AMP is submitted to the Drug Data Reporting for Medicaid (DDR) system, it should be rounded to six decimal places. In Manufacturer Release No. 46 (April 18, 2000), CMS modified the rounding methodology for the URA and required manufacturers to round URA calculations to four digits and because the field codes require six digits, CMS “pads” positions five and six with zeros. HRSA receives both the AMP and URA data from CMS at six decimal places. For the purposes of calculating the 340B ceiling price, HHS has decided that data utilized for the calculation of the 340B ceiling price will be rounded to six decimal places in an effort to ensure an accurate 340B ceiling price. HHS will then make the 340B ceiling price available in the secure 340B ceiling price system rounded to two decimal places in an effort to ensure certainty in the market place.

    Comment: Some commenters urge HHS to clarify in the final rule that the ceiling price calculation is based on the quarterly AMP as opposed to a monthly AMP.

    Response: AMP is described in section 340B(a)(1) of the PHSA as the AMP for the drug under title XIX of the SSA in the preceding calendar quarter. The AMP used for the calculation of the 340B ceiling price is a quarterly AMP sent to HRSA by CMS on a quarterly basis. We agree with the commenters and have modified the final rule to clarify that the 340B ceiling price is based on quarterly AMP data.

    Comment: Commenters argue that the ceiling price calculation mechanics are unclear given that HHS has not yet implemented the ceiling price verification mechanism and Web site for covered entities. Other commenters request that HHS provide a detailed, standardized 340B ceiling price methodology, including a written formula.

    Response: With respect to the 340B ceiling price calculation, HHS has determined that this final rule will be limited to the elements necessary to calculate the 340B ceiling price as defined at section 340B(a)(1) of the PHSA. This final rule sets forth the 340B ceiling price calculation as AMP minus URA. The development of the 340B ceiling price reporting system is proceeding under a separate ICR process that is operational in nature and is not contingent upon the specific provisions contained in this final rule. This ICR was submitted and approved by OMB on September 28, 2015, after a formal notice and comment process (80 FR 22207, April 21, 2015, OMB No. 0915-0327).

    Comment: Some commenters encourage HHS to require both manufacturers and CMS to report URA values to HHS for verification and resolution of anomalies or discrepancies.

    Response: The reporting obligations of manufacturers and HRSA's receipt of pricing information from CMS are outside the scope of this rule.

    B. Ceiling Price for a Covered Outpatient Drug—Exception—§ 10.10(b)

    Where the URA equals the AMP for a drug, the section 340B ceiling price formula would result in a ceiling price of zero. The statute, however, clearly contemplates a payment to a manufacturer and the act of purchasing covered outpatient drugs. Setting a zero dollar ceiling price would run counter to the statutory scheme and lead to unintended consequences, including operational challenges. For example, some information technology systems are not able to generate invoices for any prices less than $0.01 and manufacturers may not be able to generate an electronic data interchange price update for an item that does not have a price of at least $0.01. The NPRM therefore proposed that when the 340B ceiling price calculation resulted in an amount less than $0.01, a manufacturer charge a $0.01 per unit of measure.

    In light of the comments received on this particular policy (when ceiling price calculations result in a ceiling price that equals a zero, or “penny pricing”), HHS reopened the comment period (81 FR 22960, April 19, 2016) to solicit additional comment and determine whether or not alternatives raised in the comments regarding the penny pricing policy would be more appropriate. HHS also sought to provide the public with adequate opportunity to comment on alternatives to penny pricing.

    The specific alternatives raised by commenters on the NPRM included the Federal Ceiling Price (FCP), the most recent positive 340B ceiling price from previous quarters, and nominal price. Some commenters stated that the FCP, which is the basis for certain Federal government program drug purchases, would be a viable alternative. Other commenters suggested that charging a ceiling price from previous quarters in which the ceiling price was greater than $0.00 would be reasonable. Finally, several commenters suggested that nominal pricing, which is a term used in the MDRP, would be more appropriate. Other commenters suggested that manufacturers should be able to utilize any reasonable pricing methodology that they choose.

    In the reopening of the comment period published in the Federal Register, HHS received numerous comments supporting and opposing the alternatives to penny pricing. Several commenters opposed to the alternatives expressed that any alternatives to penny pricing would violate the 340B ceiling price formula and would reward manufacturers for raising prices faster than inflation. In addition, commenters opposed to the alternatives explained that they would directly conflict with the intent of the 340B Program by increasing costs for covered entities. Other commenters opposing the penny pricing policy suggested that the policy would result in drug shortages, stockpiling, diversion, harm to patients and abuse. Among support for several of the alternatives, these commenters recommended that HHS allow manufacturers to select a reasonable pricing methodology in accordance with their duty of good faith under the PPA.

    After consideration of the comments received, HHS is finalizing the penny pricing policy as proposed. This long-standing policy reflects a balance between the equities of different stakeholders and establishes a standard pricing method in the market. Specific comments are addressed below.

    Comment: Several commenters support the maintenance of the current HHS penny pricing proposal, believing it is the best approach for calculating the 340B ceiling price, that it is well-established and effective, and that it is consistent with HHS' existing policy. Many commenters were concerned that any alternatives to penny pricing would be inconsistent with the statute. Commenters encouraged HHS to consider the unintended impact that changing the penny pricing policy would have on the covered entities and the vulnerable populations they serve and supported finalizing the original penny pricing proposal. Commenters recommended that if alternate proposals were considered, HHS put forward more detailed models for thorough review and analysis of impact on covered entities.

    Response: HHS agrees with the commenters supporting the current policy and is finalizing the penny pricing policy as proposed. HHS has established the penny pricing policy that allows for the next positive price ($0.01) when the calculation of the 340B ceiling price is zero. This policy is consistent with the timing of the 340B ceiling price calculation (preceding calendar quarter), and it appropriately aligns with the requisite data points (i.e., AMP and URA) for the 340B ceiling price as set forth in section 340B(a)(1) of the PHSA. HHS believes that the proposed alternatives to penny pricing would be inconsistent with the 340B ceiling price formula established in section 340B(a) of the PHSA and would raise 340B ceiling prices above the statutory formula in ways that would be inconsistent with the statutory scheme. HHS believes that the penny pricing policy best effectuates the statutory scheme.

    Comment: Some commenters stated that the inflationary penalty used to calculate the URA was established to discourage manufacturers from raising the price of drugs faster than inflation (i.e., the rebate percentage increases when a manufacturer increases the price of a brand-name drug). Further, commenters believed that any alternative policy to penny pricing would reward manufacturers for raising prices faster than inflation. Commenters stated that the inflationary penalty used to calculate the URA was intentionally established by Congress to discourage manufacturers from raising the price of drugs faster than the rate of inflation and that any alternative to penny pricing would ignore this core component of the pricing formula established by Congress.

    Response: Under the MDRP, CMS indexes quarterly AMPs to the rate of inflation (Consumer Price Index adjusted for inflation-urban). Section 1927(c)(2)(A) of the SSA provides that if the AMP increases at a rate faster than inflation, the manufacturer pays an additional rebate amount which is reflected in an increased URA. Historically, because of the basic rebate and the inflation factor, section 1927(c)(2)(A) of the SSA could increase the rebate amount manufacturers must pay to the States, and result in negative 340B ceiling prices. Due to the provision in section 1927(c)(2)(D) of the SSA that limits the unit rebate amount to 100 percent of the AMP, effective January 1, 2010, an increase in the basic rebate and inflation factor would not result in a negative 340B price, but could result in a zero 340B ceiling price. The methodologies proposed as alternatives to penny pricing would decrease the effect of the inflationary component of the statutory formula established by Congress (AMP increasing faster than inflation).

    Comment: Commenters acknowledged HHS' authority and obligation to define the term “ceiling price,” but argued that a literal interpretation of the statutory text that would result in a calculated 340B ceiling price of zero dollars is an absurd outcome.

    Response: The calculation of the 340B ceiling price is defined in section 340B(a)(1) of the PHSA as AMP minus URA. Under the MDRP, CMS indexes quarterly AMPs to the rate of inflation (Consumer Price Index adjusted for inflation-urban). Section 1927(c)(2)(A) of the SSA provides that if AMP increases at a rate faster than inflation, the manufacturer pays an additional rebate amount which is reflected in an increased URA, which could result in a 340B ceiling price of zero. Although infrequent, HHS notes that there are instances when the 340B ceiling price does calculate to a zero price. For example, in the first calendar quarter of 2016, approximately 1 percent of all drugs listed under the 340B program for that quarter resulted in a zero price.

    For the reasons described in the previous responses, HHS does not believe that it is consistent with the statutory scheme to set the price at zero. In this circumstance, HHS is therefore requiring that manufacturers charge a $0.01 for the drug, which we believe best effectuates the statutory scheme by requiring a payment.

    Comment: Several commenters stated that the 340B statute does not address situations where the 340B ceiling pricing calculation results in zero and therefore the PPA should govern. Commenters argued that while the PPA does not directly address what should occur when the 340B pricing formula results in zero, it provides that the agreement “shall be construed in accordance with Federal common law” which requires the parties “gap fill” by negotiating ambiguous requirements in good faith. Other commenters offered criteria under which the duty of good faith would be met by a reasonable pricing methodology to include that the policy is readily and objectively verifiable, is statutorily supported, and represents a favorable discount to covered entities.

    Response: The U.S. Supreme Court has stated that PPAs are not transactional, bargained for contracts, and that “PPAs simply incorporate statutory obligations and record the manufacturers' agreement to abide by them” (Astra USA v. Santa Clara County, 563 U.S. 110, 118 (2011)). Moreover, the PPA indicates that any ambiguities shall be interpreted in a manner that best effectuates the statutory scheme, not that any ambiguities should be negotiated between the parties. 340B Program requirements are based on the manner in which the Department interprets the statute, and are not subject to a contractual negotiation process. For the reasons previously stated, the Department has determined that penny pricing is the policy that best effectuates the statutory scheme.

    Comment: Commenters suggested that HHS institute a similar policy to address zero prices as the Veterans Administration (VA) uses to implement the Master Agreement for FCP prices given to certain Federal purchasers pursuant to the Veterans Health Care Act of 1992, the same legislation that created the 340B Program. They state that the VA interprets its program, which is similar to the 340B Program, to require a good faith negotiation to set a reasonable price in the event of a negative or zero FCP.

    Response: Contrary to the commenters' position, the approach utilized by the VA under its separate Prime Vendor Program supports the penny pricing policy. Similar to this final rule, the VA sets the price of a negative or zero priced FCP at $0.01. The VA's assumption for these drugs is, therefore, that prices are set at $0.01. While the VA also has an additional mechanism through which manufacturers can request nominal increases in the prices of drugs (Department of Veterans Affairs, Dear Manufacturer Letter, February 24, 1993), the VA's ability to increase prices by a nominal amount above this default is based on statutory authority that does not apply to the 340B Program. Title 38 U.S.C. 8126(a)(2) states that prices may nominally exceed the statutory formula if the VA determines it “to be in the best interests of the Department or such Federal agencies.” There is no similar authority in the 340B statute to exceed the basic price calculation, and therefore HHS does not have the same ability to adjust the pricing formula set by statute.

    Comment: Many commenters strongly objected to the penny pricing policy. They argued that HHS did not articulate a non-arbitrary, non-capricious reason as to why a $0.01 price is reasonable. Some commenters stated that there is no material difference between zero and $0.01, and since HHS has already stated that zero is not reasonable, $0.01 is also not reasonable. They also argued that the price of zero or one penny fails to cover the costs of goods sold, so cannot be considered the “purchase” of product. Commenters argued that the penny pricing policy would result in an illegal taking of private property by the government. They also argued the policy would result in “arbitrary” or “confiscatory” price controls.

    Response: The longstanding penny pricing policy attempts to strike a balance that best effectuates the statutory scheme while ensuring that a zero ceiling price does not result. There is no requirement in the statute that the price paid must cover the costs of the drug. Reading such a requirement into the statute would require the evaluation of the costs of not only zero priced drugs, but any drug with a 340B ceiling price that is only a nominal amount. HHS does not believe that such a system is consistent with the statute. The sale of a drug for a cost less than manufacturing costs still constitutes a “purchase” and does not result in the taking of private property.

    HHS disagrees with commenters that there is no material difference between setting the price at zero and $0.01. Setting the price at $0.01 requires a payment and therefore ensures that there is a purchase within the meaning of the statute and, as a practical matter, between the buyer and seller. Setting the price at zero rather than $0.01 would lead to operational challenges. We understand, for instance, that some information technology systems are not able to generate invoices for any prices less than $0.01 and manufacturers may not be able to generate an electronic data interchange price update for an item that does not have a price of at least $0.01.

    Manufacturer participation in the 340B Program is also voluntary, albeit required in order to participate in the MDRP. Moreover, it is important to note that a manufacturer controls when a product reaches a zero 340B ceiling price through its own pricing decisions. If a manufacturer does not wish to offer a zero 340B ceiling price, the manufacturer may choose not to participate in the 340B Program or may alter its drug pricing practices so as not to cause a zero 340B ceiling price. For example, when AMP increases more quickly than the rate of inflation, the manufacturer must pay a greater Medicaid rebate, which can also cause a zero 340B price. A manufacturer can control AMP by adjusting the prices that it charges for drugs.

    Comment: Some commenters stated the penny pricing proposal is likely to result in and/or increase the potential for drug shortages and diversion, requiring manufacturers to adopt burdensome and costly “alternate allocation procedures” to correct for the market-distorting effect of HHS' policies. Commenters further stated the continuation of penny pricing policy would further exacerbate drug shortages, particularly for generic drugs, given that in the first quarter 2017 generic drugs will be subject to an additional rebate in the URA formula if the AMP for such drugs rises faster than inflation. Given this, the penny pricing provision would result in potential of stockpiling, diversion, harm to patients, and abuse of controlled substances. Commenters were also concerned that there could be an increase in risk evaluation and mitigation strategy (REMS) drugs and drugs for which there is a grey or black market.

    Response: The penny pricing policy has been in place for many years and HHS does not have evidence that the policy causes significant risks of stockpiling, diversion, harm to patients, and abuse of controlled substances. HHS has existing policy with regard to manufacturer limited distribution plans for sales of covered outpatient drugs to eligible 340B entities under the 340B Program. Manufacturers may address any resultant market distribution challenges by developing and executing a plan for limited distribution to all purchasers of the affected drug, including 340B covered entities when penny pricing occurs. Manufacturers are currently able to develop appropriate limited distribution protocols. HHS will be sensitive to plans to address drug shortages, stockpiling, and oversupplying of drugs subject to abuse or with REMS warnings.

    Comment: Many commenters stated their desire for the flexibility to use any or all of the alternative methods to penny pricing proposed. Manufacturer flexibility and discretion to adopt reasonable approaches to setting the 340B ceiling price when the ceiling price calculates to zero allows manufacturers to recover their costs while providing a discounted rate commensurate with the intent of the 340B statute.

    Response: HHS believes it is most appropriate to establish a standard price calculation in this circumstance, as it is not practical to allow all manufacturers to choose from a variety of methods that could result in pricing variations that could create market disruption and uncertainty. Therefore, we are finalizing the penny pricing policy as proposed.

    Comment: Some commenters were in favor of utilizing nominal pricing (less than 10 percent of AMP in the same quarter for which the AMP is computed) as an alternative to penny pricing. Commenters also noted that the MDRP uses this methodology, and that nominal price is a term that appears nine times in the Medicaid statute. They stated further that Congress has demonstrated support for applying this concept by listing 340B covered entities first among the six potential recipients to whom manufacturers may extend a nominal price without impacting best price. Commenters stated that nominal price addressed HHS' concern that “prices must be based on the immediately preceding calendar quarter.”

    Response: While the term nominal price appears in the Medicaid drug rebate statute, it is entirely absent from the 340B statute. Covered entities can receive a nominal price without impacting a manufacturers' best price for purposes of Medicaid calculations; however, nominal pricing is unrelated to the statutorily-mandated 340B Program pricing calculation. Although the nominal pricing alternative is based on the calendar quarter in which AMP is calculated, consistent with the timing of the 340B ceiling price calculation, it does not appropriately align with the requisite data points (i.e., AMP and URA) for the 340B ceiling price as set in section 340B(a)(1) of the PHSA. HHS will therefore finalize penny pricing as proposed.

    Comment: Some commenters favored the utilization of the most recent positive AMP or the last positive, non-zero ceiling price as an alternative to penny pricing. This approach would result in a significant discount to covered entities and would be analogous to the process under MDRP where manufacturers are required to report the most recent positive AMP if AMP equals zero. Carrying forward the most-recent, positive quarterly 340B ceiling price would have the practical effect of establishing a realistic covered entity purchase price, and would reduce the risk of diversion posed by penny pricing.

    Response: The MDRP and the 340B Program are authorized under different statutes. While the commenter attempts to draw a comparison between the Medicaid AMP policy and the 340B penny pricing policy, AMP is not the only component of the 340B ceiling pricing formula, as the calculation also includes the URA.

    In addition, utilizing the AMP calculation from the last positive quarter would not align with the statutory requirement at section 340B(a)(1) of the PHSA that the 340B ceiling price be based on the preceding calendar quarter's data and could encourage manufacturers to manipulate pricing data. In addition, this method ignores the portion of the congressionally mandated pricing formula regarding the inflation adjustment. Therefore, HHS has determined that this alternative is not an adequate alternative and will finalize this rule as proposed.

    Comment: Many commenters were in favor of utilizing the FCP as an alternative to penny pricing. Commenters also suggested the FCP offers an objectively verifiable benchmark and conveys a significant discount to covered entities without driving stockpiling and diversion.

    Response: The FCP has some similarities in intent and price-setting methodology to the 340B ceiling price. However, the FCP is generally computed once each calendar year and does not align with the requirement that 340B ceiling prices be calculated on a quarterly basis. Additionally, the FCP is not computed using the required calculation points of AMP and URA. Moreover, there is no mention of the FCP in the 340B statute. Therefore, HHS has determined that FCP is not an adequate alternative and will finalize this rule as proposed.

    Comment: Some commenters requested an exception to the penny pricing policy for orphan drugs. They suggest that when 340B sales volume exceeds a given threshold (e.g., 15 percent), a manufacturer should be permitted to utilize an alternative 340B price, such as its lowest commercial price.

    Response: When an orphan drug meets the definition of a covered outpatient drug, it would be subject to the requirements as set forth in this final rule. Further, the statue does not contemplate an alternative pricing methodology for orphan drugs.

    C. Ceiling Price for a Covered Outpatient Drug—New Drug Price Estimation—§ 10.10(c)

    In general, calculation of the current quarter 340B ceiling price for each covered outpatient drug is based on pricing data from the immediately preceding calendar quarter. For new drugs, there is no sales data from which to determine the 340B ceiling price. HHS published guidelines in 1995 describing ceiling price calculations for new drugs (60 FR 51488, October 2, 1995) and the final rule will replace these guidelines.

    In the NPRM, HHS proposed that manufacturers estimate the 340B ceiling price for a new covered outpatient drug as of the date the drug is first available for sale, and provide HHS an estimated 340B ceiling price for each of the first three quarters the drug is available for sale. HHS also proposed that, beginning with the fourth quarter the drug is available for sale, the manufacturer must calculate the 340B ceiling price as described in proposed 42 CFR 10.10(a). Under the proposed rule, the actual 340B ceiling price for the first three quarters would also have been calculated and manufacturers would have been required to provide a refund or credit to any covered entity that purchased the covered outpatient drug at a price greater than the calculated 340B ceiling price. HHS proposed that any refunds or credits owed to a covered entity would be provided by the end of the fourth quarter.

    HHS received comments supporting and opposing the various components of its proposal on new drug price estimation. Commenters requested clarification on de minimis refunds under the proposed policy, price estimation methodologies, and whether refund policies stated in this regulation apply to all refunds, not just those corresponding to new drugs. Several commenters supported a specific methodology for calculating new drug prices, which included setting the price of the new covered outpatient drug as wholesale acquisition cost (WAC) minus the applicable rebate percentage (i.e., 23.1 percent for most single-source and innovator drugs, 17.1 percent for clotting factors and drugs approved exclusively for pediatric indications, and 13 percent for generics). Commenters argued that this price would eliminate the need to estimate the price for the first three quarters and would result in a reasonable 340B ceiling price. Given the comments received regarding setting a specific methodology, when HHS reopened the comment period, HHS sought comment on this issue. HHS specifically requested comment on setting the estimation at WAC minus the applicable rebate percentage.

    After consideration of the comments received, HHS is modifying the final rule to require that manufacturers estimate, using a standardized methodology, the 340B ceiling price for a new covered outpatient drug until there is AMP data available to calculate an actual 340B ceiling price as set forth in 340B(a)(1) of the PHSA. The methodology set forth in this final rule for the estimated 340B ceiling price is WAC minus the appropriate rebate percentage. Once the AMP is known, and no later than the fourth quarter that the drug is available for sale, manufacturers would be required to calculate the actual 340B ceiling price based on AMP for the time under which the 340B ceiling price was estimated. The manufacturer is then required to offer a repayment to the covered entity the difference between the estimated 340B ceiling price and the actual 340B ceiling price within 120 days of the determination by the manufacturer that an overcharge occurred.

    For example, if a manufacturer with a PPA has a new drug approved for sale in February, and that drug meets the definition of covered outpatient drug, the 340B price estimation requirements would apply for at least one full calendar quarter. During that time, the manufacturer would estimate the 340B ceiling price at WAC minus the appropriate rebate percentage until the manufacturer can calculate an AMP for the product, resulting in an actual 340B ceiling price based on that AMP. The estimation can occur for up to the first three calendar quarters of availability, at which point the manufacturer will have the necessary pricing data to calculate the 340B ceiling price based on section 340B(a)(1) of the PHSA.

    Since manufacturers must offer repayments as set forth in this section, it is incumbent on them to contact affected covered entities as part of that process. During initial contact, a manufacturer and a covered entity may both determine that a given overcharge is not significant, or agree to other payment options such as netting or crediting. In these instances, both parties are free to pursue mutually agreed-upon alternative refund arrangements. HHS has summarized and provided a response to the comments below.

    Comment: HHS received comments generally supporting and opposing the proposal to price new covered outpatient drugs at WAC minus the Medicaid minimum discount rebate percentages (i.e., 23.1 percent for most single-source and innovator drugs, 17.1 percent for clotting factors and drugs approved exclusively for pediatric indications, and 13 percent for generics) until an AMP derived ceiling price can be identified after the third full quarter in which the drug became available. In addition, commenters suggested that HHS should not require subsequent pricing revisions or a refund once the actual price is determined. The commenters stated that such an approach would be simpler, while resulting in reasonable proxies for the final 340B ceiling prices.

    Response: The 340B ceiling price is calculated based upon AMP minus URA data supplied by CMS that is reported by manufacturers under the MDRP. Given that the AMP for a new covered outpatient drug may not be known for a period of time after the drug comes to market, HHS sought a balance between a standardized and universally applicable interim pricing requirement, while also ensuring that covered entities ultimately receive the 340B ceiling price as defined by the statute. Therefore, we have added to the final rule that new covered outpatient drugs should be estimated and sold to 340B participating covered entities using a standardized formula for the estimation at WAC minus the applicable Medicaid drug rebate percentage until an actual 340B ceiling price can be determined based on AMP. HHS believes a standardized formula for the calculation of the estimation will create stability in the market and provide transparency and consistency in the process. While the commenter's suggested approach may be feasible, HHS does not believe that it is reflective of statutory intent. In addition, HHS has maintained in the final rule that once an actual 340B ceiling price can be determined, manufacturers will be obligated to refund any difference between the estimated 340B price and the actual 340B ceiling price. If a manufacturer refuses to refund covered entities after it has been determined covered entities were overcharged during the time the 340B ceiling price was estimated, that could meet the knowingly and intentionally standard to apply a CMP. This has been clarified in § 10.11 of this final rule.

    Comment: HHS received several comments from covered entity groups expressing concern that the proposed new drug price estimation method, based on WAC minus the appropriate rebate percentage, would result in prices that are significantly higher than estimates derived from other methods. Commenters stated that WAC-derived pricing is often 30 percent higher than prices available to group purchasing organizations and that 340B ceiling prices are typically much lower than this estimation.

    Response: HHS believes that the final rule ensures that covered entities will be able to receive the 340B ceiling price as defined in statute by requiring manufacturers to offer a refund to covered entities after the estimation period and within 120 days of determining there was an overcharge.

    Comment: Several commenters suggested that the 340B Program follow Medicaid policy towards rebates for new drugs, whereby prices are determined from the beginning by AMP (rather than WAC) minus the applicable discount percentage. The commenters argued that policy alignment with Medicaid would greatly simplify rebate program administration, and minimize the need for future reconciliation of overcharges. Commenters also suggested that HHS should reevaluate such a formula for new drug pricing to see how closely it aligns with AMP derived pricing after the initial estimation period.

    Response: The CMS Medicaid Covered Outpatient Drug Rule (81 FR 5270, February 1, 2016) refers to AMP-based pricing only when a new version of an existing drug comes to market. In the case of a new drug, the Medicaid program does not utilize AMP-based pricing, as there are no prior sales data to base it on. Therefore, initial prices must be based on another price point. HHS believes that using a standardized formula, WAC minus the appropriate rebate percentage, to estimate 340B ceiling prices prior to an AMP being available is the most appropriate way to implement pricing requirements with regards to new drugs.

    Comment: Regarding the timeframe for new drug price calculations, several commenters suggested that new drug pricing follow the VA policy, whereby manufacturers are required to provide an initial (provisional) FCP statutory discount percentage to the WAC for 30 days, followed by a temporary pricing period predicated on the first 30 days of commercial sales, and permanent ceiling pricing taking effect after the first quarter by applying the statutory discount to the non-Federal AMP as it becomes available. Commenters cited the VA timeframe, whereby an estimated (WAC-based) price is used for the first month that a new drug is available, followed by a switch to a temporary (AMP-based) price.

    Response: HHS believes that it is appropriate to minimize any restatements of pricing that occur as a new 340B drug comes to market. The VA timeframe does not correlate to the quarterly pricing that occurs in the 340B Program. Therefore, HHS has finalized the rule to estimate drug pricing as WAC minus the appropriate rebate percentage until an actual 340B ceiling price can be computed based on AMP.

    HHS also notes that a provisional FCP is not required by the VA, it is optional. In addition, if a provisional FCP is established, it is not valid for just the first 30 days. It remains valid until the first temporary FCP comes due or is established, which could be up to 75 days from launch.

    Comment: Commenters suggested that new drug calculations should not be subject to the two-quarter lag typical of other price calculations. These commenters recommended establishing an “interim” (WAC minus the appropriate rebate percentage) ceiling price through the first full quarter, followed by pricing based on the AMP, which can be established with one quarter of data. Other commenters suggested establishing provisional 340B ceiling prices for new drugs based on MDRP statutory discounts applied to an available U.S. sales reference price (e.g., WAC reduced by estimates for quarterly URA values), thus eliminating the need for restatements at a later date.

    Response: The 340B ceiling price is set by the statute and manufacturers are required to charge covered entities that ceiling price. Therefore, manufacturers are required to issue refunds if it is determined that a covered entity paid a price higher than the 340B ceiling price. HHS has also decided to standardize the pricing estimation during the period for which there is not an AMP available to calculate an actual 340B ceiling price. HHS believes that WAC minus the rebate percentage serves is a fair and reasonable estimated 340B ceiling price.

    Comment: Commenters among the drug manufacturer community stated that it is not necessary to provide price estimates past the first full quarter, so that less time will elapse where a new drug ceiling price is estimated instead of being based on actual market data. Others stated that two quarters was sufficient to calculate prices based off the first quarter's sales data. Commenters argued that a shorter estimate period would reduce administrative burdens, and lessen the need for retroactive refunds.

    Response: HHS agrees that an AMP for a new covered outpatient drug may be established after one full quarter has elapsed. Under the final rule, once the AMP is known, and no later than the fourth quarter that the drug is available for sale, manufacturers would be required to calculate the actual 340B ceiling price based on the AMP for the time under which the ceiling price was estimated. The estimation can occur for up to the first three calendar quarters of availability, at which point the manufacturer will have the necessary pricing data to calculate the 340B ceiling price based on section 340B(a)(1) of the PHSA. The manufacturer must offer to refund or credit the covered entity the difference between the estimated ceiling price and the actual 340B ceiling price within 120 days of the determination by the manufacturer that an overcharge occurred.

    Comment: Commenters were concerned that the proposed timeframe for manufacturers to issue refunds or credits is too short. Commenters requested that the refund process for overestimated new drug prices follow the Medicaid approach of allowing 12 quarters for price restatements, followed by 2 quarters for the refund to occur. Other commenters wrote in support of the proposed fourth quarter standard.

    Response: The NPRM proposed that refunds or credits be provided to entities by the end of the fourth quarter. HHS agrees additional time may be necessary to issue refunds. Therefore, HHS has changed the NPRM's fourth quarter standard in the final rule. In addition, the final rule states that manufacturers must offer to refund or credit the covered entity the difference between the estimated 340B ceiling price and the actual 340B ceiling price within 120 days of the determination by the manufacturer that an overcharge occurred. HHS believes that 120 days allows the manufacturer and the covered entity an opportunity to first determine whether the overcharge is significant, and if not, whether to make repayment options such as crediting or netting.

    Comment: Commenters argued that the proposed refund procedure is inconsistent with the 1995 guidance (60 FR 51488, October 2, 1995) where covered entities are responsible for initiating the refund process, and must do so without a third-party intermediary and that the refund requests should be made by the end of the fourth full quarter after a new drug comes to market.

    Response: Manufacturers are required by statute to provide covered entities the statutorily defined 340B ceiling price. Therefore, once a manufacturer determines there is an overcharge related to new drug price estimation as set forth in this final rule, manufacturers must notify covered entities affected and appropriately refund them accordingly. This final rule replaces the 1995 guidance in its entirety.

    Comment: Commenters stated that requiring refunds following ceiling price recalculations would be inconsistent with the 340B statute because such refunds would impose an undue cost on manufacturers.

    Response: In accordance with section 340B(a)(1) of the PHSA, 340B ceiling prices for covered entities must “not exceed an amount equal to the average manufacturer price for the drug under title XIX of the SSA in the preceding calendar quarter, reduced by the rebate percentage” outlined in section 340B(a)(2)(A) of the PHSA. Since the necessary predicate of an AMP cannot be known until a drug has been on the market for a preceding calendar quarter, we have determined that using a reasonable, standardized estimate in the interim, followed by refunds as the AMP is calculated, achieves the programmatic goal of assuring that covered entities receive refunds owed in both a timely and a complete manner. Regarding the cost to manufacturers, this policy involves using similar mechanisms currently in use for other refunds routinely issued by manufacturers, and does not represent a significant added cost.

    Comment: Commenters requested clarification on what is meant by the “expected” versus the “actual” price, in addition to requests for clarification on methods for developing expected or estimated prices for new drugs.

    Response: For the purposes of this rule, “expected” can be understood as the initial (estimated) 340B ceiling price that is charged to a covered entity when there is not yet an AMP to use in the 340B ceiling price calculation. HHS has added to this final rule a standardized formula to the new drug price cost estimation, which is WAC minus the appropriate rebate percentage. The “actual” 340B ceiling price is the price of a new drug once there is an AMP in place that is used to calculate the 340B ceiling price per statute.

    Comment: Commenters requested clarification on the potential role of wholesalers and distributors in the refund process, specifically in identifying covered entities entitled to a refund based on new drug price estimation.

    Response: The role of wholesalers and distributors is dependent on how individual manufacturers contract with these third parties to distribute 340B drugs. Whether wholesalers and distributors play a role in the refund process is determined by individual manufacturers and their business operations with these stakeholders. The requirement to refund a covered entity as outlined in the final rule rests with the manufacturers. A manufacturer may use a third party to assist in ensuring they meet those requirements.

    Comment: Several commenters requested that there be an exemption for de minimis refund amounts resulting from differences between initial ceiling price estimates and the establishment of a retroactive actual ceiling price after the first three quarters that a new drug becomes available. Commenters cited administrative burden in issuing refunds for all overcharges, regardless of their significance. Commenters representing both the manufacturer and the covered entity communities were broadly supportive of a defined threshold, as well as a stated timeframe for refunds to be issued.

    Response: Manufacturers are obligated to offer repayments within 120 days of the determination that an overcharge occurred. HHS does not agree that the final rule should set a materiality threshold, and believes this is best approached by marketplace arrangements and in good faith negotiation between the parties. To the extent that a manufacturer and covered entity agree that a de minimis threshold for refunds should be established, such a threshold can be established through mutual agreement between the manufacturer and covered entity.

    Comment: Regarding overcharges resulting from differences between estimated and actual ceiling prices, a number of commenters requested that overcharges be netted in a manner similar to MDRP regulations. The commenters stated that the MDRP permits manufacturers to aggregate the impact of restated prices on each sale to determine the net amount due after pricing restatements and that states are not permitted to retain excess rebate amounts paid upon recalculations. Commenters suggested that because the MDRP and 340B Program are closely intertwined, they should be consistently administered and allow a similar netting approach as to minimize administrative and financial burden of refunding 340B covered entities.

    Response: To the extent there is an agreement between the manufacturer and covered entity, HHS does not intend to prevent manufacturers from using the industry's practice of netting overcharges and undercharges, or to restate ceiling prices based on pricing data submitted to CMS. However, the 340B statute is specific to ensuring each covered outpatient drug is offered at or below the 340B ceiling price. Once it is determined that an overcharge occurred, a manufacturer and a covered entity, in good faith, may both determine that a given overcharge is not significant, or agree to other payment options such as netting or crediting. In these instances, both parties are free to pursue mutually agreed-upon alternative refund arrangements.

    Comment: Many commenters suggested that covered entities be held liable for undercharges that occur during a new drug's estimated pricing period.

    Response: Given the nature of the standardized estimated 340B ceiling price calculation described in this final rule, HHS views the likelihood of undercharges to be low. Because WAC is typically higher than the 340B ceiling price and the estimation for new drugs finalized in this rule is based on that amount, we believe that new estimation undercharges will be minimal. Section 340B(a)(10) of the PHSA states that there is no prohibition on larger discounts being offered to covered entities. In addition, the statute is specific in addressing when a manufacturer overcharges a covered entity and it does not address refunds by covered entities if the manufacturer provides a price below the 340B ceiling price. Therefore, it will not be addressed in the final rule.

    Comment: Commenters requested clarification on whether the refund policy described in this rule would apply to all overcharges identified during price restatements, and not just those that occur as sales data can be applied to new drug pricing. Commenters also requested that HHS codify a formal refund procedure in regulation and that the Affordable Care Act requires the 340B Program to develop a refund mechanism.

    Response: The refund requirements as set forth in this final rule apply as it relates to new drug price estimations. Specific procedures for refunds are outside the authority of this final rule and will be addressed in future guidance. HHS is finalizing this refund requirement as proposed and continues to believe that an instance of overcharging may occur at the time of initial purchase or when subsequent ceiling price recalculations resulting from pricing data submitted to CMS occur.

    Comment: Commenters requested that HHS define “new drug” in this rule, suggesting the use of NDC-11 or package size as criteria. Commenters suggested a clarification that a new package size is not a new drug, suggesting that new prices can be derived off known unit prices, with any subsequent refunds occurring under the existing reconciliation process. Commenters suggested a clarification that a new package size of an existing drug should not be considered a new drug for purposes of this rule and that the 340B ceiling price should use the per unit pricing data (NDC-9) from the existing package sizes already in the market.

    Response: For the purposes of this final rule, a new covered outpatient drug is any drug that does not have a previous quarter AMP calculation from which a price can be derived. HHS does not believe this distinction needs to be clarified in the final rule, and additional policy on this issue may be developed if the need arises.

    D. Manufacturer Civil Monetary Penalties General—§ 10.11(a)

    Section 340B(d)(1)(B)(vi) of the PHSA provides for the imposition of civil monetary penalties on manufacturers that knowingly and intentionally charge a covered entity a price for a 340B drug that exceeds the ceiling price. At § 10.11(a) of the NPRM, HHS proposed that any manufacturer with a PPA that knowingly and intentionally charges a covered entity more than the 340B ceiling price, as defined in § 10.10, for a covered outpatient drug, may be subject to a civil monetary penalty not to exceed $5,000 for each instance of overcharging a covered entity. As indicated in the NPRM, pursuant to a delegation of authority, OIG will have authority to impose a CMP. The initial release of the NRPM did not define the term “knowing and intentional,” but based on comments received, HHS reopened the NPRM comment period (81 FR 22960, April 19, 2016) to seek comment on the definition of the knowing and intentional standard for purposes of HHS' CMP authority. HHS offered possible options on how the term should be defined. HHS understands that intent is difficult to define, therefore, input was solicited on circumstances in which the requisite intent should and should not be inferred. In particular, HHS solicited comment on the concept that manufacturers would not be considered to have the requisite intent in the following circumstances:

    • The manufacturer made an inadvertent, unintentional, or unrecognized error in calculating the ceiling price;

    • A manufacturer acted on a reasonable interpretation of agency guidance; or

    • When a manufacturer has established alternative allocation procedures where there is an inadequate supply of product to meet market demand, as long as covered entities are able to purchase on the same terms as all other similarly situated non-340B covered entities.

    HHS received numerous comments recommending the terms knowingly and intentionally be further defined in the final rule. Commenters generally supported the listed examples of circumstances where the requisite intent is not demonstrated, and a number of commenters suggested additional examples. Commenters also raised concern over ensuring the terms knowingly and intentionally are not overly prescriptive such that they limit the use of a CMP. In the final rule, HHS sought balance between a clear and enforceable definition and the need to approach each instance of an overcharge with a full view of the surrounding circumstances. Given these two goals, HHS is finalizing the rule as proposed and has provided additional examples of conduct that would not be considered to meet the threshold of “knowing and intentional” action in this supplementary information section in response to comments. In addition, as a general principle, HHS will defer to OIG to determine whether a given situation constitutes a `knowing and intentional' 340B drug overcharge based on the specific case being investigated. HHS believes this will provide the flexibility necessary to evaluate an instance of overcharging on a case-by-case basis. Below is a summary of the comments received, and HHS' responses.

    Comment: Commenters provided additional examples to be considered as not meeting the knowing and intentional threshold, such as periods of estimations for new drugs.

    Response: HHS agrees that the period of time for which a manufacturer is estimating a 340B ceiling price for new drugs as set forth in this final rule may not meet the knowingly and intentionally standard, as long as the manufacturer also ensures that the covered entities are refunded according to § 10.10(c). However, if a manufacturer does not offer to refund a covered entity per § 10.10(c) of the final rule, that may constitute a knowing and intentional overcharge. The final rule has been modified accordingly. Examples of circumstances where HHS would assume that a manufacturer did not “knowingly and intentionally” overcharge a covered entity are:

    • The manufacturer made an isolated inadvertent, unintentional, or unrecognized error in calculating the 340B ceiling price;

    • The manufacturer sells a new covered outpatient drug during the period the manufacturer is estimating a price based on this final rule, as long as the manufacturer offers refunds of any overcharges to covered entities within 120 days of determining an overcharge occurred during the estimation period;

    • When a covered entity did not initially identify the purchase to the manufacturer as 340B-eligible at the time of purchase; or

    • When a covered entity chooses to order non-340B priced drugs and the order is not due to a manufacturer's refusal to sell or make drugs available at the 340B price.

    We note that these examples are not exhaustive, and are intended to provide an indication of some types of actions that would not be considered “knowing and intentional” overcharges. In the NPRM, the last two examples above were included in the text of the regulation defining instances of overcharging. Upon consideration of public comments, HHS believes that the last two examples above should be construed as particular circumstances under which an instance of overcharging did not occur as opposed to examples of what would constitute an instance of overcharging. As a result, HHS is not including these two examples in the final regulatory text defining an instance of overcharging, but rather providing them here as examples of instances where overcharging did not occur. As a general principle, HHS will defer to OIG to determine whether a given situation constitutes a `knowing and intentional' overcharge based on the specific case being investigated.

    Comment: Some commenters suggested that HHS adopt the definition of “knowingly” from the HHS OIG CMP regulations. Under these regulations, the term “knowingly” is defined as “a person, with respect to information, has actual knowledge of information, acts in deliberate ignorance of the truth or falsity of the information, or acts in reckless disregard of the truth or falsity of the information, and that no proof of specific intent to defraud is required” (42 CFR 1003.102 (e)). A few commenters noted that under the canons of statutory construction, agencies must assume Congress intended each word or phrase to have a distinct meaning.

    Response: HHS does not believe it is appropriate to incorporate additional language over and above the statutory language “knowingly and intentionally” that would limit OIG further in applying this penalty. Each factual case is different and will be evaluated separately to determine if it may warrant a penalty as set forth in this final rule. After consideration of the comments received, HHS has decided not to define these terms and to allow OIG the necessary flexibility to evaluate each instance of overcharge on a case-by-case basis.

    Comment: Commenters offered specific definitions of the term “intentionally.” Several commenters requested that “intentionally” be defined as “not due to a mathematical miscalculation, clerical oversight, or similar inadvertent error.” A few commenters requested that the term “intentionally” be defined as “consciously committing an act or omission that results in an overcharge.” Commenters requested that, when defining the terms “knowingly” and “intentionally,” HHS incorporate definitions such as “actual knowledge by the manufacturer, its employees, or its agents of the instance of overcharge” or “acting consciously and with awareness of the acts leading to the instance of overcharge.” Commenters interpreted the statute to say that it must be “knowing and intentional” on the part of the manufacturer both that the amount charged exceeds the ceiling price and that the entity charged is in fact a covered entity.

    Response: HHS appreciates commenters' proposed definitions of “knowingly and intentionally,” and also acknowledges commenters' concerns about HHS' proposed definitions. HHS agrees that in cases where a manufacturer established that the overcharge in question was as a result of an isolated act of simple negligence or inadvertent math error, then the penalty would not typically apply. However, the facts and circumstances of each case would need to be taken into account. For example, if a manufacturer inadvertently developed an unreliable process that resulted in negligent errors, but later there is knowledge of such systematic failures that results in errors in the 340B ceiling price calculation that causes overcharges, this could be sufficient to meet a knowingly and intentionally standard. After consideration of the comments received, HHS has decided not to define these terms and to allow OIG the necessary flexibility to evaluate each instance of overcharge on a case-by-case basis.

    Comment: Several commenters believed that the statute's requirement that conduct must be both “knowing” and “intentional” to impose CMPs sets up a specific and demanding standard and some covered entities were concerned that the proposed definitions set the bar so high as to have little practical value in ensuring that they receive appropriate prices under the 340B Program. They stated that the intent standard is contrary to Congress' intent to give HHS a meaningful enforcement tool, and it will not deter manufacturers from overcharging under the 340B statute. Further, they noted that the Supreme Court wrote that through CMP provisions “Congress thus opted to strengthen and formalize HHS' enforcement authority” (Astra USA v. Santa Clara County, 563 U.S. 110, 121-22 (2011)). Other commenters were concerned that the proposed definitions would not amount to the heightened threshold for intent outlined in the statute, meaning that the proposed definitions would capture lesser forms of misconduct than Congress had intended.

    Response: While HHS agrees that the use of the terms knowingly and intentionally as set forth in the statute set a high standard for imposing penalties, HHS believes it will serve as an enforcement tool to ensure manufacturers are charging covered entities at or below the 340B ceiling price. HHS appreciates commenters' proposed definitions of “knowingly and intentionally,” and also acknowledges commenters' concerns about HHS' proposed definitions. HHS has decided not to define these terms and to allow OIG the necessary flexibility to evaluate each instance of overcharge on a case-by-case basis.

    Comment: HHS provided several possible definitions for knowing and intentional when it reopened the comment period: (1) Actual knowledge by the manufacturer, its employees, or its agents of the instance of overcharge; (2) willful or purposeful acts by, or on behalf of, the manufacturer that lead to the instance of overcharge; (3) acting consciously and with awareness of the acts leading to the instance of overcharge; and/or (4) acting with a conscious desire or purpose to cause an overcharge or acting in a way practically certain to result in an overcharge. HHS received a number of comments on the proposed definitions.

    Response: HHS has decided not to define these terms and to allow OIG the necessary flexibility to evaluate each instance of overcharge on a case-by-case basis.

    Comment: With respect to the language in the notice of reopening of comment period (81 FR 22960, April 6, 2016) that “manufacturers do not need to intend specifically to violate the 340B statute; but rather to have knowingly and intentionally overcharged the 340B covered entity,” several commenters expressed concern that this is inconsistent with the statutory text. These commenters argued that in order to be subject to CMPs, the manufacturer must specifically intend to violate the 340B statute, not solely intend to charge a price that is higher than the 340B ceiling price.

    Response: HHS agrees that CMPs will be applied to a manufacturer that knowingly and intentionally overcharges a covered entity. The specific intent to violate the 340B statute is not necessarily required to be shown to warrant an application of the penalty provision.

    Comment: Commenters expressed concern that any further definition of the terms “knowing” and “intentionally” will constrain HHS' ability to judge whether a CMP is appropriate in a given instance. If HHS determines that further definition is necessary, they suggested using an exclusionary approach, stating specific actions that do not rise to the level of requisite intent, rather than an approach that names only specific actions that will be considered “knowing and intentional” in this context. Commenters generally supported the listed examples of circumstances where the requisite intent is not demonstrated and requested that the examples be explicitly characterized as non-exhaustive. Several commenters suggested adding a catch-all provision to the list of examples, such as “other situations in which it is reasonable not to infer that a manufacturer acted `knowingly and intentionally,' ” or “any other situation not presenting circumstances of a deliberate effort to disobey the law with regard to the 340B program.”

    Response: HHS agrees with the commenter's approach. Therefore, instead of defining these terms in an inclusive manner, HHS has chosen to provide OIG the flexibility to determine what constitutes “knowingly” and “intentionally” overcharging a covered entity in a particular instance. In addition, HHS provides examples above regarding circumstances that would not meet the threshold of knowingly and intentionally overcharging a covered entity.

    Comment: With respect to the proposed example “the manufacturer made an inadvertent, unintentional, or unrecognized error in calculating the ceiling price,” one commenter suggested including an error “identifying the eligibility of an entity to receive the 340B discount.”

    Response: HHS did not include the suggestion to include an error in “identifying the eligibility of an entity to receive the 340B discount” in the final rule to retain flexibility that the penalty be applied only where appropriate. However, it should be noted that 340B covered entities are listed on the 340B public database, and those listed are entitled to the 340B ceiling price.

    Comment: Regarding the proposed example “a manufacturer acted on a reasonable interpretation of agency guidance,” a commenter was concerned that the example was overly broad, since manufacturers may decide what is reasonable, and this, therefore, may create a loophole for manufacturers to avoid CMPs. They recommended, at a minimum, clarifying that this is an objective reasonableness standard, as determined by HHS and/or OIG. Several other commenters suggested adding exceptions for reasonable interpretations of laws, regulations, and the pharmaceutical pricing agreement. Further, one commenter stated that in circumstances where the statute and agency guidance conflict, it is reasonable for the manufacturer to adopt practices consistent with the statute.

    Response: HHS agrees that the proposed example that, “a manufacturer acted on a reasonable interpretation of agency guidance,” was overly broad. OIG would need to consider each circumstance of a 340B drug overcharge on a case by case basis to determine if that circumstance constitutes a “knowing and intentional action.

    Comment: With respect to the proposed example, “when a manufacturer has established alternative allocation procedures where there is an inadequate supply of product to meet market demand, as long as covered entities are able to purchase on the same terms as all other similarly-situated providers,” commenters were concerned that this is overly broad. They recommended that HHS only provide a safe harbor for manufacturers with valid limited distribution plans, and revise § 10.11 of the final rule to address other situations where a manufacturer fails to make 340B drugs available to covered entities to the same extent as to non-340B providers. They argued that the statute states CMPs are issued when manufacturers “knowingly and intentionally charges a covered entity a price for purchase of a drug that exceeds the maximum available price under subsection (a)(1).” Section 340B(a)(1) of the PHSA requires that “the manufacturer offer each covered entity covered outpatient drugs for purchase at or below the applicable ceiling price if such a drug is made available to any other purchaser at any price.” Therefore, if a manufacturer does not comply with the nondiscrimination provision in subsection (a)(1), this constitutes an overcharge for purposes of the CMP provision. Other commenters recommended that HHS delete this example, because it would allow any manufacturer to develop alternative allocation procedures to disregard the ceiling price whenever demand exceeds supply.

    Response: HHS agrees that the proposed example, “when a manufacturer has established alternative allocation procedures where there is an inadequate supply of product to meet market demand, as long as covered entities are able to purchase on the same terms as all other similarly-situated providers,” was overly broad. OIG would need to consider each circumstance of a 340B drug overcharge on a case by case basis to determine if that circumstance constitutes a “knowing and intentional” action.

    Comment: Commenters suggested that the proposed example, “when a manufacturer has established alternative allocation procedures where there is an inadequate supply of product to meet market demand, as long as covered entities are able to purchase on the same terms as all other similarly-situated providers,” a manufacturer would not have the requisite intent if a covered entity chooses to purchase the manufacturer's product through a channel other than the subset of distributors through which the 340B ceiling price is available. Another commenter suggested that the example read instead, “. . . as long as the manufacturer offers covered entities the opportunity to purchase on terms consistent with those offered to other similarly-situated entities in the same class of trade.”

    Response: In general, HHS agrees that the penalty provisions typically would not be appropriate in a case where a covered entity chooses to purchase a covered outpatient drug knowing that the price charged exceeds the 340B ceiling price. However, in the case where there was sufficient evidence to conclude that this result was due to actions by the manufacturer that were knowing and intentional, a penalty may be appropriate. Although it may be reasonable to believe that such a circumstance is extremely unlikely to arise, HHS does not believe it is appropriate or necessary to exclude a possibility that may occur.

    Comment: A number of commenters suggested additional examples of situations that they believe do not meet the “knowing and intentional” standard. Some of the examples suggested by commenters include, but are not limited to, the following:

    • Instances of intentional failure to issue refunds to covered entities, because HHS has not yet established procedures for issuing refunds;

    • A case where a manufacturer was not aware it was selling to a covered entity;

    • A case where a distributor failed to give a covered entity a 340B price through no fault of the manufacturer;

    • Situations where there is a reasonable disagreement and no established law or agency guidance or circumstances where the manufacturer acted based on reasonable assumptions in the absence of (or in the face of conflicting) guidance, provided such assumptions are consistent with the requirements and intent of section 340B of the PHSA and any implementing regulations, and a written or electronic record outlining these assumptions is maintained; and

    • When a manufacturer has established a uniformly applied limited distribution system or risk evaluation and mitigation strategy (“REMS”).

    Response: HHS appreciates the efforts commenters made in enumerating conduct they believed should be exempt from examples of knowingly and intentionally selling a drug above its 340B ceiling price. OIG will review these circumstances on a case-by-case basis along with the facts for each instance. Rather than try to anticipate every circumstance that might occur, HHS believes it more appropriate to retain flexibility. To the extent that manufacturers identify situations where uncertainty results in unnecessary costs, HHS will respond as such circumstances arise and may provide additional guidance in the future.

    Additionally, since manufacturers are named in statute as being responsible for setting appropriate 340B ceiling prices, they must be responsible for the conduct of business partners with whom they have contracted. Nevertheless, inadvertent clerical errors, as long as they are corrected as soon as identified, would not be considered to be a “knowing and intentional” overcharge.

    Comment: Commenters recommended including as an exemption from being considered an overcharge and meeting the knowing and intentional threshold when a manufacturer acted on credible evidence that a covered entity is engaged in diversion of 340B drugs. They stated that if a manufacturer has evidence a covered entity is improperly diverting a drug, it should be able to charge the covered entity a price above the 340B ceiling price. It is argued that this option would create a check on 340B drug diversion, since manufacturers have better and timelier access to sales data than does HHS.

    Response: HHS does not believe that unilaterally overcharging a covered entity based upon suspicion of diversion is warranted under the statutory language. Manufacturers cannot condition the sale of a 340B drug at the 340B ceiling price because they have concerns or specific evidence of possible non-compliance by a covered entity. Manufacturers that suspect diversion are encouraged to work in good faith with the covered entity, conduct an audit per the current audit guidelines, or contact HHS directly.

    E. Manufacturer Civil Monetary Penalties—Instance of Overcharging—§ 10.11(b)

    At § 10.11(b) of the proposed rule, HHS defined an instance of overcharging for the purpose of imposing a CMP as any order for a certain covered outpatient drug, by NDC, which results in a covered entity paying more than the 340B ceiling price. An instance of overcharging is considered at the NDC level and may not be offset by other discounts provided on any other NDC or discounts provided on the same NDC on other transactions, orders, or purchases. HHS also proposed that manufacturers have an obligation to ensure that the 340B ceiling price is provided through distribution arrangements made by the manufacturer. An instance of overcharging may occur at the time of initial purchase or at subsequent ceiling price recalculations. The recalculations are due to pricing data submitted to CMS that results in a covered entity paying more than the ceiling price due to failure or refusal to refund or credit a covered entity. Finally, HHS proposed that a manufacturer's failure to provide the 340B ceiling price is not considered an instance of overcharging when a covered entity did not initially identify the purchase to the manufacturer as 340B-eligible at the time of purchase. Covered entity orders of non-340B priced drugs will not subsequently be considered an instance of overcharging unless the manufacturer refuses to sell or makes drugs available at the 340B ceiling price.

    HHS received comments supporting and opposing the proposed § 10.11(b). Some commenters opposed certain components of the proposed definition, including the proposal to (1) define the term based on orders; (2) require manufacturers to ensure 340B pricing regardless of distribution arrangements; (3) prohibit offsets; (4) consider as an instance of overcharging when a manufacturer fails or refuses to provide funds at the time of initial purchases or during subsequent ceiling price recalculation; and (5) clarify that a manufacturer's failure to provide the 340B ceiling price if a covered entity did not initially identify such purchases as 340B eligible or that covered entity orders of non-340B drugs will not be subsequently considered an instance of overcharging unless the manufacturers refuses or makes drugs available at the 340B ceiling price. These commenters claimed that HHS does not have the statutory authority to define the term as such or that such definition does not meet the “knowingly and intentionally” standard. At the same time, other commenters supported these components of the proposed definitions as they ensure that covered entities have access to covered outpatient drugs under the 340B Program. Specific comments are addressed below.

    Comment: Commenters wrote in opposition to the definition of an instance of overcharging as any order for a covered outpatient drug, by NDC, which results in a covered entity paying more than the ceiling price. Some commenters asked HHS to define an instance of overcharging more restrictively and on a per-unit basis rather than a per-order basis. Doing so would allow OIG to impose penalty amounts commensurate with the severity of the violation.

    Response: HHS has determined to finalize the definition of instance as proposed. An instance of overcharging is any order for a certain covered outpatient drug, by NDC, which results in a covered entity paying more than the 340B ceiling price, as defined in § 10.3 of this final rule, for a covered outpatient drug. Each order for an NDC will constitute a single instance, regardless of the number of units of each NDC in that order. This includes any order placed with a manufacturer or through a wholesaler, authorized distributor, or agent. A single order may contain one or more NDCs; thus a violation of this provision may constitute more than one instance depending on the number of NDCs in the order. HHS believes that changing the definition to a per-unit basis is restrictive and overly burdensome as current purchasing occurs at the 11-digit NDC versus a per-unit basis. Finalizing the rule as proposed strikes the right balance in applying the appropriate penalties.

    Comment: Commenters asked HHS to clarify that the “order” is the single purchase order, rather than separate line items within a single purchase order. Commenters claimed that defining an instance of overcharging based on “orders” may be interpreted to include situations in which estimated 340B ceiling prices for new drugs were too high and the manufacturer did not issue refunds to covered entities in the time that the rule would require.

    Response: Each order for an NDC will constitute a single instance, regardless of the number of units of each NDC in that order. If a covered entity orders a single bottle of a covered outpatient drug four times in a month, it would be considered four instances of overcharging. A single order may contain one or more NDCs; thus a violation of this provision may constitute more than one instance depending on the number of NDCs in the order. With regards to new drug price estimation and refunds to a covered entity, HHS addresses those requirements in § 10.10 of this final rule. If refunds in this circumstance are not offered to covered entities within 120 days of the determination by the manufacturer that an overcharge occurred, it may be considered as meeting the definition of knowingly and intentionally overcharging the covered entity and the definition of instance would apply. This is in alignment with the statute that requires manufacturers to provide covered entities the 340B ceiling price.

    Comment: Some commenters suggested that an instance of overcharging be defined as each product ceiling price reported by a manufacturer to HRSA that contains a price that the manufacturer knows and intends to be in excess of the price as calculated. Other comments recommended further defining the term to add details related to the instance. For example, some recommended inclusion of the following language: all mispriced purchases within a quarter on a particular drug to a particular customer, intentionally incorrect ceiling prices reported to HRSA that actually result in overcharges to one or more registered covered entities, and incorrect treatment by a manufacturer of a registered covered entity as an organization ineligible for the 340B ceiling price. Other commenters asked HHS to include in the definition of instance of overcharging, a manufacturer's failure to offer a covered outpatient drug to a covered entity to the same extent that the drug is offered to other purchasers.

    Response: HHS declines to include additional language as raised by the commenters. While the examples provided may result in a covered entity being charged above the 340B ceiling price, they relate more to defining the knowing and intentional standard, which will be determined by OIG on a case-by-case basis. HHS believes it is important to provide the necessary flexibility for OIG to determine the facts surrounding a specific case. HHS also notes that it is the actual sale of the covered outpatient drug above the 340B ceiling price by the manufacturers to the covered entity that is the subject of the overcharge per the statute.

    Comment: Commenters opposed the proposed extension of the manufacturer's responsibility to ensure that covered entities have access to 340B pricing for covered outpatient drugs sold by wholesalers and distributors. They contend that manufacturers should not be responsible for the conduct of their agents, since an agent's actions are not knowing and intentional on the part of the manufacturer and since these actions are not within the manufacturers' control. A number of commenters pointed out that manufacturers may provide wholesalers and distributers the 340B pricing but covered entities may not purchase drugs at 340B pricing because wholesalers and distributers may add fees that may raise the price of drugs above the 340B ceiling price. Clarification was requested related to when actions by a wholesaler would be attributed to manufacturers when assessing CMPs, and whether a distribution fee charged by a wholesaler could cause an overcharge.

    Response: Manufacturers are ultimately responsible for ensuring a covered entity receives a drug at or below the 340B ceiling price as stated in the statute and per this final rule. Manufacturers also have control over the distribution of covered outpatient drugs, including those distributed by wholesalers, distributers, and agents wherein the terms and conditions of the sales set through these distribution arrangements are set by the manufacturer via a contract agreed to and between the manufacturer and the distributors. This final rule applies solely to manufacturers, even though other third parties have a role in ensuring the covered entity receives a drug at or below the 340B ceiling price. Manufacturers must consider the wholesaler role in this process and work out issues in good faith and in normal business arrangements regarding the assurance that the covered entity is receiving the appropriate prices. Failure to ensure the covered entities are receiving the 340B ceiling prices through a third party may be grounds for the assessment of CMPs under this final rule. HHS does clarify, however, that fees charged directly by a wholesaler or other distributor are not considered part of the 340B ceiling price and would not be considered as part of assessing an instance of an overcharge.

    Comment: Commenters asked for a clarification that specialty pharmacies are not considered “specialty distribution or wholesalers” and thus are not required to provide 340B pricing. Other commenters claimed that the requirements set forth under this section are not consistent with the non-discrimination policy, which allows manufacturers to establish alternate allocation procedures. Commenters requested clarification that CMPs would not apply in a situation where a covered entity purchased product in the marketplace when the manufacturer was employing a distribution system compliant with HRSA's non-discrimination guidance (340B Program Notice Release No. 2011-1.1 (May 23, 2012)). Some commenters asked HHS to clarify that a refusal by the covered entity to purchase drugs through a limited distribution arrangement should not be interpreted as the manufacturer's refusal to sell or make drugs available at the 340B price for purposes of CMPs.

    Response: All requirements as set forth in this final rule for offering the 340B ceiling price to covered entities apply regardless of the distribution system. If a manufacturer is using a specialty pharmacy to distribute covered outpatient drugs, it must ensure the covered entity is not overcharged if drugs are accessed through that pharmacy. As to comments suggesting that the rule is inconsistent with the current non-discrimination policy, HHS does not believe that is the case. Consistent with section 340B(a)(1) of the PHSA, manufacturers are expected to provide the same opportunity for 340B covered entities and non-340B purchasers to purchase covered outpatient drugs when such drugs are sold through limited distributors or specialty pharmacies. Manufacturers may continue to develop limited distribution procedures provided that those arrangements follow HHS established policy. HHS will take into consideration whether a manufacturer has submitted an alternate allocation plan to HHS when a manufacturer is being investigated for a possible overcharge, whether this plan is compliant with the 340B non-discrimination policy, and whether the manufacturer is following its plan.

    Comment: Commenters argued that HHS is attempting to interpret and apply the “shall offer” provision through this rule. Some commenters claimed that CMPs do not apply to a shall offer provision until a manufacturer signs a PPA that includes that provision.

    Response: Section 340B(a)(1) of the PHSA provides that a manufacturer shall offer each covered entity covered outpatient drugs for purchase at or below the applicable ceiling price if such drug is made available to any other purchaser at any price. This particular provision of section 340B(a)(1) is separate and distinct from the provision pertaining to the calculation of 340B ceiling prices. Because this final rule is applicable to the provision of section 340B(a)(1) pertaining to the calculation of the 340B ceiling price, the language in the statute regarding “shall offer” will not be addressed in this final rule.

    Comment: Commenters asked HHS not to finalize the proposed rule provision that an instance of overcharging would be considered at the NDC level and may not be offset by other discounts provided on any other NDC or discounts provided on the same NDC on other transactions, orders, or purchases. They argue that offsetting is an industry practice and should not meet the knowing and intentional standard. Still other commenters pointed out that HHS has not developed a process for refunds and without such a standardized refund process, the use of offsets should be allowed. For these reasons, the commenters asked that HHS finalize the regulation to allow for offsets. Commenters also claimed that if finalized, HHS would make the offering of sub-ceiling prices mandatory rather than voluntary. Calculating refunds based only on restatements that lower the ceiling price, without accounting for restatements that raise the ceiling price, would transform the voluntary nature of offering sub-ceiling prices into a requirement. Other commenters favored allowing offsetting but providing covered entities a mechanism to contest the offsets.

    Response: As proposed, and finalized in this rule, an instance of overcharging is considered at the 11-digit NDC level and may not be offset by other discounts provided on any other NDC or discounts provided on the same NDC on other transactions, orders, or purchases. The 340B statute is specific to ensuring each covered outpatient drug is offered at or below the 340B ceiling price. However, HHS does not intend to prevent manufacturers from using the industry's practice of netting overcharges and undercharges, or from restating ceiling prices based on pricing data submitted to CMS, to the extent that there is agreement between the manufacturer and covered entity.

    In regards to comments based on the refund process, HHS has finalized that an instance of an overcharge may occur at the time of initial purchase or when subsequent ceiling price recalculations occur and the manufacturer refuses to refund or issue a credit to a covered entity. HHS has clarified in the final rule that this would include refusal to refund covered entities according to § 10.10(c) of the final rule with regards to new drug price estimation and would include refusal to refund a covered entity after restatements to CMS. If a covered entity is not refunded when there is an overcharge, the covered entity, in essence paid above the 340B ceiling price. While HHS has finalized in this rule the requirement to refund if there is an overcharge, the specific refund procedures will be addressed under separate guidance. Until there is final guidance in place regarding refund procedures, manufacturers and covered entities should work in good faith and refund in a reasonable manner that is documented by the parties involved.

    Regarding the statement that not allowing offsets would force manufacturers to sell below 340B ceiling prices, the statute is specific in addressing when a manufacturer overcharges a covered entity and it does not address refunds by covered entities if the manufacturer provides a price below the 340B ceiling price. Therefore, it will not be addressed in the final rule.

    Comment: Some commenters asked HHS not to finalize the rule as proposed related to penalizing a manufacturer for failure or refusal to refund or credit a covered entity. They pointed out that HHS has not developed a mechanism to provide such subsequent price recalculations and has not established or operationalized a mechanism to retroactively revise 340B pricing based on revised Medicaid metrics. Other commenters stated that finalizing the rule is premature since HHS has not developed a process for credits and refunds.

    Response: HHS has finalized that an instance of an overcharge may occur at the time of initial purchase or when subsequent ceiling price recalculations occur and the manufacturer refuses to refund or issue a credit to a covered entity. This would include refusal to refund covered entities according to § 10.10(c) of the final rule with regards to new drug price estimation and would include refusal to refund a covered entity after restatements to CMS. If a covered entity is not refunded when there is an overcharge, the covered entity, in essence paid above the 340B ceiling price. The final rule requires a refund if there is an overcharge and specific refund procedures will be addressed under separate guidance. HHS does not believe that the requirements of this rule are dependent on the separate issue of how to operationalize a refund process. Until there is final guidance in place regarding the refund procedures, manufacturers and covered entities should work in good faith and refund in a reasonable manner that is documented by the parties involved.

    Comment: Some commenters supported the rule as proposed but asked HHS to allow covered entities time to request a reclassification of prior purchases as 340B eligible. They asked that HHS finalize the rule to require manufacturers to honor a covered entity's request to reclassify a purchase from non-340B to 340B and to issue a corresponding refund if a covered entity requests such a reclassification within 365 days of purchase.

    Response: HHS continues to maintain the decision that a manufacturer's failure to provide the 340B ceiling is not considered an overcharge if the covered entity did not initially identify the purchase to the manufacturer as 340B eligible at the time of purchase. HHS does not authorize covered entities to reclassify a purchase as 340B eligible after the fact. Therefore, HHS has removed this example from the final regulation and instead includes it as an example of what would not be considered an instance of overcharging in the preamble to this rule. Covered entities participating in the 340B Program are responsible for requesting 340B pricing at the time of the original purchase. If a covered entity wishes to reclassify a previous purchase as 340B, covered entities should first notify manufacturers and ensure all processes are fully transparent with a clear audit trail that reflects the actual timing and facts underlying a transaction. The covered entity retains responsibility for ensuring full compliance and integrity of its use of the 340B Program.

    Comment: Commenters supported the proposal that it could be considered an instance of overcharging when a manufacturer's documented refusal to sell or make drugs available at the 340B price results in the covered entity purchasing at the non-340B price. However, some commenters asked HHS to clarify the term “documented refusal” mentioned in the preamble. They suggested that the following examples not constitute a documented refusal:

    • Communications between a manufacturer (or a wholesaler) and a covered entity relating to verifying eligibility for 340B prices prior to a sale, or

    • A manufacturer's failure to provide the 340B ceiling price to a covered entity that has violated the prohibition against diversion or duplicate discounting.

    Response: Covered entity orders of non-340B priced drugs will not subsequently be considered an instance of overcharging unless the manufacturer's documented refusal to sell or make drugs available at the 340B price resulted in the covered entity purchasing at the non-340B price. When a manufacturer's documented refusal to sell or make drugs available at the 340B ceiling price results in the covered entity purchasing at the non-340B price, a manufacturer's sale at the non-340B price could be considered an instance of overcharging. An example of “documented refusal” would include any type of manufacturers' written communication related to reasons a manufacturer is not providing 340B ceiling prices to either a single covered entity or group of covered entities. HHS does not agree that a manufacturer could consider not selling a 340B drug at the 340B ceiling price to a covered entity based on possible non-compliance with program requirements. Regarding verifying the eligibility of a covered entity, the 340B public database lists all covered entities eligible to purchase 340B drugs in any given quarter. The 340B public database should be used by all stakeholders to determine and verify covered entity eligibility. In addition to the example provided above as “documented refusal,” OIG would also review information related to such a circumstance on a case-by-case basis to determine if a manufacturer has overcharged a covered entity and whether the threshold is met to apply CMPs. HHS notes that we are removing this specific example from the final regulation and include it as an example of what would not be considered an instance of overcharging in the preamble to this rule.

    Comment: Some commenters requested that HHS not require that an act be “intentional” when imposing CMPs and that the penalty be higher than $5,000.

    Response: Section 340B(d)(1)(B)(vi) of the PHSA provides for the imposition of civil monetary penalties on manufacturers that knowingly and intentionally charge a covered entity a price for purchase of a drug that exceeds the 340B ceiling price. Additionally, section 340B(d)(1)(B)(vi)(II) of the PHSA states that CMPs “shall not exceed $5,000 for each instance of overcharging.” Therefore, HHS has no authority to modify the standard of intent, and any CMPs assessed will be done in accordance with the amount specified in the 340B statute, as adjusted annually for inflation pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (section 701 of Pub. L. 114-74).

    Comment: A few commenters stated that when imposing CMPs, certain documentation should be required to establish that there was a “knowing and intentional” overcharge. They suggested that evidence should include documentation that the manufacturer received a request for the ceiling price by the covered entity, and either refused in writing to provide the ceiling price, or failed to execute a ceiling price transaction within a specified period of time.

    Response: The OIG will determine, upon review of the case, the appropriate documentation and other information that may be required to determine if a CMP should be applied.

    Comment: Commenters requested that the rule specify that HHS should not attempt to recover any penalties until at least 60 days after the end of any appeal or judicial review. It was also requested that, should a party seek data in relation to a CMP proceeding from a third party, such as a wholesaler or software vendor, the party seeking data may compensate the third party for their assistance, and that the third party may require that compensation. Commenters also recommended that the rule provide for confidentiality requirements in CMP proceedings, in order to ensure the confidentiality of 340B pricing.

    Response: HHS understands the importance of maintaining the confidentiality of 340B ceiling price data and will handle such data accordingly. More broadly, the pertinent procedures outlined in 42 CFR parts 1003 and 1005 will be followed in matters involving the imposition of CMPs and any appeals therefrom.

    Comment: Several commenters suggested that the funds collected from CMPs should be directed to OIG to support the enforcement of CMPs, to the HRSA Office of Pharmacy Affairs, and for HHS to create a 340B ceiling price database.

    Response: While HHS appreciates these comments, they are beyond the statutory authority of the 340B Program and this final rule.

    Comment: Several commenters supported HHS delegating the authority to levy CMPs to OIG, and recommended that the delegation of authority to OIG be explicitly stated in the regulation, rather than mentioned in the preamble. Additionally, several commenters were also concerned that at proposed § 10.11(a), in the sentence “This penalty will be imposed pursuant to the procedures at 42 CFR part 1003 and 1005” the term “procedures” may be read to not encompass definitions and standards for CMPs. Therefore, they suggested modifying the sentence to state, “Pursuant to a delegation of authority, the HHS Office of Inspector General (OIG) will have the authority to bring CMP actions utilizing the definitions, standards, and procedures applied to civil monetary penalties under 42 CFR parts 1003 and 1005.” It was also suggested to add a definition of “knowingly and intentionally” to section 1003.101 of the OIG regulations.

    Response: HHS does not believe it necessary to add the delegation of authority to OIG in the regulatory text. HHS believes that pursuant to a separate delegation of authority, OIG has the authority to handle CMP actions utilizing the definitions, standards, and procedures applied to civil monetary penalties under 42 CFR parts 1003 and 1005, as applicable. Consistent with the proposed rule, we have finalized the regulatory text indicating that CMPs will be imposed pursuant to the procedures contained at 42 CFR part 1003. No further rulemaking is required to apply the procedures at 42 CFR part 1003 to the imposition of CMPs. HHS will monitor activities relating to the evaluation and pursuit of CMPs and, if necessary, will consider issuing additional guidance about procedures applicable to such actions.

    Comment: A few commenters were concerned about the decision to delegate CMP actions to OIG. They stated that HHS has not identified a specific delegation, and that 42 CFR parts 1003 and 1005 only provide for the imposition of CMPs under specific statutory authorities, which do not include the 340B statute's CMP provisions. They argued that unless OIG amends their regulations to apply them to a 340B proceeding, HHS will need to develop, take comments on, and ultimately finalize a new proposal setting out procedures for seeking and imposing CMPs against manufacturers. A few commenters noted that some portions of 42 CFR parts 1003 and 1005 are inapplicable in a 340B context.

    Response: As noted above, a delegation of authority to OIG for a CMP from the Secretary of HHS is sufficient. HHS does not perceive there to be any conflict between the procedural aspects of 42 CFR part 1003 and the imposition of CMPs. HHS notes that 42 CFR part 1005 applies to appeals of exclusions and civil monetary penalties and assessments and would not be directly relevant to the initial imposition of a CMP. Accordingly, HHS finalized the regulatory text indicating that CMPs will be imposed pursuant to the applicable procedures contained at 42 CFR part 1003. No further rulemaking is required to apply the procedures at 42 CFR part 1003 to the imposition of CMPs. HHS will monitor activities relating to the evaluation and pursuit of CMPs and, if necessary, will consider issuing additional guidance about procedures applicable to such actions.

    III. Regulatory Impact Analysis

    HHS has examined the effects of this rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 8, 2011), the Regulatory Flexibility Act (September 19, 1980, Pub. L. 96-354), the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132 on Federalism (August 4, 1999).

    Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 is supplemental to and reaffirms the principles, structures, and definitions governing regulatory review as established in Executive Order 12866, emphasizing the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action that is likely to result in a rule: (1) Having an annual effect on the economy of $100 million or more in any 1 year, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities (also referred to as “economically significant”); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year), and a “significant” regulatory action is subject to review by the Office of Management and Budget (OMB).

    This final rule will not have economic impacts of $100 million or more in any 1 year, and, therefore, has not been designated an “economically significant” rule under section 3(f)(1) of Executive Order 12866. The 340B Program as a whole creates significant savings for entities purchasing drugs through the program, with total savings estimated to be $6 billion in CY 2015.1 However, this final rule would not significantly impact the Program. This final rule codifies current policies, some of which have been modified, regarding calculation of the 340B ceiling price and manufacturer civil monetary penalties. HHS does not anticipate that the imposition of civil monetary penalties would result in significant economic impact.

    1 In CY 2015, 340B covered entities spent approximately $12 billion on the total purchases of 340B drugs under the 340B Program. This data was obtained from the 340B Prime Vendor Program. This amount represents 2.6 percent of the overall prescription drug market. Assuming covered entities pay 25 to 50 percent less than non-340B prices, HHS calculated the estimated total savings in CY 2015 to be approximately $6 billion.

    The 340B Program uses information that already must be reported under Medicaid to calculate the statutorily defined 340B ceiling price as required by this final rule. Because the components of the 340B ceiling price are already calculated by the manufacturers under the MDRP and reported to CMS, HHS does not believe this portion of the final rule would have an impact on manufacturers. The impact on manufacturers would also be limited with respect to calculation of the 340B ceiling price as defined in this final rule due to the fact that manufacturers regularly calculate the 340B ceiling price and have been doing so since the program's inception.

    Separate from calculation of the 340B ceiling price, manufacturers are required to ensure they do not overcharge covered entities, and a civil monetary penalty could result from overcharging if it met the standards in this final rule. HHS envisions using these penalties in rare situations. Since the Program's inception, issues related to overcharges have been resolved between a manufacturer and a covered entity and any issues have generally been due to technical errors in the calculation. For the penalties to be used as defined in the statute and in this rule, the manufacturer overcharge would have to be the result of a knowing and intentional act. Based on anecdotal information received from covered entities, HHS anticipates that this would occur very rarely if at all.

    This rulemaking also proposes that a manufacturer charge a $0.01 per unit of measure for a drug with a 340B ceiling price below $0.01. A small number of manufacturers have informed HRSA over the last several years that they charge more than $0.01 for a drug with a ceiling price below $0.01. However, this is a long-standing HRSA policy, and HRSA believes the majority of manufacturers currently follow the practice of charging a $0.01. Therefore, this portion of the regulation would not result in a significant impact. This final regulation would allow HRSA to enforce the policy in a manner that would require the manufacturer to charge a $0.01, and it is likely that manufacturers would charge $0.01 in order to avoid the imposition of a civil monetary penalty for overcharging a covered entity. HRSA believes manufacturers that currently do not comply will come into compliance, which will result in the covered entity paying less for these drugs. There will be a cost transfer from the covered entity to the manufacturer.

    HHS recognizes that certain administrative costs would be incurred for compliance with this final rule. HHS does not collect data related to such administrative costs, and compliance costs are expected to vary significantly. HHS believes it is reasonable to assume that manufacturers would use one-half to one full-time compliance officer to ensure compliance with the requirements in this final rule. According to the Bureau of Labor Statistics, the mean annual wage for a pharmaceutical compliance officer (NAICS 325400, occupation code 13-1041) is $80,170 in 2015. Inclusion of benefits and overhead (resulting in a total labor cost of 1.5 times mean annual wage) yields a total annual cost of $120,255 for one compliance officer. Thus, the estimated annual cost for labor across all 600 manufacturers is between $36,067,500 and $72,153,000.

    We received the following comments on the anticipated impacts on drug manufacturers:

    Comment: Regarding the proposed rule's regulatory impact analysis, some commenters disagree that the proposed rule is “not likely to have an economic impact of $100 million or more in any 1 year” and objects to its failure to designate the proposed rule as economically significant. They argue that resources that would be required to comply with the obligations of this proposed rule would extend beyond a compliance officer and would include the re-writing and implementation of new policies and procedures, and the training of staff.

    Response: The proposed rule and the policies finalized herein codify several current policies, some of which have been modified, regarding the calculation of the 340B ceiling price and introduce manufacturer civil monetary penalties. HHS reviewed the comments submitted in response to the NPRM, and has attempted to minimize burden for both manufacturers and covered entities in its formulation of the final rule, specifically regarding the policy of estimating new drug prices (see § 10.10(c)). With the modification made in this final rule, we believe that stakeholders' administrative burdens' with respect to this policy will be minimal. Through the comments that HHS received during both comment periods on the estimation of new drug prices, commenters expressed support for this approach and maintained that it created an even playing field across all stakeholders as the calculation of the 340B ceiling price is easily verifiable by covered entities and reduces administrative burden. HHS also understands that based on the comments received, the methodology for calculating new drugs as set forth in this final rule is already taking place in the marketplace and will thus not create any additional burden.

    Manufacturers have always been required to ensure that they do not overcharge covered entities per the section 340B(d)(1). This final rule incorporates a penalty for knowingly and intentionally overcharging covered entities, as discussed in subsequent sections of this final rule (see § 10.11(a)). Under current practice, HHS encourages manufacturers and covered entities to work in good faith to resolve any pricing discrepancies. HHS anticipates this practice to continue and anticipates that the imposition of penalties to occur only on a rare basis. The remaining policies in the proposed rule and finalized in this rule reflect current 340B Program policy and should not result in significant economic impacts.

    Comment: Commenters note that manufacturers would have to build into their systems the capacity to identify all sales transactions with covered entities at the originally charged price, as well as any recalculated price, for up to three full years after the original transaction. They explain that these prices along with issuing the actual refunds to the covered entities could easily exceed $100 million per year.

    Response: We note that the 340B Program uses data that manufacturers already report to CMS under the MDRP (AMP, URA) to calculate the statutorily defined 340B ceiling price. As these components of the 340B ceiling price are already calculated by manufacturers under the MDRP, HHS does not believe that this will cause additional burden on manufacturers.

    The Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) and the Small Business Regulatory Enforcement and Fairness Act of 1996, which amended the RFA, require HHS to analyze options for regulatory relief of small businesses. If a rule has a significant economic effect on a substantial number of small entities, the Secretary must specifically consider the economic effect of the rule on small entities and analyze regulatory options that could lessen the impact of the rule. HHS will use an RFA threshold of at least a three percent impact on at least five percent of small entities.

    The final rule would affect drug manufacturers (North American Industry Classification System code 325412: Pharmaceutical Preparation Manufacturing). The small business size standard for drug manufacturers is 750 employees. Approximately 600 drug manufacturers participate in the 340B Program. While it is possible to estimate the impact of this final rule on the industry as a whole, the data necessary to project changes for specific manufacturers or groups of manufacturers is not available, as HRSA does not collect the information necessary to assess the size of an individual manufacturer that participates in the 340B Program.

    This final rule clarifies statutory requirements for manufacturers, including small manufacturers, and codifies current ceiling price calculation policies in regulation. HHS is unaware of small manufacturers who do not follow the ceiling price policies finalized by this regulatory action. The specific elements required as part of the calculation of the ceiling price are elements that manufacturers are already required to utilize as part of their participation in the 340B Program. HHS expects that these elements would continue to be available. Therefore, calculation of the ceiling price would not result in an economic impact or create additional administrative burden on these businesses.

    HHS has determined, and the Secretary certifies that this final rule will not have a significant impact on the operations of a substantial number of small manufacturers; therefore, we are not preparing an analysis of impact for the purposes of the RFA. HHS, estimates that the economic impact on small manufacturers will be minimal and less than three percent.

    Unfunded Mandates Reform Act

    Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before issuing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year.” In 2015, that threshold level is approximately $144 million. HHS does not expect this final rule to exceed the threshold.

    Executive Order 13132—Federalism

    HHS has reviewed this final rule in accordance with Executive Order 13132 regarding federalism, and has determined that it does not have “federalism implications.” This final rule would not “have substantial direct effects on the States, or on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” The provisions in this final rule would not adversely affect the following family elements: Family safety, family stability, marital commitment; parental rights in the education, nurture, and supervision of their children; family functioning, disposable income or poverty; or the behavior and personal responsibility of youth, as determined under Section 654(c) of the Treasury and General Government Appropriations Act of 1999.

    Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that OMB approve all collections of information by a Federal agency from the public before they can be implemented. This final rule is projected to have no impact on current reporting and recordkeeping burden for manufacturers under the 340B Program. Changes finalized in this rulemaking would result in no new reporting burdens.

    List of Subjects in 42 CFR Part 10

    Biologics, Business and industry, Diseases, Drugs, Health, Health care, Health facilities, Hospitals, 340B Drug Pricing Program.

    Dated: October 3, 2016. James Macrae, Acting Administrator, Health Resources and Services Administration. Sylvia M. Burwell, Secretary, Department of Health and Human Services. For the reasons set forth in the preamble, the Department of Health and Human Services revises 42 CFR part 10 to read as follows: PART 10—340B DRUG PRICING PROGRAM Subpart A—General Provisions Sec. 10.1 Purpose. 10.2 Summary of 340B Drug Pricing Program. 10.3 Definitions. Subpart B—340B Ceiling Price 10.10 Ceiling price for a covered outpatient drug. 10.11 Manufacturer civil monetary penalties. Authority:

    Sec. 340B of the Public Health Service Act (42 U.S.C. 256b) (PHSA), as amended.

    Subpart A—General Provisions
    § 10.1 Purpose.

    This part implements section 340B of the Public Health Service Act (PHSA) “Limitation on Prices of Drugs Purchased by Covered Entities.”

    § 10.2 Summary of 340B Drug Pricing Program.

    Section 340B of the PHSA instructs the Secretary of Health and Human Services to enter into agreements with manufacturers of covered outpatient drugs under which the amount to be paid to manufacturers by certain statutorily-defined covered entities does not exceed the 340B ceiling price.

    § 10.3 Definitions.

    For the purposes of this part, the following definitions apply:

    Average Manufacturer Price (AMP) has the meaning set forth in section 1927(k)(1) of the Social Security Act, as implemented in 42 CFR 447.504.

    Ceiling price means the maximum statutory price established under section 340B(a)(1) of the PHSA and this section.

    CMS is the Centers for Medicare & Medicaid Services.

    Covered entity means an entity that is listed within section 340B(a)(4) of the PHSA, meets the requirements under section 340B(a)(5) of the PHSA, and is registered and listed in the 340B database.

    Covered outpatient drug has the meaning set forth in section 1927(k) of the Social Security Act.

    Manufacturer has the meaning set forth in section 1927(k) of the Social Security Act, as implemented in 42 CFR 447.502.

    National Drug Code (NDC) has the meaning set forth in 42 CFR 447.502.

    Pharmaceutical Pricing Agreement (PPA) means an agreement described in section 340B(a)(1) of the PHSA.

    Quarter refers to a calendar quarter unless otherwise specified.

    Secretary means the Secretary of the Department of Health and Human Services and any other officer of employee of the Department of Health and Human Services to whom the authority involved has been delegated.

    Subpart B—340B Ceiling Price
    § 10.10 Ceiling price for a covered outpatient drug.

    A manufacturer is required to calculate the 340B ceiling price for each covered outpatient drug, by National Drug Code (NDC) on a quarterly basis.

    (a) Calculation of 340B ceiling price. The 340B ceiling price for a covered outpatient drug is equal to the Average Manufacturer Price (AMP) from the preceding calendar quarter for the smallest unit of measure minus the Unit Rebate Amount (URA) and will be calculated using six decimal places. HRSA will publish the 340B ceiling price rounded to two decimal places.

    (b) Exception. When the ceiling price calculation in paragraph (a) of this section results in an amount less than $0.01 the ceiling price will be $0.01.

    (c) New drug price estimation. A manufacturer must estimate the 340B ceiling price for a new covered outpatient drug as of the date the drug is first available for sale. That estimation should be calculated as wholesale acquisition cost minus the appropriate rebate percentage until an AMP is available, which should occur no later than the 4th quarter that the drug is available for sale. Manufacturers are required to calculate the actual 340B ceiling price as described in paragraph (a) of this section and offer to refund or credit the covered entity the difference between the estimated 340B ceiling price and the actual 340B ceiling price within 120 days of the determination by the manufacturer that an overcharge occurred.

    § 10.11 Manufacturer civil monetary penalties.

    (a) General. Any manufacturer with a pharmaceutical pricing agreement that knowingly and intentionally charges a covered entity more than the ceiling price, as defined in § 10.10, for a covered outpatient drug, may be subject to a civil monetary penalty not to exceed $5,000 for each instance of overcharging, as defined in paragraph (b) of this section. This penalty will be imposed pursuant to the applicable procedures at 42 CFR part 1003. Any civil monetary penalty assessed will be in addition to repayment for an instance of overcharging as required by section 340B(d)(1)(B)(ii) of the PHSA.

    (b) Instance of overcharging. An instance of overcharging is any order for a covered outpatient drug, by NDC, which results in a covered entity paying more than the ceiling price, as defined in § 10.10, for that covered outpatient drug.

    (1) Each order for an NDC will constitute a single instance, regardless of the number of units of each NDC ordered. This includes any order placed directly with a manufacturer or through a wholesaler, authorized distributor, or agent.

    (2) Manufacturers have an obligation to ensure that the 340B discount is provided through distribution arrangements made by the manufacturer.

    (3) An instance of overcharging is considered at the NDC level and may not be offset by other discounts provided on any other NDC or discounts provided on the same NDC on other transactions, orders, or purchases.

    (4) An instance of overcharging may occur at the time of initial purchase or when subsequent ceiling price recalculations due to pricing data submitted to CMS or new drug price estimations as defined in § 10.10(c) result in a covered entity paying more than the ceiling price due to failure or refusal to refund or credit a covered entity.

    [FR Doc. 2016-31935 Filed 1-4-17; 8:45 am] BILLING CODE 4165-15-P
    82 3 Thursday, January 5, 2017 Proposed Rules DEPARTMENT OF AGRICULTURE Food and Nutrition Service 7 CFR Part 250 RIN 0584-AE38 Revisions and Clarifications in Requirements for the Processing of Donated Foods AGENCY:

    Food and Nutrition Service (FNS), USDA.

    ACTION:

    Proposed rule.

    SUMMARY:

    This rule proposes to revise and clarify requirements for the processing of donated foods in order to: Incorporate successful processing options tested in demonstration projects, ensure accountability for donated foods provided for processing, and increase program efficiency. The rule would require multi-State processors to enter into National Processing Agreements to process donated foods into end products, permit processors to substitute commercially purchased beef and pork of U.S. origin and of equal or better quality for donated beef and pork, and would increase oversight of inventories of donated foods at processors. The rule also revises regulatory provisions in plain language, to make them easier to read and understand.

    DATES:

    To be assured of consideration, comments must be received on or before March 6, 2017.

    ADDRESSES:

    The Food and Nutrition Service invites interested persons to submit comments on this proposed rule. You may submit comments, identified by RIN number 0584-AE38, by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting comments.

    Email: Send comments to [email protected] Include RIN number 0584-AE38 in the subject line of the message.

    Mail: Send comments to Kiley Larson, Program Analyst, Policy Branch, Food Distribution Division, Food and Nutrition Service, U.S. Department of Agriculture, Room 500, 3101 Park Center Drive, Alexandria, Virginia 22302-1594.

    Hand Delivery or Courier: Deliver comments to the above address.

    FOR FURTHER INFORMATION CONTACT:

    Kiley Larson or Erica Antonson at the above address or telephone (703) 305-2680.

    SUPPLEMENTARY INFORMATION: I. Background

    The Department of Agriculture (the Department or USDA) provides donated foods to State distributing agencies for distribution to recipient agencies (e.g., school food authorities) participating in the National School Lunch Program (NSLP) and other child nutrition or food distribution programs. In accordance with Federal regulations in 7 CFR part 250, distributing agencies may provide the donated foods to commercial processors for processing into end products for use in NSLP or other food programs. For example, a whole chicken or chicken parts may be processed into precooked grilled chicken strips for use in NSLP. The ability to divert donated foods for processing provides recipient agencies with more options for using donated foods in their programs. The regulations ensure that State and recipient agencies, and program recipients, receive the full benefit of the donated foods provided to such processors for processing into end products. Distributing agencies must enter into agreements with processors to ensure compliance with the requirements in Federal regulations.

    Over the last 30 years, the quantity and variety of donated foods provided in the NSLP and other child nutrition programs has increased substantially. Donated foods meet the highest quality and safety standards and are selected by the Department to assist recipient agencies in offering nutritious and well-balanced meals that meet meal pattern and nutrition standards for meals served in child nutrition programs. Concurrently, the variety of end products offered by processors has increased and adapted to reflect the types of foods recipient agencies need. In the last several years, the Department's Food and Nutrition Service (FNS) has taken a number of steps to facilitate the use of donated foods by commercial processors in the interest of providing more efficient and effective service to school food authorities and other recipient agencies. Most of these changes have been implemented as a result of discussions with State and local program operators, processors and industry consultants.

    FNS has used its regulatory waiver authority in current 7 CFR 250.30(q) to initiate demonstration projects designed to better serve recipient agencies and foster a more efficient program. These demonstration projects have proven very informative as the industry and the needs of recipient agencies have evolved. Many of these methods tested, such as the expansion of permitted substitutions and the implementation of National Processing Agreements, have proven successful and are proposed for codification in this rule.

    In a final rule published in the Federal Register on October 23, 2002 at 67 FR 65011, 7 CFR part 250 was amended to expand the types of donated foods that processors were permitted to substitute with commercially purchased foods without prior FNS approval. The rule permitted processors to substitute donated fruits, vegetables, and eggs with commercially purchased foods of the same generic identity, of U.S. origin, and of equal or better quality than the donated foods. Additionally, limited substitution of donated poultry was permitted, in accordance with the processor's USDA-approved substitution plan. Substitution allows processors more flexibility and efficiency in producing finished end products for school food authorities which helps minimize cost while ensuring quality.

    In May 2013, FNS initiated a demonstration project which permitted processors with a USDA-approved substitution plan to substitute commercially purchased beef and pork for donated beef and pork, in accordance with the processor's USDA-approved substitution plan. In accordance with the terms of the demonstration project, as established in FNS policy memorandum FD-130: Processing—Substitution of USDA Beef and Pork, the commercial product must be of U.S. origin and of equal or better quality in all Departmental purchase specifications than the donated food. Among other requirements of the demonstration project, the substitution plan has required assurances that: (1) Processing is performed in plants under continuous Federal or State meat inspection; (2) the Department's Agricultural Marketing Service (AMS) graders monitor the process to ensure compliance with substitution requirements; (3) commercial product is purchased from an AMS-approved vendor in good standing and is tested to ensure that it is of equal or better quality in all Departmental purchase specifications, including specifications relating to acceptable tolerance levels for specific microorganisms, chemical residues, and fat; and (4) commercial product is subject to audited processes for humane handling, food defense, and threat agent testing.

    In October 2004, FNS initiated a demonstration project to allow multi-State processors to submit end product data schedules to FNS for review and approval at the national level, rather than submitting them to State distributing agencies for their approval. End product data schedules indicate the required yield of donated foods that must be obtained in their processing into end products. Review and approval of end product data schedules, however, is a time and labor-intensive activity for State distributing agencies. National approval of end product data schedules under the demonstration project has reduced the time and labor burden considerably for both distributing agencies and all multi-State processors since processors are not required to submit end product data schedules for approval in each State in which they operate.

    In conjunction with the demonstration project allowing national approval of end product data schedules, FNS requires multi-State processors to sign a National Processing Agreement. Under the National Processing Agreement, FNS monitors the processor's national inventory of donated foods, and holds and manages the processor's performance bond or letter of credit, which protects the value of the processor's donated food inventories. Under the demonstration project, the monitoring and protection of donated food inventories held by processors at the national level has further reduced the burden on distributing agencies. Distributing agencies may include other State-specific processing requirements and select the processor's nationally approved end products for sale in the State under their State Participation Agreements with multi-State processors.

    On August 24, 2006, FNS published a proposed a rule to revise and clarify requirements for the processing of donated foods (71 FR 50249). As part of this proposed rule, FNS proposed to retain title to donated foods delivered to multi-State processors until acceptance of finished end products by the State distributing or recipient agency. It was subsequently determined that FNS needed additional statutory authority to retain title to donated foods at the processor and the rule was not finalized pending legislative change. Section 4104 of the Agricultural Act of 2014 (Pub. L. 113-79, the Farm Bill) amended Section 17 of the Commodity Distribution Reform Act and WIC Amendments of 1987, 7 U.S.C. 612c note to provide that authority and the necessary statutory authority for FNS to promulgate regulations ensuring accountability of USDA Donated Foods.

    The regulatory amendments proposed in this rule would implement provisions of the Farm Bill related to processing of donated foods and incorporate into 7 CFR part 250 the processing options provided under the demonstration project described above. They would also more effectively ensure accountability for donated foods provided for processing while streamlining requirements to increase program efficiency for recipient agencies. Most significantly, the rule proposes to:

    (1) Require that FNS retain title of USDA Donated Foods while at multi-State processors;

    (2) Require each multi-State processor to sign a National Processing Agreement with FNS and to submit end product data schedules to the Department for approval at the national level;

    (3) Require multi-State processors to submit a performance bond or letter of credit to FNS to protect the value of the processors' donated food inventories;

    (4) Permit substitution of donated beef and pork with commercial beef and pork of U.S. origin and of equal or better quality in all Departmental purchase specifications than the donated food, provided applicable requirements are met, including a USDA-approved substitution plan;

    (5) Establish a title transfer exception dictating that when a recipient agency has contracted with a distributor to act as an authorized agent, title to finished end products containing donated foods transfers to the recipient agency upon delivery and acceptance by the contracted distributor;

    (6) Require processors providing end products containing donated foods to a distributor to enter into a written agreement with the distributor specifying the (a) distributor's financial liability for the replacement value of donated foods once delivered to the distributor; (b) frequency of reporting; and (c) applicable value pass through system; and

    (7) Require distributing agencies to more closely monitor donated food inventories at processors to ensure that processors do not maintain inventories in excess of what can be effectively utilized by recipient agencies in a timely manner.

    As discussed below, we propose to amend current §§ 250.2, 250.11, 250.18 and 250.19, and to completely revise § 250.30 under Subpart C, Processing and Labeling of Donated Foods. The revision of Subpart C would break out the single section in that subpart into 10 new sections to more clearly present the specific processing requirements. Lastly, we propose to rewrite all revised sections in plain language, to make them easier to read and understand but not to change or alter the interpretation and application of the revised sections. The proposed changes to 7 CFR part 250 are discussed in detail below.

    II. Discussion of the Rule's Provisions A. Definitions, § 250.2

    Due to developments in food distribution programs, and for the purpose of clarification, we propose to remove, revise, and add definitions in current § 250.2 relating to processing of donated foods. We propose to remove the definitions of “Contracting agency” and “Fee-for-service.” The term “Contracting agency” would be replaced throughout the proposed regulatory provisions with the specific agency (i.e., distributing and/or recipient agency) that may enter into a processing agreement. The meaning of the term “Fee-for-service” is clear in the context of the proposed regulatory provisions and no longer requires a separate definition.

    We propose to add definitions of “Backhauling,” “Commingling,” “End product data schedule,” “In-State Processing Agreement,” “National Processing Agreement,” “Recipient Agency Processing Agreement,” “Replacement value,” and “State Participation Agreement.” The definition of “Backhauling” would describe a means of delivery of donated food to a processor from a recipient agency's storage facility. The definition of “Commingling” would describe the common storage of donated foods with commercially purchased foods. The definition of “End product data schedule” would convey the important function of this document in describing the processing of donated foods into finished end products. Definitions of “National Processing Agreement,” “Recipient Agency Processing Agreement,” “State Participation Agreement,” and “In-State Processing Agreement” would help the reader understand the different types of processing agreements permitted. These processing agreements are further described in the proposed § 250.30. The definition of “Replacement value” would clarify the donated food value that must be used by processors to ensure compensation for donated foods lost in processing or other activities. The definition of “Replacement value” reflects the price in the market at the time that the Department assigns the value whereas the definition of “Contract value” in current regulations reflects the Department's current acquisition price, which is set annually.

    B. Delivery and Receipt of Donated Food Shipments, § 250.11

    We propose to amend current § 250.11(e), which describes the timing of transfer of title to donated foods and the agency to which title is transferred. Currently, title to donated foods transfers to the distributing or recipient agency upon its acceptance of the donated foods at the time and place of delivery. However, we also propose to add an exception to the timing of title transfer, in accordance with the amendments made by Section 4104 of the Farm Bill and the requirements under National Processing Agreements proposed in this rule. In the proposed § 250.32(a), we are proposing to require a multi-State processor to provide a performance bond or letter of credit to FNS to protect the value of the processor's donated food inventory in accordance with its National Processing Agreement. However, unless the Department retains title to the donated foods held in the inventory of a processor, FNS would not have the authority to call in the bond if the processor failed to comply with processing requirements. Hence, we propose in § 250.11(e) to state that title to donated foods provided to a multi-State processor, in accordance with its National Processing Agreement, transfers to the distributing or recipient agency, as appropriate, upon the acceptance of finished end products at the time and place of delivery.

    Many recipient agencies receiving finished end products from multi-State processors contract with a distributor to store end products and/or transport the finished end products to their facilities. The inclusion of distributors in the supply chain for finished end products creates challenges related to tracking and reporting the value of donated foods. Because processors are not a party to the contractual relationship between recipient agencies and distributors, processors lose control of finished end products once they are delivered to the distributors designated by each recipient agency. Therefore, we propose in this rulemaking that when a distributor is contracted by the recipient agency for the transportation and/or storage of finished end products and is acting as the recipient agency's authorized agent (i.e., purchasing processed end products containing donated foods on behalf of the recipient agency), title of donated foods would transfer to the recipient agency upon the acceptance of finished end products at the time and place of delivery at the recipient agency or the distributor acting as the authorized agent of the recipient agency, whichever happens first.

    Currently, in situations where recipient agencies contract with a distributor to store and/or transport processed end products containing donated foods and act as their authorized agent, complications can arise that may impede the transfer of title described above. Some processors and distributors, working in this manner, manufacture and/or order some processed end products prior to receiving donated food orders from recipient agencies. This results in processors and distributors “pooling” their inventories of processed end products, particularly for products containing nonsubstitutable items. In other words, processors will manufacture finished end products and distributors will order and receive processed end products from the processor without either entity knowing specifically which recipient agency will order or receive those items. This is most commonly due to processors and/or distributors manufacturing/ordering end products in advance of receiving orders from recipient agencies based on forecasted estimates. The diagram below illustrates the differences between “pooled” and “non-pooled” inventory in these specific cases (i.e., nonsubstitutable donated food traveling through a supply chain that includes a distributor acting as the recipient agency's authorized agent).

    In the case of “pooled” inventories (as illustrated below), under current regulations title cannot transfer to the recipient agency at the time of delivery at their contracted distributor because neither the processor nor the distributor know which recipient agency will receive which products. The intent of the proposed § 250.11(e) is to discourage the pooling of processed end products containing nonsubstitutable donated foods (i.e., end products must be assigned to a specific recipient agency by the time they are accepted at a distributor so that the title may be transferred to the correct recipient agency).

    Current Practice:

    EP05JA17.314

    This shift in the timing of title transfer would impact the calculation of performance bonds currently being required of multi-State processors through National Processing Agreements. All other factors held equal, some multi-State processors would encounter a reduction in the required annual bond amount, as determined by FNS, due to the transfer of title of donated foods to the recipient agency taking place at an earlier stage in the supply chain. Although this shift would reduce inventories and bonding amounts for some multi-State processors, it would also place more responsibility on recipient agencies to track and protect the value of donated food inventories being managed by their designated distributors, acting as their agents.

    C. Reporting Requirements, § 250.18

    In current § 250.18(b), processors are required to submit monthly performance reports to the distributing agency, in accordance with current § 250.30(m). We propose to retain this requirement but to clarify that processors must submit performance reports and other supporting documentation, as required by the distributing agency or by FNS, in accordance with proposed § 250.37.

    D. Recordkeeping Requirements, § 250.19

    In current § 250.19(a), processors must maintain records documenting the sale of end products to recipient agencies, including the sale of such end products by distributors. As discussed later in the preamble, we are proposing to include specific recordkeeping requirements for processors in the proposed § 250.37(d). Hence, we propose to amend this section to require that processors must comply with the applicable recordkeeping requirements in Subpart C of this part and with any other recordkeeping requirements included in their agreements.

    E. Subpart C—Processing of Donated Foods

    As previously mentioned, we propose to completely revise current Subpart C, Processing and Labeling of Donated Foods, which currently contains only § 250.30. In revising Subpart C, we would restructure it into 10 new sections, to more clearly present the specific processing requirements, and rewrite these sections in plain language. We propose to include the requirements for specific processing activities in the order in which they most commonly occur; i.e., entering into processing agreements, processing of donated foods into end products, sale of end products, submission of reports, etc. We also propose to change the heading of Subpart C to Processing of Donated Foods. The new sections proposed under the revised Subpart C include the following:

    250.30  Processing of donated foods into end products. 250.31  Procurement requirements. 250.32  Protection of donated food value. 250.33  Ensuring processing yields of donated foods. 250.34  Substitution of donated foods. 250.35  Storage, food safety, quality control, and inventory management. 250.36  End product sales and crediting for the value of donated foods. 250.37  Reports, records, and reviews of processor performance. 250.38  Provisions of agreements. 250.39  Miscellaneous provisions. 1. Processing of Donated Foods Into End Products, § 250.30

    In the proposed § 250.30, we propose to state clearly why donated foods are provided to processors for processing, and to describe the different types of processing agreements permitted, including National, In-State, and Recipient Agency Processing Agreements. However, we propose to include the specific provisions required for each type of agreement in the proposed § 250.38, as the reason for their inclusion would only be clear with an understanding of the processing requirements contained in the preceding sections.

    In the proposed § 250.30(a), we propose to describe the benefit of providing donated foods to a processor for processing into end products, and to clarify that a processor's use of a commercial facility to repackage donated foods, or to use donated foods in the preparation of meals, is also considered processing in 7 CFR part 250.

    In current § 250.30(b), a distributing agency may contract with a processor to process donated foods, or may permit subdistributing or recipient agencies to contract with processors. Currently, most donated foods are processed in accordance with National Processing Agreements or In-State Processing Agreements. However, some large school food authorities currently have agreements with processors to process donated foods and contracts to purchase the finished end products, as permitted by distributing agencies. Additionally, as previously described, FNS has permitted multi-State processors to process donated foods in accordance with National Processing Agreements under a demonstration project initiated in 2004.

    In the proposed § 250.30(b), we propose to clarify that processing of donated foods must be performed in accordance with an agreement between the processor and FNS, between the processor and the distributing agency, or, if permitted by the distributing agency, between the processor and a recipient agency (or subdistributing agency). We propose to include in proposed § 250.30(b) the stipulation in current § 250.30(c)(5)(ix) that an agreement may not obligate the distributing or recipient agency, or the Department, to provide donated foods to a processor for processing. USDA purchase and donation of foods is dependent on market conditions, and specific foods may not be available for donation in certain years. We propose to clarify that the agreements described in this section are required in addition to, not in lieu of, competitively procured contracts required in accordance with § 250.31. We propose to revise the requirement in current § 250.30(c)(4) that indicates which official of the processor must sign the processing agreement and more simply state in proposed § 250.30(b) that the processing agreement must be signed by an authorized individual acting for the processor. We propose to remove the stipulation in current § 250.30(c)(1) that a processing agreement must be in standard written form.

    In accordance with the National Processing Agreement permitted under the demonstration project, FNS reviews and approves end product data schedules submitted by multi-State processors, and holds and manages the processor's performance bond or letter of credit to protect the value of donated food inventories. FNS also monitors the processor's national donated food inventory through the review of performance reports, which processors must submit to FNS on a monthly basis. Hence, in the proposed § 250.30(c), we would require that a multi-State processor enter into a National Processing Agreement with FNS to process donated foods into end products, in accordance with end product data schedules approved by FNS. We would also indicate that, in the proposed § 250.32, FNS holds and manages the multi-State processor's performance bond or letter of credit to protect the value of donated food inventories under the National Processing Agreement. We would indicate that FNS does not itself procure or purchase end products under such agreements, and that a multi-State processor must enter into a State Participation Agreement with the distributing agency in order to sell nationally approved end products in the State, as in the proposed § 250.30(d).

    In the proposed § 250.30(d), we would require the distributing agency to enter into a State Participation Agreement with a multi-State processor to permit the sale of end products produced under the processor's National Processing Agreement in the State, as previously indicated. The State Participation Agreement is currently utilized in conjunction with National Processing Agreements in the demonstration project. Under the State Participation Agreement, we propose to permit the distributing agency to select the processor's nationally approved end products for sale to eligible recipient agencies within the State or to directly purchase such end products. The processor may provide a list of such nationally approved end products in a summary end product data schedule. We also propose to permit the distributing agency to include other processing requirements in the State Participation Agreement, such as the specific methods of end product sales permitted in the State, in accordance with the proposed § 250.36, (e.g., a refund, discount, or indirect discount method of sales), or the use of labels attesting to fulfillment of meal pattern requirements in child nutrition programs. We propose to require the distributing agency to utilize selection criteria in current § 250.30(c)(1) to select processors with which to enter into State Participation Agreements.

    Currently, a distributing agency must enter into an In-State Processing Agreement with an in-State processor (i.e., a processor which only services recipient agencies in a single State via a production facility located in the same State) to process donated foods into finished end products for sale in the State. Under such an agreement, the distributing agency may procure the services and purchase the finished end products for distribution to eligible recipient agencies. However, it may also select a number of processors with which it enters into such agreements and permit recipient agencies to purchase finished end products from them, in accordance with applicable procurement requirements. These latter types of processing agreements are commonly called “master agreements.” The distributing agency must utilize selection criteria in current § 250.30(c)(1) to select processors with which to enter into master agreements. Under all In-State Processing Agreements, the distributing agency must approve end product data schedules submitted by the processor, hold and manage the processor's performance bond or letter of credit, and assure compliance with all processing requirements.

    In the proposed § 250.30(e), we propose to clarify the distinction between master agreements and other In-State Processing Agreements and to include in this proposed section the required criteria in current § 250.30(c)(2) for selecting processors under master agreements. We propose to require that the distributing agency enter into an In-State Processing Agreement with an in-State processor to process donated foods, as currently required under the demonstration project.

    In current § 250.30(b)(3), the distributing agency may permit recipient agencies (or subdistributing agencies) to enter into agreements with processors to process donated foods and to purchase the finished end products. We propose to permit such agreements in the proposed § 250.30(f), and to refer to them as Recipient Agency Processing Agreements. We also propose to clarify that, under such agreements, the distributing agency may also delegate oversight and monitoring to the recipient agency to approve end product data schedules or select nationally approved end product data schedules, review processor performance reports, manage the performance bond or letter of credit of an in-State processor, and monitor other processing activities. All such activities must be performed in accordance with the requirements of this part. We propose to clarify that a recipient agency may also enter into a Recipient Agency Processing Agreement, and perform the activities described above, on behalf of other recipient agencies, in accordance with an agreement between the parties (such as in a school cooperative). We propose to require the recipient agency to utilize selection criteria in current § 250.30(c)(1) to select processors with which to enter into Recipient Agency Processing Agreements. We propose to include the requirement in current § 250.30(l) that the distributing agency approve all Recipient Agency Processing Agreements. In general, FNS recommends that distributing agencies consult with the State administering agency for the review and approval of these agreements, if necessary. State administering agencies have experience reviewing and establishing processes to review contracts which are similar to Recipient Agency Processing Agreements.

    In current § 250.30(b)(1), the distributing agency must test end products with recipient agencies prior to entering into processing agreements, to ensure that they will be acceptable to recipient agencies. Such testing is not required if end products have previously been tested, or have otherwise been determined to be acceptable to recipient agencies. We propose to include these requirements in the proposed § 250.30(g), but to clarify that the requirements only apply to distributing agencies that procure end products on behalf of recipient agencies or otherwise limit recipient agencies' access to the procurement of specific end products. We also propose to clarify that the distributing agency may permit recipient agencies to test end products. We also propose to amend the current requirement that the distributing agency develop a system to monitor product acceptability on a periodic basis by requiring instead that the distributing agency, or its recipient agencies, must monitor product acceptability on an ongoing basis.

    In current § 250.30(c)(5)(xv), a processor may not assign the processing agreement, or subcontract with another entity, to perform any aspect of processing without the written consent of the distributing agency. We propose to clarify, in the proposed § 250.30(h), that a processor may not assign any processing activities under its processing agreement, or subcontract with another entity to perform any aspect of processing, without the written consent of the other party to the agreement, which may be the distributing, subdistributing, or recipient agency, or FNS. We propose to permit the distributing agency to provide the required written consent as part of its State Participation Agreement or In-State Processing Agreement with the processor.

    In the proposed § 250.30(i), we would require agreements between processors and distributors. This proposal would provide distributing and recipient agencies with another tool to ensure that the value of donated foods and finished end products are properly credited and provided to recipient agencies when third party distributors exist in the supply chain between processors and recipient agencies. The agreement, initiated by the processor before releasing finished end products to a distributor, must reference, at a minimum, the financial liability (i.e., who must pay) for the replacement value of donated foods, not less than monthly end product sales reporting frequency, requirements under § 250.11, and the applicable value pass through system to ensure that the value of donated foods and finished end products are properly credited to recipient agencies. Distributing agencies could set additional requirements such as requiring that copies or templates of these agreements be included with the submission of signed State Participation Agreements.

    In current § 250.30(c)(1), processing agreements are limited to one year, but may provide for an option to extend the agreement for two additional one-year periods. In the proposed § 250.30(j), we propose to revise this requirement by permitting all agreements between a distributing, subdistributing, or recipient agency and a processor to be up to five years in duration. This proposal would permit the appropriate agency to determine the length of agreement that would be to its best advantage, within the five-year limitation, and would reduce the time and labor burden imposed on such agencies. We propose to make National Processing Agreements permanent. We propose to indicate that amendments to any agreements may be made as needed (e.g., when new subcontractors are added), with the concurrence of the parties to the agreement, and that such amendments would be effective for the duration of the agreement, unless otherwise indicated.

    We propose to remove the following requirements or statements in current § 250.30 related to processing agreements, as they are overly restrictive or unnecessary given current practice and administrative structure:

    • The requirement in current § 250.30(c)(1) that the FNS Regional Office review processing agreements.

    • The requirement in current § 250.30(c)(3) that the agreement be prepared and reviewed by State legal staff to ensure conformance with Federal regulations.

    • The requirement in current § 250.30(l) that the distributing agency provide a copy of the 7 CFR part 250 regulations to processors and a copy of agreements to processors and the FNS Regional Office.

    2. Procurement Requirements, § 250.31

    The requirements for the procurement of goods and services under Federal grants are established in 2 CFR part 200 and USDA implementing regulations at 2 CFR part 400 and Part 416, as applicable. In the proposed § 250.31(a), we propose to indicate the applicability of these requirements to the procurement of processed end products, distribution, or of other processing services related to donated foods. We also propose to indicate that distributing or recipient agencies may use procurement procedures that conform to applicable State and local laws, as appropriate, but must ensure compliance with the Federal procurement requirements.

    In the proposed § 250.31(b), we would require specific information in procurement documents, to assist recipient agencies in ensuring that they receive credit for the value of donated foods in finished end products. We propose to require that procurement documents include the price to be charged for the finished end product or other processing service, the method of end product sales that would be utilized, an assurance that crediting for donated foods would be performed in accordance with the applicable requirements for such method of sales in proposed § 250.36, the contract value of the donated food in the finished end products, and the location for the delivery of the finished end products. We propose to remove current requirements for the provision of pricing information outside of the procurement process, including:

    (1) The requirement in current § 250.30(c)(5)(ii) that pricing information be included with the end product data schedule; and

    (2) The requirements in current § 250.30(d)(3) and (e)(2) that the processor provide pricing information summaries to the distributing agency, and the distributing agency provide such information to recipient agencies, as soon as possible after completion of the agreement.

    3. Protection of Donated Food Value, § 250.32

    In current § 250.30(c)(5)(viii)(B), the processor is required to obtain, and furnish to the distributing agency, financial protection to protect the value of donated foods prior to their delivery for processing, by means of a performance bond, an irrevocable letter of credit, or an escrow account. The distributing agency must determine the dollar value of the financial protection, based on the quantity of donated foods for which the processor is accountable. In the proposed § 250.32(a), we propose to include the current requirement that the processor obtain such financial protection but to remove the option to obtain an escrow account, as it is little-used and unnecessarily complicates this section. However, we propose to require that a multi-State processor provide the performance bond or irrevocable letter of credit to FNS, in accordance with its National Processing Agreement. We propose to clarify that the amount of the performance bond or letter of credit must be sufficient to cover at least 75 percent of the value of donated foods in the processor's physical or book inventory, as determined annually, and at the discretion of FNS, for processors under National Processing Agreements. For multi-state processors in their first year of participation in the processing program, the amount of the performance bond or letter of credit must be sufficient to cover 100 percent of the value of donated foods, as determined annually, and at the discretion of FNS. This proposed clarification would codify existing Program policy.

    In the proposed § 250.32(b), we propose to indicate the conditions under which the distributing or recipient agency must call in the performance bond or letter of credit. We also propose to indicate that FNS would call in the performance bond or letter of credit under the same conditions and would ensure that any monies recovered by FNS are reimbursed to distributing agencies for losses of entitlement foods.

    4. Ensuring Processing Yields of Donated Foods, § 250.33

    In current § 250.30(c)(5), the processor must submit, as part of the agreement approval, information regarding the production of an end product to ensure that the distributing or recipient agency, as appropriate, receives the benefit of the donated food processed. This information, called the end product data schedule, must include the following:

    • A description of the end product;

    • The types and quantities of donated foods and other ingredients needed to produce a specific quantity of end product;

    • The yield for the donated food;

    • The contract value of the donated food; and

    • Any pricing information in addition to the charge for the end product or fee-for-service.

    In the proposed § 250.33, we propose to retain the required submission of the end product data schedule and to more specifically describe the required processing yields of donated food, which is currently referred to as the yield. In the proposed § 250.33(a), we would require submission of the currently required information on the end product data schedule, with the exception of the price charged for the end product or other pricing information and the contract value of the donated food. As described above, in the proposed § 250.31, pricing information must be included in the procurement of end products or other processing services relating to donated foods. Inclusion of such information on end product data schedules may be misleading, as it may lead some recipient agencies to conclude that a competitive procurement has been performed by the distributing agency under its In-State Processing Agreement or State Participation Agreement. Prices currently included on end product data schedules generally reflect the highest price that a processor would charge for the finished end product and not necessarily the actual price of the end product.

    We also propose to require inclusion of the processing yield of donated food, which may be expressed as the quantity of donated food (e.g., pounds or cases) needed to produce a specific quantity of end product or as the percentage of donated food returned in the finished end product. We propose to retain the requirement that end product data schedules be approved by the distributing agency under In-State Processing Agreements. We propose to clarify that the end product data schedules for products containing donated red meat or poultry must also be approved by the Department, as is currently required under the demonstration project. We propose to require that, under National Processing Agreements, end product data schedules be approved by the Department. Lastly, we propose to clarify that an end product data schedule must be submitted in a standard electronic format dictated by FNS, and approved for each new end product that a processor wishes to provide or for a previously approved end product in which the ingredients or other pertinent information have been altered.

    In proposed § 250.33(b), we propose to describe the different processing yields of donated foods that may be approved in end product data schedules. In current § 250.30(c)(5)(ii), the processor must meet a 100 percent yield in the processing of all substitutable donated foods (i.e., generally all donated foods except beef, pork and poultry). Under 100 percent yield, the processor must ensure that 100 percent of the raw donated food diverted for processing is returned in the finished end product. Production loss of donated food must be accounted for by replacement with commercially purchased food of the same generic identity, of U.S. origin, and of equal or better quality than the donated food. To demonstrate this, the processor must report reductions in donated food inventories on performance reports. These reductions must be reported in the amount of donated food contained in the finished end product rather than the amount that went into production. We propose to include the current 100 percent yield requirement in the proposed § 250.33(b)(1). We propose to indicate that FNS may make exceptions to the 100 percent yield requirement, on a case-by-case basis. Exceptions to the 100 percent yield requirement can result in one of the alternate processing yields described below.

    Processing of donated foods such as beef, pork, and poultry invariably results in significant loss of product, such as the bones in chicken or fat in beef and pork. Hence, the processing yield must take such losses into account in the same manner that the processing of commercial product accounts for such losses. Currently, the three processing yields approved in end product data schedules to account for such losses include guaranteed yield, guaranteed minimum yield, and standard yield. In an effort to simplify the yield requirements and streamline monitoring for distributing and recipient agencies we propose to limit the processing yields to 100 percent yield, guaranteed yield, and standard yield.

    Under guaranteed yield, the processor must ensure that a specific quantity of end product would be produced from a specific quantity of donated food put into production. The guaranteed yield for a specific product is determined and agreed upon by the parties to the processing agreement, and, for In-State and Recipient Agency Processing Agreements, approved by the Department. Guaranteed yield is generally used when significant variance is present across processors in manufacturing and yield for a particular end product. The guaranteed yield must be indicated on the end product data schedule. We propose to describe guaranteed yield in the proposed § 250.33(b)(2).

    Under standard yield, the processor must ensure that a specific quantity of end product, as determined by the Department, would be produced from a specific quantity of donated food. The standard yield is determined and applied uniformly by the Department to all processors for specific donated foods. The established standard yield is higher than the average yield under normal commercial production and serves to reward those processors that can process donated foods most efficiently. If necessary, the processor must use commercially purchased food of the same generic identity, of U.S. origin, and equal or better in all USDA procurement specifications than the donated food to provide the number of cases required to meet the standard yield to the distributing or recipient agency, as appropriate. Like guaranteed yield, standard yield ensures that the recipient agency would receive a specific quantity of end product, which helps to ensure that it can meet its food service needs. We propose to describe standard yield in the proposed § 250.33(b)(3).

    In the proposed § 250.33(c), we would require that the processor compensate the distributing or recipient agency, as appropriate, for the loss of donated foods, or for commercially purchased foods substituted for donated foods. Processing of donated foods may sometimes result in finished end products that are wholesome but do not meet the specifications required for use in the recipient agency's food service. In normal business practice, such products are usually returned to production for processing into end products that meet required specifications. These are often called rework products. Loss of donated foods may result for a number of reasons, including the processor's failure to meet the required processing yield or failure to produce end products that meet required specifications, as described above, spoilage or damage of donated foods in storage, or improper distribution of end products. In order to compensate for such losses of donated foods, we propose to require that the processor:

    (1) Replace the lost donated food or commercial substitute with commercially purchased food of the same generic identity, of U.S. origin, and equal or better in all USDA procurement specifications than the donated food; or

    (2) Return end products that are wholesome but do not meet required specifications to production for processing into the requisite quantity of end products that meet the required specifications; or

    (3) Pay the distributing or recipient agency, as appropriate, for the replacement value of the donated food or commercial substitute only if the purchase of replacement foods is not feasible and the processor has received approval. In-State processors would be required to obtain distributing agency approval for such payment and multi-State processors would be required to obtain FNS approval.

    In current § 250.30(c)(5)(viii)(D), the processor must credit the distributing or recipient agency, as appropriate, for the sale of any by-products resulting from the processing of donated foods or of commercially purchased foods substituted for donated foods. Crediting must be achieved through reduction of the processing fee and must be in the amount received from such sale or the market value of the by-products. We propose to include this requirement in the proposed § 250.33(d), but propose to require crediting through invoice reductions or another means of crediting. We also propose to clarify that the processor must credit the appropriate agency for the net value received from the sale of by-products after subtraction of any documented expenses incurred in preparing the by-product for sale. We propose to remove the requirement in current § 250.30(c)(5)(viii)(D) that the processor credit the distributing or recipient agency for the sale of donated food containers because the burden required to monitor the credit outweighed the value returned.

    In current § 250.30(i), the processor must meet applicable Federal labeling requirements, and must follow the procedures required for approval of labels for end products that claim to meet meal pattern requirements in child nutrition programs. We propose to include these requirements in the proposed § 250.33(e).

    5. Substitution of Donated Foods, § 250.34

    We propose to include requirements for the substitution of donated foods in the proposed § 250.34. Currently, in § 250.30(f)(1), the processing agreement may allow the processor to substitute commercially purchased foods for all donated foods except donated beef, pork and poultry without prior approval of the Department. Substitution must be with commercially purchased foods of the same generic identity, of U.S. origin, and of equal or better quality than the donated foods. Under current regulations, substitution of donated poultry is permitted with some limitations in accordance with a processor's USDA-approved substitution plan. Substitution of donated beef and pork is not permitted under the current regulations.

    As previously discussed in the preamble, beginning in 2013, the Department used its regulatory waiver authority, to permit processors with a Department-approved Processor Control Certification Program plan to substitute commercially purchased beef and pork for donated beef and pork. The commercial product must be of U.S. origin, and of equal or better quality in all Departmental purchase specifications than the donated food. In addition, only donated beef and pork delivered to the processor from a USDA vendor may be substituted. Donated beef and pork delivered to a processor from a recipient agency facility for processing may not be substituted (this process is commonly called backhauling). In a similar manner, substitution of backhauled donated poultry is prohibited in current § 250.30(f)(1)(ii).

    In the proposed § 250.34(a), we propose to permit a processor to substitute any donated food that is delivered to it from a USDA vendor with commercially purchased food of the same generic identity, of U.S. origin, and of equal or better quality in all Departmental purchase specifications than the donated food. We propose to clarify that commercially purchased beef, pork or poultry must meet the same specifications as donated product, including inspection, grading, testing, and humane handling standards, and must be approved by the Department in advance of substitution. Hence, we propose to remove the required elements of a processor's plan for poultry substitution in current § 250.30(f)(1)(ii)(B).

    In current § 250.30(f)(1)(ii)(A), substitution of commercial poultry for donated poultry may be made before the processor actually receives a shipment of the donated poultry. In such case, however, the processor assumes all risks if, due to changing market conditions or other reasons, the Department is unable to purchase and deliver donated poultry to the processor for processing. In the proposed § 250.34(a), we propose to allow a processor the option to substitute any donated food in advance of the receipt of the donated food shipment and to more clearly describe the processor's assumption of risk should the Department be unable to purchase and deliver any donated food so substituted. Lastly, we propose to require that commercially purchased food substituted for donated food meet the same processing yield requirements that would be required for the donated food, as in the proposed § 250.33.

    Donated food may be backhauled to a processor from a recipient agency facility when a recipient agency determines that, despite earlier projections, it is unable to utilize the donated food in its current form. Rather than see it go to waste, the recipient agency provides the food to a processor to process into a more usable form. In the proposed § 250.34(b), we propose to prohibit substitution or commingling of all backhauled donated foods and to require that the processor, if amenable to reformulation, process such end products into end products for sale and delivery to the same recipient agency that provided them and not to any other recipient agency. In other words, the recipient agency which backhauls a previously processed end product to a processor for reformulation must in turn use the reformulated end products, containing their backhauled product, in their food service. Additionally, we propose to prohibit the processor from providing payment to the recipient agency in lieu of processing and prohibit the distributing or recipient agency from transferring the backhauled food to another processor.

    In current § 250.30(g), the processing of donated beef, pork and poultry must occur under Federal acceptance service grading in order to assure that substitution and yield requirements are met and that end products conform with the applicable end product data schedule. Such grading is conducted by the Department's Agricultural Marketing Service. The grader verifies the quality and quantity of food that is put into production, and the quantity of end products produced, and includes the pertinent information on a grading certificate. The processor is responsible for paying the cost of the acceptance service grading. In current § 250.30(f)(1), the processor must maintain records (including grading certificates) necessary to document that substitution of all donated foods has been conducted in accordance with the requirements in 7 CFR part 250. We propose to include all of these requirements in the proposed § 250.34(c).

    In current § 250.30(g), the distributing agency may approve a waiver of the grading requirement for donated beef, pork, or poultry under certain conditions. We propose to include this contingency, and retain the current conditions under which the distributing agency may approve such a waiver, in the proposed § 250.34(d). However, we propose to indicate that such waivers may only be approved on a case by case basis—e.g., for a specific production run. The distributing agency may not approve a blanket waiver of the requirement. We also include the current stipulation that a waiver may only be approved if the processor's past performance indicates that the quality of the end product would not be adversely affected.

    Also, in current § 250.30(f)(1)(ii)(A), the processor may use donated poultry that has been substituted with commercially purchased poultry in any processing activities conducted at its facilities. Additionally, in current § 250.30(f)(2), substituted donated food must be used by the processor and may not be sold or disposed of in bulk form. In the proposed § 250.34(e), we propose to include the current provision that the processor may use any substituted donated food in other processing activities conducted at its facilities. We propose to remove the stipulation, in current § 250.30(f)(4), that title to the substituted donated food passes to the processor upon the initiation of processing of the end product with the commercial substitute. The transfer of title to donated foods, which are part of the Federal grant, is limited to the distributing agency or recipient agency, as the recipients of the grant. Subsequent donated food activities may be performed in accordance with Federal regulations and the terms of processing agreements but would not include a further transfer of title.

    We propose to remove the requirements in current § 250.30(f)(1)(iii) that the processor maintain documentation that it has not reduced its level of commercial production in exercising the option to substitute commercially purchased foods for donated foods, or that it has made sufficient purchases to meet the 100 percent yield requirement in processing of donated foods. In addition to being virtually impossible to determine, it is unlikely that a processor would choose to process donated foods if it were to adversely affect its commercial activities. The requirement that the processor compensate the distributing or recipient agency for failure to meet required processing yields of donated foods, as in the proposed § 250.33(f), is more appropriate, and effective, than a requirement that the processor make specific purchases of foods in the commercial market.

    6. Storage, Food Safety, Quality Control, and Inventory Management, § 250.35

    We propose to include requirements for the storage, food safety oversight, quality control, and inventory management of donated foods provided for processing in the proposed § 250.35. In current § 250.30(c)(5)(x), the processor must describe its quality control system and assure that an effective quality control system will be maintained for the duration of its agreement. In the proposed § 250.35(a), we would require the processor to ensure the safe and effective storage of donated foods, including compliance with the general storage requirements in current § 250.12, and to maintain an effective quality control system at its processing facilities. We propose to require the processor to maintain documentation to verify the effectiveness of its quality control system and to provide such documentation upon request.

    In current § 250.30(g), the processing of donated beef, pork and poultry, and of commercial meat products that contain any donated foods, must be performed in plants under continuous Federal meat or poultry inspection. However, in States certified as having programs at least equal to Federal standards, processing of such foods may be performed in plants under continuous State meat or poultry inspection for processed end products that are utilized in the State, rather than the Federal inspection. We propose to simplify these regulations in the proposed § 250.35(b) by requiring that all processing of donated foods is conducted in compliance with all Federal, State, and local requirements relative to food safety.

    In the proposed § 250.35(c), we propose to clarify that a processor may commingle donated foods and commercially purchased foods, unless the processing agreement specifically stipulates that the donated foods must be used in processing, and not substituted, or the donated foods have been backhauled from a recipient agency. However, we propose to clarify that such commingling must be performed in a manner that ensures the safe and efficient use of donated foods, as well as compliance with substitution requirements, and with reporting of donated food inventories on performance reports, as required in 7 CFR part 250.

    We also propose to require that processors ensure that commingling of finished end products with other food products by distributors results in the sale to recipient agencies of end products that meet substitution requirements. One way that this may be achieved is by affixing the applicable USDA certification stamp to the exterior shipping containers of such end products. This incorporates the provision in current § 250.30(f)(1)(ii)(B) that finished poultry end products that have not been produced under AMS acceptance service grading may not be substituted for end products containing donated foods. However, we propose to remove the requirement in current § 250.30(i) that exterior shipping containers or product labels for end products containing nonsubstitutable donated foods include such information to ensure their sale to eligible recipient agencies. Such assurance may be made through notification of the appropriate parties or by other means.

    In current § 250.30(n)(1), a processor is limited in the amount of donated foods for which it is accountable at any one time. A processor may not have on hand more than a six-month supply of donated foods, based on an average amount utilized for that period. However, the distributing agency may, at the processor's request, provide written approval to allow the processor to maintain a larger amount of donated foods in inventory if it determines that the processor may efficiently store and process such an amount. The distributing agency may not order donated foods for delivery to a processor if it would result in excessive inventories, unless it has granted such approval. We propose to include the current limitation on inventories of donated foods at a processor in the proposed § 250.35(d) and to clarify that distributing agencies are not permitted to submit food orders for processors reporting no sales activity during the prior year's contract period unless documentation is submitted by the processor which outlines specific plans for donated food drawdown, product promotion, or sales expansion. Many distributing agencies have adopted “sweep” policies in which they transfer excess processor inventories for one recipient agency to another recipient agency or processor which is willing to accept it, to ensure that inventory is used effectively. For example, a distributing agency may transfer a recipient agency's remaining inventory at a processor to another recipient agency that is willing to accept such foods and use the foods efficiently. Such policies provide an additional tool for distributing agencies to ensure that donated foods are used efficiently and that processors and recipient agencies effectively manage their donated food inventories. We propose to include an allowance for FNS to require an inventory transfer to another State distributing agency or processor when inventories are determined to be excessive for a State distributing agency or processor, i.e., more than six months on-hand or exceeding the established inventory protection, to ensure full utilization prior to the end of the school year.

    In current § 250.30(n)(3), a processor must pay the distributing agency for the value of donated foods held in excess of allowed inventory levels at the end of the year, as indicated on the June performance report. However, in practice, the distributing agency often allows a processor to carry over such donated foods into the next year of the agreement, in accordance with its authority to approve donated food inventories in excess of the six-month limitation. The distributing agency may also direct the processor, in accordance with current § 250.12(e), to transfer donated foods held in excess of allowed levels to another distributing or recipient agency, or processor, if the processor is unable to process such foods. In the proposed § 250.35(e), we propose to clarify that the distributing agency may permit the processor to carry over donated foods in excess of allowed levels into the next year of its agreement, if the distributing agency determines that the processor may efficiently process such foods. We also propose to include the distributing agency's current option to direct the processor to transfer or re-donate such donated foods to another distributing or recipient agency or processor. Lastly, we propose to clarify that, if these options are not practical, the distributing agency must require the processor to pay for the donated foods held in excess of allowed levels in an amount equal to the replacement value of the donated foods.

    In current § 250.30(j), when an agreement terminates, and is not extended or renewed, the distributing agency must direct the processor to return donated foods remaining in inventory or pay the distributing or recipient agency as applicable for the donated foods at the replacement value. For substitutable donated foods, the distributing agency may also permit the processor to return commercially purchased foods that meet substitution requirements in place of the donated foods or transfer the donated foods to other agencies with which it has entered into agreements. In the proposed § 250.35(f), we propose to expand the current options for the disposition of substitutable donated foods at the termination of an agreement to all donated foods, in accordance with our proposal in the proposed § 250.34 to permit substitution of all donated foods. We propose to clarify that the disposition of donated foods may include a transfer; i.e., the distributing agency may permit a transfer of donated foods to another State distributing agency, with FNS approval, in accordance with current § 250.12(e). We also propose to permit the transfer of commercially purchased foods that meet the substitution requirements in the proposed § 250.34 in place of the donated foods. We propose to permit the processor to pay the distributing or recipient agency, as appropriate, for the donated foods only if returning or transferring the donated foods or commercially purchasing food that meets the substitution requirements is not feasible and if FNS approval has been granted. If the distributing agency requires the processor to pay for donated foods, we propose to require such payment at the contract value or replacement value, whichever is higher, rather than the several options for assigning the donated food value currently included in the regulations. We propose to include the current requirement that the processor pay the cost of transporting any donated foods when the agreement is terminated at the processor's request or as a result of the processor's failure to comply with the requirements of 7 CFR part 250.

    We propose to remove the stipulation in current § 250.30(j)(3) that funds received by distributing agencies from payments for donated foods upon termination of an agreement be used in accordance with § 250.17(c). The allowable use of funds accruing from program operations, including funds received by distributing agencies from payments for donated foods upon termination of an agreement, is described in current § 250.17 and thus the stipulation is no longer necessary.

    7. End Product Sales and Crediting for the Value of Donated Foods, § 250.36

    In current § 250.30(d)(1), a processor must sell end products to recipient agencies under a system that assures such agencies receive credit or “value pass-through” for the contract value of donated food contained in the end product. And, in current § 250.30(e), a processor must ensure that, when end products are provided to commercial distributors for sale and delivery to recipient agencies, such sales occur under a system that provides such agencies with a credit for the contract value of donated food contained in the end product. In the proposed § 250.36(a), we would require that the sales of end products, either directly by the processor or through a commercial distributor, be performed utilizing one of the methods of end product sales contained in this section, to ensure that the distributing or recipient agency, as appropriate, receives credit for the value of donated foods contained in end products. We also propose to require that all systems of sales utilized must provide clear documentation of crediting for the value of the donated foods contained in the end products.

    In current § 250.30(d)(1)(i), a processor may utilize a refund or rebate system, in which the processor sells end products to the distributing or recipient agency, as appropriate, at the commercial or gross price, and provides the appropriate agency with a refund for the contract value of donated foods contained in the end products. In current § 250.30(e), a distributor may also sell end products received from the processor under a refund system, with the processor responsible for providing the refund to the appropriate agency. We propose to permit end product sales under this system, by either the processor or distributor, in the proposed § 250.36(b). We propose to require the processor to remit the refund to the distributing or recipient agency, as appropriate, within 30 days of receiving a request for a refund from the appropriate agency. We propose to clarify that the refund request must be in writing but may be transmitted via email or other electronic means. We propose to remove the requirement in current § 250.30(k) that the recipient agency submit a refund application to receive a refund for the value of donated foods in end products, as the term “refund application” implies the submittal of a written form, which is not necessary. Additionally, we propose to remove the 30-day, or quarterly, period by which the distributing or recipient agency must currently submit such a request. Once end product sales are made, we would expect requests for refunds to be made in an expeditious manner in the interest of the program. The agency may determine how frequently it wishes to receive its refunds, but refunds must be issued more frequently than annually. To that end, we also propose to remove the option, in current § 250.30(k)(3), for the processor to submit refunds that total $25 or less on a quarterly basis.

    In current § 250.30(d)(1)(ii), the processor may utilize a discount system, in which the processor sells end products at a net price that provides a discount from the commercial case price for the value of the donated foods contained in the end products. We propose to permit end product sales under this system in the proposed § 250.36(c). We propose to refer to this system as a direct discount system to distinguish it from the method of end product sales described in the following paragraph.

    In current § 250.30(e)(1)(ii), a distributor may sell end products to the distributing or recipient agency, as appropriate, at a net price that provides a discount from the commercial case price for the value of the donated foods contained in the end products. The processor then compensates the distributor for the discount provided for the value of the donated food in its sale of end products. We propose to permit end product sales under this system in the proposed § 250.36(d), and to refer to it as the indirect discount system. We propose to require the processor to ensure that the distributor notify it of such sales, at least on a monthly basis, through automated sales reports or other submission. We propose to remove the requirement, in current § 250.30(k)(2), that the distributor apply to the processor for a refund under this system.

    In current § 250.30(d)(2), and in accordance with the definition in current § 250.2, the processor may sell end products to the distributing or recipient agency at a “fee-for-service.” The fee-for-service includes all costs to produce the end product minus the value of the donated food put into production. The processor must identify any charge for delivery of end products separately from the fee-for-service on its invoice. We propose to permit this method of end product sales in the proposed § 250.36(e).

    In current § 250.30(e)(1)(iv), the processor may provide end products sold under a fee-for-service system to a distributor for delivery to the distributing or recipient agency. In such cases, the processor must identify the distributor's delivery charge separately from the fee-for-service on its invoice or may permit the distributor to bill the distributing or recipient agency separately for the delivery of end products. As a matter of policy, we have also permitted the processor to provide written approval to the distributing or recipient agency-contracted distributor to bill the distributing or recipient agency, as appropriate, for the total case price—i.e., for the fee-for-service and the delivery charge. In such cases, the processor must ensure that the appropriate agency has advance notification of the fee-for-service and delivery charge. The processor must require that the distributor notify it of such sales, at least on a monthly basis, through automated sales reports or other submission, which may include email or other electronic means. We propose to include these requirements in the proposed § 250.36(e).

    In current § 250.30(d)(1)(iii), the processor may sell end products to the distributing or recipient agency under an alternate method of end product sales that is approved by FNS and the distributing agency. In current § 250.30(e)(1)(iii), the distributor may also sell end products under such an approved alternate method of sales. Such alternate methods of sale must ensure that the distributing or recipient agency, as appropriate, receives credit for the value of donated foods contained in the end products. We propose to include this option for both processor and distributor in the proposed § 250.36(f).

    In the proposed § 250.36(g), we propose to clarify that the contract value of the donated foods must be used in crediting for donated foods in end product sales and to refer to the definition of contract value included in current § 250.2. In the proposed § 250.36(h), we would require that the distributing agency provide the processor with a list of recipient agencies eligible to purchase end products along with the quantity of raw donated food that is to be delivered to the processor for processing on behalf of each recipient agency. This would ensure that only eligible recipient agencies receive end products, and in the amounts for which they are eligible. For end products sold through distributors, we propose to require that the processor provide the distributor with a list of eligible recipient agencies and either the quantities of approved end products that each recipient agency is eligible to receive, or the quantity of donated food allocated to each recipient agency along with the raw donated food (pounds or cases) needed per case of each approved end product.

    8. Reports, Records, and Reviews of Processor Performance, § 250.37

    In the proposed § 250.37, we propose to include the reporting and recordkeeping requirements for the processing of donated foods, and the use of such reports and records to review processor performance. In current § 250.30(m), the processor must submit a monthly performance report to the distributing agency, including the following information for the reporting period, with year-to-date totals:

    (1) A list of all eligible recipient agencies receiving end products;

    (2) The quantity of donated foods on hand at the beginning of the reporting period;

    (3) The quantity of donated foods received;

    (4) The quantity of donated foods transferred to the processor from another entity, or transferred by the processor to another entity;

    (5) The quantity of end products delivered to each eligible recipient agency; and

    (6) The quantity of donated foods remaining at the end of the reporting period.

    In the proposed § 250.37(a), we propose to retain the requirement that the processor submit the performance report to the distributing agency (or to the recipient agency, in accordance with a Recipient Agency Processing Agreement) on a monthly basis. We propose to retain all of the currently required information in the report. We propose to require the processor to include quantities of donated food losses. We propose to require that the processor also include grading certificates and other documentation, as requested by the distributing agency, to support the information included in the performance reports. Such documentation may include, for example, bills of lading, invoices or copies of refund payments to verify sales and delivery of end products to recipient agencies. We propose to retain the current deadlines for the submission of performance reports in the proposed § 250.37(a).

    In the proposed § 250.37(b), we would require that the processor must include reductions in donated food inventories on monthly performance reports only after sales of end products have been made, or after sales of end products through distributors have been documented. We propose to require that, when a distributor sells end products under a refund system, such documentation must be through the distributing or recipient agency's request for a refund (under a refund system) or through the distributor's automated sales reports or other electronic or written submission (under an indirect discount system or under fee-for-service).

    In the proposed § 250.37(c), we would require that a multi-State processor submit a summary performance report to FNS, on a monthly basis and in a standard format established by FNS, containing information from the performance report that would allow FNS to track the processor's total and State-by-State donated food inventories. The purpose of this report is to assess the amount of the performance bond or letter of credit required of the processor under its National Processing Agreement. However, each distributing agency would still be responsible for monitoring the multi-State processor's inventory of donated foods received for processing in the respective State, in accordance with the proposed § 250.37(a).

    In the proposed § 250.37(d), we would require processors to maintain specific records to demonstrate compliance with processing requirements in 7 CFR part 250, including, for example, assurance of receipt of donated food shipments, production, sale, and delivery of end products, and crediting for donated foods contained in end products.

    In accordance with current § 250.19(a), accurate and complete records must be maintained with respect to end products processed from donated foods. In the proposed § 250.37(e), we would require distributing agencies to maintain specific records to demonstrate compliance with processing requirements in 7 CFR Part 250, including, for example, end product data schedules, performance reports, copies of audits, and documentation of the correction of any deficiencies identified in such audits.

    In the proposed § 250.37(f), we would require that recipient agencies maintain specific records to demonstrate compliance with processing requirements in 7 CFR part 250, including, for example, the receipt of end products purchased from processors or distributors, crediting for the value of donated foods included in end products, and procurement documents.

    In accordance with current § 250.18(b), the distributing agency must make a continuing evaluation of processors and recipient agencies, through the review of performance reports and other reports and records, to ensure compliance with the requirements of 7 CFR part 250. And, in accordance with current § 250.30(m)(3), the distributing agency must review and analyze reports submitted by processors to ensure compliance with such requirements. We propose to clarify the review requirements for the distributing agency in the proposed § 250.37(g), including the review of performance reports to ensure that the processor:

    (1) Receives donated food shipments, as applicable;

    (2) Delivers end products to eligible recipient agencies, in the types and quantities for which they are eligible;

    (3) Meets the required processing yields for donated foods; and

    (4) Accurately reports donated food inventory activity and maintains inventories within approved levels.

    We propose to remove the requirements in current § 250.30(m)(2) and (n)(2) relating to the submission of reports and the performance of reviews to ensure that substitution of concentrated skim milk for donated nonfat dry milk is in compliance with requirements. Donated nonfat dry milk is no longer available for donation to schools.

    9. Provisions of Agreements, § 250.38

    In the proposed § 250.38, we include the required provisions for each type of processing agreement included in the proposed § 250.30, to ensure compliance with the requirements in 7 CFR part 250. In the proposed § 250.38(a), we propose to establish that the National Processing Agreement is inclusive of all provisions necessary to ensure that a multi-State processor complies with all applicable requirements relating to the processing of donated foods. FNS has developed a prototype National Processing Agreement that includes all such required provisions.

    In the proposed § 250.38(b), we would require that the State Participation Agreement with a multi-State processor contain specific provisions or attachments to assure compliance with requirements in 7 CFR part 250 that are not included in the multi-State processor's National Processing Agreement. Such provisions include, for example, a list of recipient agencies eligible to receive end products, summary end product data schedules that contain a list of end products that may be sold in the State, a requirement that processors enter into a written agreement with distributors handling end products containing donated foods, and the allowed method(s) of end product sales implemented by the distributing agency.

    In the proposed § 250.38(c), we would require that the In-State Processing Agreement contain specific provisions or attachments to assure compliance with requirements in 7 CFR part 250. Most of these provisions are included in current § 250.30(c)(5) and include, for example, assurance that the processor will meet processing yields for donated foods and substitution requirements, report donated food inventory activity and maintain inventories within approved levels, enter into a written agreement with distributors handling end products containing donated foods, credit recipient agencies for the value of all donated foods contained in end products, and obtain required audits.

    In accordance with the proposed § 250.38(d), we propose to require that the Recipient Agency Processing Agreement contain the same provisions as an In-State Processing Agreement, to the extent that the distributing agency permits the recipient to perform activities normally performed by the distributing agency under an In-State Processing Agreement (e.g., approval of end product data schedules or review of performance reports). However, a list of recipient agencies eligible to receive end products need not be included.

    In the proposed § 250.38(e), we propose to prohibit a distributing or recipient agency, as appropriate, from extending or renewing an agreement when a processor has not complied with processing requirements. We propose to allow a distributing or recipient agency to immediately terminate an agreement in the event of such noncompliance.

    10. Miscellaneous Provisions, § 250.39

    In current § 250.30(q), FNS may waive any of the requirements in 7 CFR part 250 for the purpose of conducting demonstration projects to test program changes which might improve processing of donated foods. We propose to include this provision with minimal change in the proposed § 250.39(a).

    In the proposed § 250.39(b), we propose to retain the requirement in current § 250.30(p) that the distributing agency develop and provide a processing manual or similar materials to processors and other parties to ensure sufficient guidance is given to processors and other parties to permit compliance with requirements for the processing of donated foods. Consistent with the current demonstration project, the distributing agency would be permitted to provide additional information relating to State-specific processing procedures upon request.

    In the proposed § 250.39(c), we propose to clarify that guidance or information relating to the processing of donated foods is included on the FNS Web site or may otherwise be obtained from FNS. Such guidance and information includes program regulations and policies, the FNS Audit Guide, and the USDA National Processing Agreement.

    III. Procedural Matters A. Executive Order 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility.

    This proposed rule has been determined to be not significant and was not reviewed by the Office of Management and Budget (OMB) in conformance with Executive Order 12866.

    B. Regulatory Impact Analysis

    This rule has been designated as not significant by the Office of Management and Budget, therefore, no Regulatory Impact Analysis is required.

    C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612) requires Agencies to analyze the impact of rulemaking on small entities and consider alternatives that would minimize any significant impacts on a substantial number of small entities. Pursuant to that review, the Administrator of FNS has certified that this rule would not have a significant impact on a substantial number of small entities.

    D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local and tribal governments and the private sector. Under section 202 of the UMRA, the Department generally must prepare a written statement, including a cost benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures by State, local or Tribal governments, in the aggregate, or the private sector, of $146 million or more (when adjusted for inflation; GDP deflator source: Table 1.1.9 at http://www.bea.gov/iTable) in any one year. When such a statement is needed for a rule, Section 205 of the UMRA generally requires the Department to identify and consider a reasonable number of regulatory alternatives and adopt the most cost effective or least burdensome alternative that achieves the objectives of the rule.

    This proposed rule does not contain Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local, and Tribal governments or the private sector of $146 million or more in any one year. Thus, the rule is not subject to the requirements of sections 202 and 205 of the UMRA.

    E. Executive Order 12372

    The donation of foods in USDA food distribution and child nutrition programs is included in the Catalog of Federal Domestic Assistance under 10.555, 10.558, 10.559, 10.565, 10.567, and 10.569 is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 2 CFR chapter IV)

    F. Federalism Summary Impact Statement

    Executive Order 13132 requires Federal agencies to consider the impact of their regulatory actions on State and local governments. Where such actions have federalism implications, agencies are directed to provide a statement for inclusion in the preamble to the regulations describing the agency's considerations in terms of the three categories called for under Section (6)(b)(2)(B) of Executive Order 13121.

    The Department has considered the impact of this rule on State and local governments and has determined that this rule does not have federalism implications. Therefore, under section 6(b) of the Executive Order, a federalism summary is not required.

    G. Civil Rights Impact Analysis

    FNS has reviewed this proposed rule in accordance with USDA Regulation 4300-4, “Civil Rights Impact Analysis,” to identify any major civil rights impacts the rule might have on program participants on the basis of age, race, color, national origin, sex or disability. After a careful review of the rule's intent and provisions, FNS has determined that this rule would not in any way limit or reduce the ability of participants to receive the benefits of donated foods in food distribution or child nutrition programs on the basis of an individual's or group's race, color, national origin, sex, age, or disability. FNS found no factors that would negatively and disproportionately affect any group of individuals.

    H. Executive Order 13175

    Executive Order 13175 requires Federal agencies to consult and coordinate with Tribes on a government-to-government basis on policies that have Tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes. FNS consulted with Tribes on this proposed rule on November 19, 2014, however no concerns or comments were received. We are unaware of any current Tribal laws that could be in conflict with the final rule.

    I. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995, this notice invites the general public and other public agencies to comment on this proposed information collection. This collection is a revision of a currently approved collection, OMB#0584-0293.

    Written comments must be received on or before March 6, 2017. Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions that were used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on those who are to respond, including use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.

    Comments will be accepted through the Federal eRulemaking Portal. Go to http://www.regulations.gov, and follow the online instructions for submitting comments electronically. Comments may also be sent to Kiley Larson, at the address listed in the ADDRESSES section of this preamble. Commenters are asked to separate their comments on the information collection requirements from their comments on the proposed rule.

    Title: Food Distribution Forms.

    OMB Number: 0584-0293.

    Expiration Date: 11/30/2016.

    Type of Request: Revision of a currently approved collection.

    Abstract: This is a revision of an existing information collection based on this proposed rule, Revisions and Clarifications in Requirements for the Processing of Donated Foods. The rule proposes to add reporting requirements to the existing information collection associated with 7 CFR part 250, OMB Number 0584-0293 as follows:

    New Reporting Requirements Associated With This Rulemaking

    • § 250.37(c), Summary Performance Report. Multi-State processors submit a summary performance report to FNS. The summary performance report lists the complete donated food inventory at the beginning and end of the reporting month and the total donated food inventory by State and the national total. Approximately 110 respondents are expected to submit 12 summary performance reports per year. Each performance report is expected to take 1 hour to complete, for a total annual burden of 1320.00 hours.

    • § 250.30(i), Agreements between Processors and Distributors. A processor providing end products containing donated foods to a distributor must enter into a written agreement with the distributor. The agreement must include the financial liability for the replacement value of donated foods, monthly end product sales reporting frequency, requirements under 250.11, and the applicable value pass through system. These agreements can be considered permanent, with amendments made as necessary. We estimate that 225 respondents will enter into an agreement in the first year and 5 will amend their agreements each year for the next 2 years, with 2.0 hours per response. The estimated annual reporting burden for this activity is 156.66 hours.

    • § 250.33(a), End Product Data Schedules. Processors must submit end product data schedules, in a standard electronic form dictated by FNS for approval by FNS (for National Processing Agreements) or by the State distributing agency (for In-State Processing Agreements) for each new product that a processor wishes to provide or for a previously approved end product in which the ingredients have been altered. All products containing donated red meat and poultry must have their end product data schedules approved by USDA. The end product data schedule must include a description of the end product, the donated foods and other ingredients included in the end product, the quantity of the end product produced, and the processing yield of the donated food. We expect 131 processors to provide end product data schedules to FNS or the State distributing agency 12 times a year. The estimated time for each response is 0.5 hours, for a total of 786 burden hours.

    In addition to the above reporting requirements, FNS has reviewed the information collection associated with 7 CFR part 250 and determined that several reporting and recordkeeping requirements require update due to changes in historical averages and/or duplicate counting. Those adjustments result in a net burden reduction of 5,177 hours. The table below summarizes the changes to the burden for OMB Number 0584-0293. For additional details, see the information collection material included in the docket to this rule.

    Affected public Estimated number
  • of respondents
  • Number of
  • responses per
  • respondent
  • Total annual
  • responses
  • Estimated total
  • hours per
  • response
  • Estimated total
  • burden
  • Reporting State, Local, and Tribal Governments 20,866 11.13 232,319.24 0.25 58,679.50 Private For Profit 2,812 306.43 861,681.33 0.03 26,093.88 Private Not for Profit 1,600 2.03 3,240.00 0.19 614.50 Individual 611,200.00 1.96 1,199,200.00 0.25 304,400.00 Total Estimated Reporting Burden 636,478.00 3.61 2,296,440.57 0.17 389,787.88 Recordkeeping State, Local, and Tribal Governments 20,866.00 22.58 471,130.46 0.08 35,413.02 Private For Profit 2,812 367.86 1,034,429.00 0.06 62,671.72 Private Not for Profit 1,600 7.99 12,782.00 52.63 672,662.29 Individual 0 0.00 0.00 0.00 0.00 Total Estimated Recordkeeping Burden 25,278.00 60.07 1,518,341.46 0.51 770,747.03 Total of Reporting and Recordkeeping Reporting 636,478.00 3.61 2,296,440.57 0.17 389,787.88 Recordkeeping 25,278.00 60.07 1,518,341.46 0.51 770,747.03 Total 636,478.00 5.99 3,814,782.03 0.30 1,160,534.91
    J. E-Government Act Compliance

    The Department is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

    List of Subjects in 7 CFR Part 250

    Administrative practice and procedure, Food assistance programs, Grant programs, Social programs, Reporting and recordkeeping requirements, Surplus agricultural commodities.

    Accordingly, 7 CFR part 250 is proposed to be amended as follows:

    PART 250—DONATION OF FOODS FOR USE IN THE UNITED STATES, ITS TERRITIORIES AND POSSESSIONS AND AREAS UNDER ITS JURISDICTION 1. The authority citation for Part 250 continues to read as follows: Authority:

    5 U.S.C. 301; 7 U.S.C. 612c, 612c note, 1431, 1431b, 1431e, 1431 note, 1446a-1, 1859, 2014, 2025; 15 U.S.C. 713c; 22 U.S.C. 1922; 42 U.S.C. 1751, 1755, 1758, 1760, 1761, 1762a, 1766, 3030a, 5179, 5180.

    2. In § 250.2: a. Remove definitions of Contracting agency and Fee-for-service. b. Add definitions in alphabetical order for Backhauling, Commingling, End product data schedule, In-State Processing Agreement, National Processing Agreement, Recipient Agency Processing Agreement, Replacement value, and State Participation Agreement.

    The revisions and additions read as follows:

    § 250.2 Definitions.

    Backhauling means the delivery of donated foods to a processor for processing from a distributing or recipient agency's storage facility.

    Commingling means the storage of donated foods together with commercially purchased foods.

    End product data schedule means a processor's description of its processing of donated food into a finished end product, including the processing yield of donated food.

    In-State Processing Agreement means a distributing agency's agreement with an in-State processor to process donated foods into finished end products for sale to eligible recipient agencies or for sale to the distributing agency.

    National Processing Agreement means an agreement between FNS and a multi-State processor to process donated foods into end products for sale to distributing or recipient agencies.

    Recipient Agency Processing Agreement means a recipient agency's agreement with a processor to process donated foods and to purchase the finished end products.

    Replacement value means the price assigned by the Department to a donated food which must reflect the current price in the market to ensure compensation for donated foods lost in processing or other activities. The replacement value may be changed by the Department at any time.

    State Participation Agreement means a distributing agency's agreement with a multi-State processor to permit the sale of finished end products produced under the processor's National Processing Agreement to eligible recipient agencies in the State or to directly purchase such finished end products.

    3. In § 250.11, revise paragraph (e) to read as follows:
    § 250.11 Delivery and receipt of donated food shipments.

    (e) Transfer of title. In general, title to donated foods transfers to the distributing agency or recipient agency, as appropriate, upon acceptance of the donated foods at the time and place of delivery. Title to donated foods provided to a multi-State processor, in accordance with its National Processing Agreement, transfers to the distributing agency or recipient agency, as appropriate, upon acceptance of the finished end products at the time and place of delivery. However, when a recipient agency has contracted with a distributor to act as an authorized agent, title to finished end products containing donated foods transfers to the recipient agency upon delivery and acceptance by the contracted distributor. Notwithstanding transfer of title, distributing and recipient agencies must ensure compliance with the requirements of this part in the distribution, control, and use of donated foods.

    4. In § 250.18, revise paragraph (b) to read as follows:
    § 250.18 Reporting requirements.

    (b) Processor performance. Processors must submit performance reports and other supporting documentation, as required by the distributing agency or by FNS, in accordance with § 250.37(a), to ensure compliance with requirements in this part.

    5. In § 250.19, revise paragraph (a) to read as follows:
    § 250.19 Recordkeeping requirements.

    (a) Required records. Distributing agencies, recipient agencies, processors, and other entities must maintain records of agreements and contracts, reports, audits, and claim actions, funds obtained as an incident of donated food distribution, and other records specifically required in this part or in other Departmental regulations, as applicable. In addition, distributing agencies must keep a record of the value of donated foods each of its school food authorities receives, in accordance with § 250.58(e), and records to demonstrate compliance with the professional standards for distributing agency directors established in § 235.11(g) of this chapter. Processors must also maintain records documenting the sale of end products to recipient agencies, including the sale of such end products by distributors, and must submit monthly performance reports, in accordance with Subpart C of this part and with any other recordkeeping requirements included in their agreements. Specific recordkeeping requirements relating to the use of donated foods in contracts with food service management companies are included in § 250.54. Failure of the distributing agency, recipient agency, processor, or other entity to comply with recordkeeping requirements must be considered prima facie evidence of improper distribution or loss of donated foods and may result in a claim against such party for the loss or misuse of donated foods, in accordance with § 250.16, or in other sanctions or corrective actions.

    6. Revise Subpart C to read as follows: Subpart C—Processing of Donated Foods Sec. 250.30 Processing of donated foods into end products. 250.31 Procurement requirements. 250.32 Protection of donated food value. 250.33 Ensuring processing yields of donated foods. 250.34 Substitution of donated foods. 250.35 Storage, food safety, quality control, and inventory management. 250.36 End product sales and crediting for the value of donated foods. 250.37 Reports, records, and reviews of processor performance. 250.38 Provisions of agreements. 250.39 Miscellaneous provisions. Subpart C—Processing of Donated Foods
    § 250.30 Processing of donated foods into end products.

    (a) Purpose of processing donated foods. Donated foods are most commonly provided to processors to process into approved end products for use in school lunch programs or other food services provided by recipient agencies. The ability to divert donated foods for processing provides recipient agencies with more options for using donated foods in their programs. For example, donated foods such as whole chickens or chicken parts may be processed into precooked grilled chicken strips for use in the National School Lunch Program. In some cases, donated foods are provided to processors to prepare meals or for repackaging. A processor's use of a commercial facility to repackage donated foods, or to use donated foods in the preparation of meals, is considered processing in this part.

    (b) Agreement requirement. The processing of donated foods must be performed in accordance with an agreement between the processor and FNS, between the processor and the distributing agency, or, if allowed by the distributing agency, between the processor and a recipient agency or subdistributing agency. However, a processing agreement will not obligate any party to provide donated foods to a processor for processing. The agreements described below are required in addition to, not in lieu of, competitively procured contracts required in accordance with § 250.31. The processing agreement must be signed by an authorized individual for the processor. The different types of processing agreements are described in this section.

    (c) National Processing Agreement. A multi-State processor must enter into a National Processing Agreement with FNS in order to process donated foods into end products in accordance with end product data schedules approved by FNS. FNS also holds and manages such processor's performance bond or letter of credit under its National Processing Agreement, in accordance with § 250.32. FNS does not itself procure or purchase end products under a National Processing Agreement. A multi-State processor must also enter into a State Participation Agreement with the distributing agency in order to sell nationally approved end products in the State, in accordance with paragraph (d) of this section.

    (d) State Participation Agreement. The distributing agency must enter into a State Participation Agreement with a multi-State processor to permit the sale of end products produced under the processor's National Processing Agreement to eligible recipient agencies in the State or to directly purchase such end products. The distributing agency may include other State-specific processing requirements in its State Participation Agreement, such as the methods of end product sales permitted, in accordance with § 250.36, or the use of labels attesting to fulfillment of meal pattern requirements in child nutrition programs. The distributing agency must utilize the following criteria in its selection of processors with which it enters into agreements. These criteria will be reviewed by the appropriate FNS Regional Office during the management evaluation review of the distributing agency.

    (1) The nutritional contribution provided by end products;

    (2) The marketability or acceptability of end products;

    (3) The means by which end products will be distributed;

    (4) Price competitiveness of end products and processing yields of donated foods;

    (5) Any applicable labeling requirements; and

    (6) The processor's record of ethics and integrity, and capacity to meet regulatory requirements.

    (e) In-State Processing Agreement. A distributing agency must enter into an In-State Processing Agreement with an in-State processor to process donated foods into finished end products, unless it permits recipient agencies to enter into Recipient Agency Processing Agreements for such purpose, in accordance with paragraph (f) of this section. Under an In-State Processing Agreement, the distributing agency approves end product data schedules (except red meat and poultry) submitted by the processor, holds and manages the processor's performance bond or letter of credit, in accordance with § 250.32, and assures compliance with other processing requirements. The distributing agency may also purchase the finished end products for distribution to eligible recipient agencies in the State under an In-State Processing Agreement, or may permit recipient agencies to purchase such end products, in accordance with applicable procurement requirements. In the latter case, the In-State Processing Agreement is often called a “master agreement.” A distributing agency that procures end products on behalf of recipient agencies, or that limits recipient agencies' access to the procurement of specific end products through its master agreements, must utilize the following criteria in its selection of processors with which it enters into agreements. These criteria will be reviewed by the appropriate FNS Regional Office during the management evaluation review of the distributing agency:

    (1) The nutritional contribution provided by end products;

    (2) The marketability or acceptability of end products;

    (3) The means by which end products will be distributed;

    (4) Price competitiveness of end products and processing yields of donated foods;

    (5) Any applicable labeling requirements; and

    (6) The processor's record of ethics and integrity, and capacity to meet regulatory requirements.

    (f) Recipient Agency Processing Agreement. The distributing agency may permit a recipient agency to enter into an agreement with an in-State processor to process donated foods and to purchase the finished end products in accordance with a Recipient Agency Processing Agreement. A recipient agency may also enter into a Recipient Agency Processing Agreement on behalf of other recipient agencies, in accordance with an agreement between the parties. The distributing agency may also delegate a recipient agency to approve end product data schedules or select nationally approved end product data schedules, review in-State processor performance reports, manage the performance bond or letter of credit of an in-State processor, and monitor other processing activities under a Recipient Agency Processing Agreement. All such activities must be performed in accordance with the requirements of this part. All Recipient Agency Processing Agreements must be reviewed and approved by the distributing agency. All recipient agencies must utilize the following criteria in its selection of processors with which it enters into agreements:

    (1) The nutritional contribution provided by end products;

    (2) The marketability or acceptability of end products;

    (3) The means by which end products will be distributed;

    (4) Price competitiveness of end products and processing yields of donated foods;

    (5) Any applicable labeling requirements; and

    (6) The processor's record of ethics and integrity, and capacity to meet regulatory requirements.

    (g) Ensuring acceptability of end products. A distributing agency that procures end products on behalf of recipient agencies, or that otherwise limits recipient agencies' access to the procurement of specific end products, must provide for testing of end products to ensure their acceptability by recipient agencies, prior to entering into processing agreements. End products that have previously been tested, or that are otherwise determined to be acceptable, need not be tested. However, such a distributing agency must monitor product acceptability on an ongoing basis.

    (h) Prohibition against subcontracting. A processor may not assign any processing activities under its processing agreement or subcontract to another entity to perform any aspect of processing, without the specific written consent of the other party to the agreement (i.e., distributing or recipient agency, or FNS, as appropriate). The distributing agency may, for example, provide the required consent as part of its State Participation Agreement or In-State Processing Agreement with the processor.

    (i) Agreements between Processors and Distributors. A processor providing end products containing donated foods to a distributor must enter into a written agreement with the distributor. The agreement must reference, at a minimum, the financial liability (i.e., who must pay) for the replacement value of donated foods, not less than monthly end product sales reporting frequency, requirements under § 250.11, and the applicable value pass through system to ensure that the value of donated foods and finished end products are properly credited to recipient agencies. Distributing agencies can set additional requirements.

    (j) Duration of agreements. An agreement between a distributing, or recipient agency and a processor may be up to five years in duration. National Processing Agreements are permanent. Amendments to any agreements may be made, as needed, with the concurrence of both parties to the agreement. Such amendments will be effective for the duration of the agreement, unless otherwise indicated.

    § 250.31 Procurement requirements.

    (a) Applicability of Federal procurement requirements. Distributing and recipient agencies must comply with the requirements in 2 CFR part 200 and part 400, as applicable, in purchasing end products, distribution, or other processing services from processors. Distributing and recipient agencies may use procurement procedures that conform to applicable State or local laws and regulations, but must ensure compliance with the procurement requirements in 2 CFR parts 200 and 400, as applicable.

    (b) Required information in procurement documents. In all procurements of processed end products containing USDA donated foods, procurement documents must include the following information:

    (1) The price to be charged for the end product or other processing service;

    (2) The method of end product sales that will be utilized and assurance that crediting for donated foods will be performed in accordance with the applicable requirements for such method of sales in § 250.36;

    (3) The value of the donated food in the end products; and

    (4) The location for the delivery of the end products.

    § 250.32 Protection of donated food value.

    (a) Performance bond or irrevocable letter of credit. The processor must obtain a performance bond or an irrevocable letter of credit to protect the value of donated foods to be received for processing prior to the delivery of the donated foods to the processor. The processor must provide the performance bond or letter of credit to the distributing or recipient agency, in accordance with its In-State or Recipient Agency Processing Agreement. However, a multi-State processor must provide the performance bond or letter of credit to FNS, in accordance with its National Processing Agreement. For multi-State processors, the minimum amount of the performance bond or letter of credit must be sufficient to cover at least 75 percent of the value of donated foods in the processor's physical or book inventory, as determined annually and at the discretion of FNS for processors under National Processing Agreements. For multi-state processors in their first year of participation in the processing program, the amount of the performance bond or letter of credit must be sufficient to cover 100 percent of the value of donated foods, as determined annually, and at the discretion of FNS. The surety company from which a bond is obtained must be listed in the most current Department of Treasury's Listing of Approved Sureties (Department Circular 570).

    (b) Calling in the performance bond or letter of credit. The distributing or recipient agency must call in the performance bond or letter of credit whenever a processor's lack of compliance with this part, or with the terms of the In-State or Recipient Agency Processing Agreement, results in a loss of donated foods to a distributing or recipient agency and the processor fails to make restitution or respond to a claim action initiated to recover the loss. Similarly, FNS will call in the performance bond or letter of credit in the same circumstances, in accordance with National Processing Agreements, and will ensure that any monies recovered are reimbursed to distributing agencies for losses of entitlement foods.

    § 250.33 Ensuring processing yields of donated foods.

    (a) End product data schedules. The processor must submit an end product data schedule, in a standard electronic format dictated by FNS, for approval before it may process donated foods into end products. For In-State Processing Agreements, the end product data schedule must be approved by the distributing agency and, for products containing donated red meat and poultry, the end product data schedule must also be approved by the Department. For National Processing Agreements, the end product data schedule must be approved by the Department. An end product data schedule must be submitted, and approved, for each new end product that a processor wishes to provide or for a previously approved end product in which the ingredients (or other pertinent information) have been altered. On the end product data schedule, the processor must describe its processing of donated food into an end product, including the following information:

    (1) A description of the end product;

    (2) The types and quantities of donated foods included;

    (3) The types and quantities of other ingredients included;

    (4) The quantity of end product produced; and

    (5) The processing yield of donated food, which may be expressed as the quantity (pounds or cases) of donated food needed to produce a specific quantity of end product or as the percentage of raw donated food versus the quantity returned in the finished end product.

    (b) Processing yields of donated foods. All end products must have a processing yield of donated foods associated with its production and this processing yield must be indicated on its end product data schedule. The processing yield options are limited to 100 percent yield, guaranteed yield, and standard yield.

    (1) Under 100 percent yield, the processor must ensure that 100 percent of the raw donated food is returned in the finished end product. The processor must replace any processing loss of donated food with commercially purchased food of the same generic identity, of U.S. origin, and equal or better in all USDA procurement specifications than the donated food. The processor must demonstrate such replacement by reporting reductions in donated food inventories on performance reports by the amount of donated food contained in the finished end product rather than the amount that went into production. The Department may approve an exception if a processor experiences a significant manufacturing loss.

    (2) Under guaranteed yield, the processor must ensure that a specific quantity of end product (i.e., number of cases) will be produced from a specific quantity of donated food, as determined by the parties to the processing agreement, and, for In-State Processing Agreements, approved by the Department. If necessary, the processor must use commercially purchased food of the same generic identity, of U.S. origin, and equal or better in all USDA procurement specifications than the donated food to provide the guaranteed number of cases of end product to the distributing or recipient agency, as appropriate. The guaranteed yield must be indicated on the end product data schedule.

    (3) Under standard yield, the processor must ensure that a specific quantity of end product (i.e., number of cases), as determined by the Department, will be produced from a specific quantity of donated food. The established standard yield is higher than the yield the processor could achieve under normal commercial production and serves to reward those processors that can process donated foods most efficiently. If necessary, the processor must use commercially purchased food of the same generic identity, of U.S. origin, and equal or better in all USDA procurement specifications than the donated food to provide the number of cases required to meet the standard yield to the distributing or recipient agency, as appropriate. The standard yield must be indicated on the end product data schedule.

    (c) Compensation for loss of donated foods. The processor must compensate the distributing or recipient agency, as appropriate, for the loss of donated foods, or for the loss of commercially purchased foods substituted for donated foods. Such loss may occur, for example, if the processor fails to meet the required processing yield of donated food or fails to produce end products that meet required specifications, if donated foods are spoiled, damaged, or otherwise adulterated at a processing facility, or if end products are improperly distributed. To compensate for such loss, the processor must:

    (1) Replace the lost donated food or commercial substitute with commercially purchased food of the same generic identity, of U.S. origin, and equal or better in all USDA procurement specifications than the donated food; or

    (2) Return end products that are wholesome but do not meet required specifications to production for processing into the requisite quantity of end products that meet the required specifications (commonly called rework products); or

    (3) If the purchase of replacement foods or the reprocessing of products that do not meet the required specifications is not feasible, the processor may, with FNS, distributing agency, or recipient agency approval, dependent on which entity maintains the agreement with the processor, pay the distributing or recipient agency, as appropriate, for the replacement value of the donated food or commercial substitute.

    (d) Credit for sale of by-products. The processor must credit the distributing or recipient agency, as appropriate, for the sale of any by-products produced in the processing of donated foods. The processor must credit for the net value of such sale, or the market value of the by-products, after subtraction of any documented expenses incurred in preparing the by-product for sale. Crediting must be achieved through invoice reduction or by another means of crediting.

    (e) Labeling requirements. The processor must ensure that all end product labels meet Federal labeling requirements. A processor that claims end products fulfill meal pattern requirements in child nutrition programs must comply with the procedures required for approval of labels of such end products.

    § 250.34 Substitution of donated foods.

    (a) Substitution of commercially purchased foods for donated foods. Unless its agreement specifically stipulates that the donated foods must be used in processing, the processor may substitute commercially purchased foods for donated foods that are delivered to it from a USDA vendor. The commercially purchased food must be of the same generic identity, of U.S. origin, and equal or better in all USDA procurement specifications than the donated food. Commercially purchased beef, pork, or poultry must meet the same specifications as donated product, including inspection, grading, testing, and humane handling standards and must be approved by the Department in advance of substitution. The processor may choose to make the substitution before the actual receipt of the donated food. However, the processor assumes all risk and liability if, due to changing market conditions or other reasons, the Department's purchase of donated foods and their delivery to the processor is not feasible. Commercially purchased food substituted for donated food must meet the same processing yield requirements in § 250.33 that would be required for the donated food.

    (b) Prohibition against substitution and other requirements for backhauled donated foods. The processor may not substitute or commingle donated foods that are backhauled to it from a distributing or recipient agency's storage facility. The processor must process backhauled donated foods into end products for sale and delivery to the distributing or recipient agency that provided them and not to any other agency. Distributing or recipient agencies must purchase end products utilizing donated foods backhauled to their contracted processor. The processor may not provide payment for backhauled donated foods in lieu of processing.

    (c) Grading requirements. The processing of donated beef, pork, and poultry must occur under Federal acceptance service grading, which is conducted by the Department's Agricultural Marketing Service. Federal acceptance service grading ensures that processing is conducted in compliance with substitution and yield requirements and in conformance with the end product data schedule. The processor is responsible for paying the cost of acceptance service grading. The processor must maintain grading certificates and other records necessary to document compliance with requirements for substitution of donated foods and with other requirements of this subpart.

    (d) Waiver of grading requirements. The distributing agency may waive the grading requirement for donated beef, pork or poultry in accordance with one of the conditions listed in this paragraph (d). However, grading may only be waived on a case by case basis (e.g., for a particular production run); the distributing agency may not approve a blanket waiver of the requirement. Additionally, a waiver may only be granted if a processor's past performance indicates that the quality of the end product will not be adversely affected. The conditions for granting a waiver include:

    (1) That even with ample notification time, the processor cannot secure the services of a grader;

    (2) The cost of the grader's service in relation to the value of donated beef, pork or poultry being processed would be excessive; or

    (3) The distributing or recipient agency's urgent need for the product leaves insufficient time to secure the services of a grader.

    (e) Use of substituted donated foods. The processor may use donated foods that have been substituted with commercially purchased foods in other processing activities conducted at its facilities.

    § 250.35 Storage, food safety, quality control, and inventory management.

    (a) Storage and quality control. The processor must ensure the safe and effective storage of donated foods, including compliance with the general storage requirements in § 250.12, and must maintain an effective quality control system at its processing facilities. The processor must maintain documentation to verify the effectiveness of its quality control system and must provide such documentation upon request.

    (b) Food safety requirements. The processor must ensure that all processing of donated foods is conducted in compliance with all Federal, State, and local requirements relative to food safety.

    (c) Commingling of donated foods and commercially purchased foods. The processor may commingle donated foods and commercially purchased foods, unless the processing agreement specifically stipulates that the donated foods must be used in processing, and not substituted, or the donated foods have been backhauled from a recipient agency. However, such commingling must be performed in a manner that ensures the safe and efficient use of donated foods, as well as compliance with substitution requirements in § 250.34 and with reporting of donated food inventories on performance reports, as required in § 250.37. The processor must also ensure that commingling of processed end products and other food products, either at its facility or at the facility of a commercial distributor, ensures the sale and delivery of end products that meet the processing requirements in this subpart—e.g., by affixing the applicable USDA certification stamp to the exterior shipping containers of such end products.

    (d) Limitation on donated food inventories. Inventories of donated food at processors may not be in excess of a six-month supply, based on an average amount of donated foods utilized for that period, unless a higher level has been specifically approved by the distributing agency on the basis of a written justification submitted by the processor. Distributing agencies are not permitted to submit food orders for processors reporting no sales activity during the prior year's contract period unless documentation is submitted by the processor which outlines specific plans for donated food drawdown, product promotion, or sales expansion. When inventories are determined to be excessive for a State or processor, e.g., more than six months or exceeding the established protection, FNS may require the transfer of inventory and/or entitlement to another State or processor to ensure utilization prior to the end of the school year.

    (e) Reconciliation of excess donated food inventories. If, at the end of the school year, the processor has donated food inventories in excess of a six-month supply, the distributing agency may, in accordance with paragraph (d) of this section, permit the processor to carry over such excess inventory into the next year of its agreement, if it determines that the processor may efficiently store and process such quantity of donated foods. The distributing agency may also direct the processor to transfer such donated foods to other recipient agencies, or to transfer them to other distributing agencies, in accordance with § 250.12(e). However, if these actions are not practical, the distributing agency must require the processor to pay it for the donated foods held in excess of allowed levels at the replacement value of the donated foods.

    (f) Disposition of donated food inventories upon agreement termination. When an agreement terminates, and is not extended or renewed, the processor must take one of the actions indicated in this paragraph (f) with respect to remaining donated food inventories, as directed by the distributing agency or recipient agency, as appropriate. The processor must pay the cost of transporting any donated foods when the agreement is terminated at the processor's request or as a result of the processor's failure to comply with the requirements of this part. The processor must:

    (1) Return the donated foods, or commercially purchased foods that meet the substitution requirements in § 250.34, to the distributing or recipient agency, as appropriate; or

    (2) Transfer the donated foods, or commercially purchased foods that meet the substitution requirements in § 250.34, to another distributing or recipient agency with which it has a processing agreement; or

    (3) If returning or transferring the donated foods, or commercially purchased foods that meet the substitution requirements in § 250.34, is not feasible, the processor may, with FNS approval, pay the distributing or recipient agency, as appropriate, for the donated foods, at the contract value or replacement value of the donated foods, whichever is higher.

    § 250.36 End product sales and crediting for the value of donated foods.

    (a) Methods of end product sales. To ensure that the distributing or recipient agency, as appropriate, receives credit for the value of donated foods contained in end products, the sale of end products must be performed using one of the systems of end product sales described in this section. All systems of sales utilized must provide clear documentation of crediting for the value of the donated foods contained in the end products.

    (b) Refund or rebate. Under this system, the processor sells end products to the distributing or recipient agency, as appropriate, at the commercial, or gross, price and must provide a refund or rebate for the value of the donated food contained in the end products. The processor may also deliver end products to a commercial distributor for sale to distributing or recipient agencies under this system. In both cases, the processor must provide a refund to the appropriate agency within 30 days of receiving a request for a refund from that agency. The refund request must be in writing, which may be transmitted via email or other electronic submission.

    (c) Direct discount. Under this system, the processor must sell end products to the distributing or recipient agency, as appropriate, at a net price that provides a discount from the commercial case price for the value of donated food contained in the end products.

    (d) Indirect discount. Under this system, the processor delivers end products to a commercial distributor, which must sell the end products to an eligible distributing or recipient agency, as appropriate, at a net price that provides a discount from the commercial case price for the value of donated food contained in the end products. The processor must require the distributor to notify it of such sales, at least on a monthly basis, through automated sales reports or other electronic or written submission. The processor then compensates the distributor for the discount provided for the value of the donated food in its sale of end products.

    (e) Fee-for-service. Under this system, the processor must sell end products to the distributing or recipient agency, as appropriate, at a fee-for-service, which includes all costs to produce the end products not including the value of the donated food used in production. The processor must identify any charge for delivery of end products separately from the fee-for-service on its invoice. If the processor provides end products sold under fee-for-service to a distributor for delivery to the distributing or recipient agency, the processor must identify the distributor's delivery charge separately from the fee-for-service on its invoice to the appropriate agency or may permit the distributor to bill the agency separately for the delivery of end products. When the recipient agency procures storage and distribution of processed end products separately from the processing of donated foods, the recipient agency may provide the distributor written approval to act as the recipient agency's authorized agent for the total case price (i.e., including the fee-for-service and the delivery charge). The processor must require that the distributor notify it of such sales, at least on a monthly basis, through automated sales reports, email, or other electronic or written submission.

    (f) Approved alternative method. The processor or distributor may sell end products under an alternative method approved by FNS and the distributing agency that ensures crediting for the value of donated foods contained in the end products.

    (g) Donated food value used in crediting. In crediting for the value of donated foods in end product sales, the contract value of the donated foods, as defined in § 250.2, must be used.

    (h) Ensuring sale and delivery of end products to eligible recipient agencies. In order to ensure the sale of end products to eligible recipient agencies, the distributing agency must provide the processor with a list of recipient agencies eligible to purchase end products, along with the quantity of raw donated food that is to be delivered to the processor for processing on behalf of each recipient agency. In order to ensure that the distributor sells end products only to eligible recipient agencies, the processor must provide the distributor with a list of eligible recipient agencies and either:

    (1) The quantities of approved end products that each recipient agency is eligible to receive; or

    (2) The quantity of donated food allocated to each recipient agency and the raw donated food (pounds or cases) needed per case of each approved end product.

    § 250.37 Reports, records, and reviews of processor performance.

    (a) Performance reports. The processor must submit a performance report to the distributing agency (or to the recipient agency, in accordance with a Recipient Agency Processing Agreement) on a monthly basis, which must include the information listed in this paragraph (a). Performance reports must be submitted not later than 30 days after the end of the reporting period; however, the final (June) performance report must be submitted within 60 days of the end of the reporting period. The performance report must include the following information for the reporting period, with year-to-date totals:

    (1) A list of all recipient agencies purchasing end products;

    (2) The quantity of donated foods in inventory at the beginning of the reporting period;

    (3) The quantity of donated foods received;

    (4) The quantity of donated foods transferred to the processor from another entity, or transferred by the processor to another entity;

    (5) The quantity of donated foods losses;

    (6) The quantity of end products delivered to each eligible recipient agency;

    (7) The quantity of donated foods remaining at the end of the reporting period;

    (8) A certification statement that sufficient donated foods are in inventory or on order to account for the quantities needed for production of end products;

    (9) Grading certificates, as applicable; and

    (10) Other supporting documentation, as required by the distributing agency or recipient agency.

    (b) Reporting reductions in donated food inventories. The processor must report reductions in donated food inventories on performance reports only after sales of end products have been made, or after sales of end products through distributors have been documented. Documentation of distributor sales must be through the distributing or recipient agency's request for a refund (under a refund or rebate system) or through receipt of the distributor's automated sales reports or other electronic or written reports submitted to the processor (under an indirect discount system or under a fee-for-service system).

    (c) Summary performance report. Along with the submission of performance reports to the distributing agency, a multi-State processor must submit a summary performance report to FNS, on a monthly basis and in a format established by FNS, in accordance with its National Processing Agreement. The summary report must include an accounting of the processor's national inventory of donated foods, including the information listed in this paragraph (c). The report must be submitted not later than 30 days after the end of the reporting period; however, the final performance report must be submitted within 60 days of the end of the reporting period. The summary performance report must include the following information for the reporting period:

    (1) The total donated food inventory by State and the national total at the beginning of the reporting period;

    (2) The total quantity of donated food received by State, with year-to-date totals, and the national total of donated food received;

    (3) The total quantity of donated food reduced from inventory by State, with year-to-date totals, and the national total of donated foods reduced from inventory; and

    (4) The total quantity of donated foods remaining in inventory by State, and the national total, at the end of the reporting period.

    (d) Recordkeeping requirements for processors. The processor must maintain the following records relating to the processing of donated foods:

    (1) End product data schedules and summary end product data schedules, as applicable;

    (2) Receipt of donated foods shipments;

    (3) Production, sale, and delivery of end products, including sales through distributors;

    (4) All agreements with distributors;

    (5) Remittance of refunds, invoices, or other records that assure crediting for donated foods in end products and for sale of byproducts;

    (6) Documentation of Federal or State inspection of processing facilities, as appropriate, and of the maintenance of an effective quality control system;

    (7) Documentation of substitution of commercial foods for donated foods, including grading certificates, as applicable;

    (8) Waivers of grading requirements, as applicable; and

    (9) Required reports.

    (e) Recordkeeping requirements for the distributing agency. The distributing agency must maintain the following records relating to the processing of donated foods:

    (1) In-State Processing Agreements and State Participation Agreements;

    (2) End product data schedules or summary end product data schedules, as applicable;

    (3) Performance reports;

    (4) Grading certificates, as applicable;

    (5) Documentation that supports information on the performance report, as required by the distributing agency (e.g., sales invoices or copies of refund payments);

    (6) Copies of audits of in-State processors and documentation of the correction of any deficiencies identified in such audits;

    (7) The receipt of end products, as applicable; and

    (8) Procurement documents, as applicable.

    (f) Recordkeeping requirements for the recipient agency. The recipient agency must maintain the following records relating to the processing of donated foods:

    (1) The receipt of end products purchased from processors or distributors;

    (2) Crediting for the value of donated foods contained in end products;

    (3) Recipient Agency Processing Agreements, as applicable, and, in accordance with such agreements, other records included in paragraph (e) of this section, if not retained by the distributing agency; and

    (4) Procurement documents, as applicable.

    (g) Review requirements for the distributing agency. The distributing agency must review performance reports and other records that it must maintain, in accordance with the requirements in paragraph (e) of this section, to ensure that the processor:

    (1) Receives donated food shipments;

    (2) Delivers end products to eligible recipient agencies, in the types and quantities for which they are eligible;

    (3) Meets the required processing yields for donated foods; and

    (4) Accurately reports donated food inventory activity and maintains inventories within approved levels.

    § 250.38 Provisions of agreements.

    (a) National Processing Agreement. A National Processing Agreement includes provisions to ensure that a multi-State processor complies with all of the applicable requirements in this part relating to the processing of donated foods.

    (b) Required provisions for State Participation Agreement. A State Participation Agreement with a multi-State processor must include the following provisions:

    (1) Contact information for all appropriate parties to the agreement;

    (2) The effective dates of the agreement;

    (3) A list of recipient agencies eligible to receive end products;

    (4) Summary end product data schedules, with end products that may be sold in the State;

    (5) Assurance that the processor will not substitute or commingle backhauled donated foods and will provide end products processed from such donated foods only to the distributing or recipient agency from which the foods were received;

    (6) Any applicable labeling requirements;

    (7) Other processing requirements implemented by the distributing agency, such as the specific method(s) of end product sales permitted;

    (8) A statement that the agreement may be terminated by either party upon 30 days' written notice;

    (9) A statement that the agreement may be terminated immediately if the processor has not complied with its terms and conditions; and

    (10) A statement requiring the processor to enter into an agreement with any and all distributors delivering processed end products to recipient agencies that ensures adequate data sharing, reporting, and crediting of donated foods, in accordance with § 250.30(i).

    (c) Required provisions of the In-State Processing Agreement. An In-State Processing Agreement must include the following provisions or attachments:

    (1) Contact information for all appropriate parties to the agreement;

    (2) The effective dates of the agreement;

    (3) A list of recipient agencies eligible to receive end products, as applicable;

    (4) In the event that subcontracting is allowed, the specific activities that will be performed under subcontracts;

    (5) Assurance that the processor will provide a performance bond or irrevocable letter of credit to protect the value of donated foods it is expected to maintain in inventory, in accordance with § 250.32;

    (6) End product data schedules for all end products, with all required information, in accordance with § 250.33(a);

    (7) Assurance that the processor will meet processing yields for donated foods, in accordance with § 250.33;

    (8) Assurance that the processor will compensate the distributing or recipient agency, as appropriate, for any loss of donated foods, in accordance with § 250.33(c);

    (9) Any applicable labeling requirements;

    (10) Assurance that the processor will meet requirements for the substitution of commercially purchased foods for donated foods, including grading requirements, in accordance with § 250.34;

    (11) Assurance that the processor will not substitute or commingle backhauled donated foods and will provide end products processed from such donated foods only to the recipient agency from which the foods were received, as applicable;

    (12) Assurance that the processor will provide for the safe and effective storage of donated foods, meet inspection requirements, and maintain an effective quality control system at its processing facilities;

    (13) Assurance that the processor will report donated food inventory activity and maintain inventories within approved levels;

    (14) Assurance that the processor will return, transfer, or pay for, donated food inventories remaining upon termination of the agreement, in accordance with § 250.35(f);

    (15) The specific method(s) of end product sales permitted, in accordance with § 250.36;

    (16) Assurance that the processor will credit recipient agencies for the value of all donated foods, in accordance with § 250.36;

    (17) Assurance that the processor will submit performance reports and meet other reporting and recordkeeping requirements, in accordance with § 250.37;

    (18) Assurance that the processor will obtain independent CPA audits and will correct any deficiencies identified in such audits, in accordance with § 250.20;

    (19) A statement that the distributing agency, subdistributing agency, or recipient agency, the Comptroller General, the Department of Agriculture, or their duly authorized representatives, may perform on-site reviews of the processor's operation to ensure that all activities relating to donated foods are performed in accordance with the requirements in 7 CFR part 250;

    (20) A statement that the agreement may be terminated by either party upon 30 days' written notice;

    (21) A statement that the agreement may be terminated immediately if the processor has not complied with its terms and conditions;

    (22) A statement that extensions or renewals of the agreement, if applicable, are contingent upon the fulfillment of all agreement provisions; and

    (23) A statement requiring the processor to enter into an agreement with any and all distributors delivering processed end products to recipient agencies that ensures adequate data sharing, reporting, and crediting of donated foods, in accordance with § 250.30(i).

    (d) Required provisions for Recipient Agency Processing Agreement. The Recipient Agency Processing Agreement must contain the same provisions as an In-State Processing Agreement, to the extent that the distributing agency permits the recipient agency to perform activities normally performed by the distributing agency under an In-State Processing Agreement (e.g., approval of end product data schedules, review of performance reports, or management of the performance bond). However, a list of recipient agencies eligible to receive end products need not be included.

    (e) Noncompliance with processing requirements. If the processor has not complied with processing requirements, the distributing or recipient agency, as appropriate, must not extend or renew the agreement and may immediately terminate it.

    § 250.39 Miscellaneous provisions.

    (a) Waiver of processing requirements. The Food and Nutrition Service may waive any of the requirements contained in this part for the purpose of conducting demonstration projects to test program changes designed to improve the processing of donated foods.

    (b) Processing activity guidance. Distributing agencies must develop and provide a processing manual or similar procedural material for guidance to contracting agencies, recipient agencies, and processors. Distributing agencies must revise these materials as necessary to reflect policy and regulatory changes. This guidance material must be provided to contracting agencies, recipient agencies, and processors at the time of the approval of the initial agreement by the distributing agency, when there have been regulatory or policy changes which necessitate changes in the guidance materials, and upon request. The manual must include, at a minimum, statements of the distributing agency's policies and procedures regarding:

    (1) Contract approval;

    (2) Monitoring and review of processing activities;

    (3) Recordkeeping and reporting requirements;

    (4) Inventory controls; and

    (5) Refund applications.

    (c) Guidance or information. Guidance or information relating to the processing of donated foods is included on the FNS Web site or may otherwise be obtained from FNS.

    Dated: December 23, 2016. Richard Lucas, Acting Administrator, Food and Nutrition Service.
    [FR Doc. 2016-31561 Filed 1-4-17; 8:45 am] BILLING CODE 3410-30-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-6928; Directorate Identifier 2016-SW-018-AD] RIN 2120-AA64 Airworthiness Directives; Airbus Helicopters Deutschland GmbH Helicopters AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for Airbus Helicopters Deutschland GmbH Helicopters (Airbus Helicopters) Model MBB-BK 117 C-2 and MBB-BK 117 D-2 helicopters. This proposed AD would require installing rivets to the air inlet cover rings (rings). This proposed AD is prompted by reports of rings detaching. The actions of this proposed AD are intended to prevent the unsafe condition on these products.

    DATES:

    We must receive comments on this proposed AD by March 6, 2017.

    ADDRESSES:

    You may send comments by any of the following methods:

    Federal eRulemaking Docket: Go to http://www.regulations.gov. Follow the online instructions for sending your comments electronically.

    Fax: 202-493-2251.

    Mail: Send comments to the U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590-0001.

    Hand Delivery: Deliver to the “Mail” address between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-6928; or in person at the Docket Operations Office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the European Aviation Safety Agency (EASA) AD, the economic evaluation, any comments received, and other information. The street address for the Docket Operations Office (telephone 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    For service information identified in this proposed rule, contact Airbus Helicopters, 2701 N. Forum Drive, Grand Prairie, TX 75052; telephone (972) 641-0000 or (800) 232-0323; fax (972) 641-3775; or at http://www.airbushelicopters.com/techpub. You may review the referenced service information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy, Room 6N-321, Fort Worth, TX 76177.

    FOR FURTHER INFORMATION CONTACT:

    Matt Fuller, Senior Aviation Safety Engineer, Safety Management Group, Rotorcraft Directorate, FAA, 10101 Hillwood Pkwy, Fort Worth, TX 76177; telephone (817) 222-5110; email [email protected]

    SUPPLEMENTARY INFORMATION:

    Comments Invited

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

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

    Discussion

    EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD No. 2016-0001, dated January 4, 2016, to correct an unsafe condition for Airbus Helicopters Model MBB-BK 117 C-2, Model MBB-BK117 C-2e, Model MBB-BK117 D-2, and MBB-BK117 D-2m helicopters. EASA advises that a ring detached and got stuck between the air inlet and the cyclic stick on a Model MBB-BK117 C-2 helicopter, restricting the cyclic stick's range of movement. According to EASA, an inspection on another helicopter found a second loose cover ring. EASA states that this condition, if not corrected, could affect the cyclic stick's range of movement, possibly resulting in degraded control of the helicopter. The EASA AD consequently requires inspections and reinforcement of the rings' installation.

    Determination

    These helicopters have been approved by the aviation authority of Germany and are approved for operation in the United States. Pursuant to our bilateral agreement with Germany, EASA, its technical representative, has notified us of the unsafe condition described in its AD. We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition is likely to exist or develop on other products of the same type designs.

    Related Service Information Under 1 CFR Part 51

    We reviewed Airbus Helicopters Alert Service Bulletin (ASB) MBB-BK117 C-2-21A-011 for Model MBB-BK 117 C-2 and Model MBB-BK117 C-2e helicopters and ASB MBB-BK117 D-2-21A-004 for Model MBB-BK 117 D-2 and Model MBB-BK 117 D-2m helicopters. Both ASBs are Revision 0 and dated November 16, 2015. This service information introduces an improved attachment method for the ring using rivets. The ASBs specify inspecting the air inlet to determine whether the ring is loose, and then gluing and riveting the ring to the air inlet at different timeframes, depending on whether it is loose.

    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.

    Proposed AD Requirements

    This proposed AD would require within 100 hours time-in-service (TIS), manually inspecting each ring to determine if it is loose. If the ring is loose, this proposed AD would require gluing and riveting the ring on the air inlet. If the ring is not loose, this proposed AD would require, within 400 hours TIS, manually inspecting the ring again to determine if it is loose. If the ring is loose, this proposed AD would require gluing and riveting the ring on the air inlet. If the ring is not loose, this proposed AD would require riveting the ring on the air inlet.

    After the effective date of this AD, this proposed AD would prohibit installing an air inlet P/N B212M20C1005 on any helicopter unless the ring has been riveted to the air inlet in accordance with the requirements of this proposed AD.

    Differences Between This Proposed AD and the EASA AD

    The EASA AD applies to Model MBB-BK117 D-2m helicopters. This proposed AD would not because this model does not have an FAA type certificate. The EASA AD requires compliance for Model MBB-BK117 D-2 helicopters within 400 hours TIS, while this proposed AD would require compliance within 100 hours TIS. The EASA AD requires marking the air inlet with the applicable ASB once it is glued and riveted, while this proposed AD would not.

    Costs of Compliance

    We estimate that this proposed AD would affect 141 helicopters of U.S. Registry and that labor costs would average $85 per work-hour. Based on these estimates, we expect the following costs:

    Manually inspecting the left and right air inlet cover rings would require a half work-hour for a labor cost of $43 per helicopter. No parts would be needed, so the U.S. fleet cost would total $6,063.

    Riveting the rings would require 2 work-hours for a labor cost of $170 per helicopter. The cost for parts would be minimal for a U.S. fleet cost of $23,970.

    Authority for This Rulemaking

    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.

    Regulatory Findings

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

    For the reasons discussed, I certify this proposed regulation:

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

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

    3. Will not affect intrastate aviation in Alaska 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 proposed AD and placed it in the AD docket.

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Airbus Helicopters Deutschland GmbH Helicopters: Docket No. FAA-2016-6928; Directorate Identifier 2016-SW-018-AD. (a) Applicability

    This AD applies to Airbus Helicopters Deutschland GmbH Helicopters Model MBB-BK 117C-2 (including configuration C-2e) helicopters, serial number 9004 through 9725, and Model MBB-BK 117D-2 helicopters, serial number 20003 through 20045, certificated in any category, with an air inlet part number (P/N) B212M20C1005 installed.

    (b) Unsafe Condition

    This AD defines the unsafe condition as a detached air inlet cover ring (ring), which could become stuck between the air inlet and the cyclic stick, restricting movement of the cyclic stick. This condition could result in loss of helicopter control.

    (c) Comments Due Date

    We must receive comments by March 6, 2017.

    (d) Compliance

    You are responsible for performing each action required by this AD within the specified compliance time unless it has already been accomplished prior to that time.

    (e) Required Actions

    (1) Within 100 hours time-in-service (TIS), manually inspect each ring to determine if it is loose. If a ring is loose, before further flight, glue the ring on the air inlet using an adhesive (CM 687 or CM 6044 or equivalent) as shown in Figure 1 of Airbus Helicopters Alert Service Bulletin (ASB) MBB-BK117 C-2-21A-011, Revision 0, dated November 16, 2015 (ASB C-2-21A-011), or ASB MBB-BK117 D-2-21A-004, Revision 0, dated November 16, 2015 (ASB D-2-21A-004), as applicable to your model helicopter. Rivet the ring to the air inlet in accordance with the Accomplishment Instructions, paragraphs 3.B.4.2 through 3.B.4.4 of ASB C-2-21A-011 or paragraphs 3.B.3.2 through 3.B.3.4 of ASB D-2-21A-004.

    (2) If a ring is not loose, within 400 hours TIS:

    (i) Manually inspect the ring to determine if it is loose. If the ring is loose, before further flight, glue the ring on the air inlet using an adhesive (CM 687 or CM 6044 or equivalent) as shown in Figure 1 of ASB C-2-21A-011 or ASB D-2-21A-004.

    (ii) Rivet the ring to the air inlet in accordance with the Accomplishment Instructions, paragraphs 3.B.3.2 through 3.B.3.4 of ASB C-2-21A-011 or paragraphs 3.B.2.2 through 3.B.2.4 of ASB D-2-21A-004.

    (3) After the effective date of this AD, do not install an air inlet P/N B212M20C1005 on any helicopter unless the ring has been riveted to the air inlet in accordance with the requirements of this AD.

    (f) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Safety Management Group, FAA, may approve AMOCs for this AD. Send your proposal to: Matt Fuller, Senior Aviation Safety Engineer, Safety Management Group, Rotorcraft Directorate, FAA, 10101 Hillwood Pkwy, Fort Worth, TX 76177; telephone (817) 222-5110; email [email protected]

    (2) For operations conducted under a 14 CFR part 119 operating certificate or under 14 CFR part 91, subpart K, we suggest that you notify your principal inspector, or lacking a principal inspector, the manager of the local flight standards district office or certificate holding district office before operating any aircraft complying with this AD through an AMOC.

    (g) Additional Information

    The subject of this AD is addressed in European Aviation Safety Agency (EASA) AD No. 2016-0001, dated January 4, 2016. You may view the EASA AD on the Internet at http://www.regulations.gov in the AD Docket.

    (h) Subject

    Joint Aircraft Service Component (JASC) Code: 2150, Cabin Cooling System.

    Issued in Fort Worth, Texas, on December 21, 2016. Lance T. Gant, Manager, Rotorcraft Directorate, Aircraft Certification Service.
    [FR Doc. 2016-31865 Filed 1-4-17; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-9523; Directorate Identifier 2016-NM-134-AD] RIN 2120-AA64 Airworthiness Directives; The Boeing Company Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to supersede Airworthiness Directive (AD) 2014-12-13, which applies to all The Boeing Company Model 737-100, -200, -200C, -300, -400, and -500 series airplanes. AD 2014-12-13 currently requires repetitive inspections for cracking of the main landing gear (MLG) beam, and the rear spar upper chord and rear spar web; and repair if necessary. Since we issued AD 2014-12-13, we received reports of additional cracking in the inspar upper skin, rear spar web and rear spar upper chord. This proposed AD would expand the inspection area and add related investigative and corrective actions if necessary. We are proposing this AD to address the unsafe condition on these products.

    DATES:

    We must receive comments on this proposed AD by February 21, 2017.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: 202-493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this NPRM, contact Boeing Commercial Airplanes, Attention: Contractual & Data Services (C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740; telephone 562-797-1717; Internet https://www.myboeingfleet.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221. It is also available on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9523.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9523; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (phone: 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Payman Soltani, Aerospace Engineer, Airframe Branch, ANM-120L, FAA, Los Angeles Aircraft Certification Office (ACO), 3960 Paramount Boulevard, Lakewood, CA 90712-4137; phone: 562-627-5313; fax: 562-627-5210; email: [email protected]

    SUPPLEMENTARY INFORMATION: Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2016-9523; Directorate Identifier 2016-NM-134-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

    Discussion

    On June 6, 2014, we issued AD 2014-12-13, Amendment 39-17874 (79 FR 39300, July 10, 2014) (“AD 2014-12-13”), for all The Boeing Company Model 737-100, -200, -200C, -300, -400, and -500 series airplanes. AD 2014-12-13 requires repetitive inspections for cracking of the aft support fitting for the MLG beam, the rear spar upper chord and rear spar web in the area of rear spar station (RSS) 224.14; and repair if necessary. AD 2014-12-13 resulted from reports of cracks found in the aft support fitting, the rear spar upper chord, and the rear spar web. We issued AD 2014-12-13 to detect and correct cracking of the aft support fitting for the MLG beam, the rear spar upper chord and rear spar web in the area of RSS 224.14, which could grow and result in a fuel leak and possible fire.

    Other Related Rulemaking

    On October 11, 2015, we issued AD 2015-21-08, Amendment 39-18301 (80 FR 65921, October 28, 2015) (“AD 2015-21-08”), for certain The Boeing Company Model 737-100, -200, -200C, -300, -400, and -500 series airplanes. AD 2015-21-08 was prompted by a report that an operator discovered a crack in a certain section of the inspar upper skin, just forward of the rear spar on the right wing. AD 2015-21-08 requires repetitive eddy current inspections for any cracking in the inspar upper skin, and related investigative and corrective actions if necessary. We issued AD 2015-21-08 to detect and correct any cracking in the inspar upper skin and rear spar upper chord, which could result in the inability of the structure to carry limit load, or result in a fuel leak, which could prevent continued safe flight and landing.

    Actions Since AD 2014-12-13 and 2015-21-08 Were Issued

    Since we issued AD 2014-12-13 and AD 2015-21-08, an operator discovered a 2.375-inch-long crack in the inspar upper skin at wing buttock line (WBL) 157, just forward of the rear spar on the right wing and adjacent to the inspection area specified in Boeing Special Attention Service Bulletin 737-57-1318, dated May 15, 2013 (the source of service information for the actions required by AD 2014-12-13). Two additional smaller cracks were found in the skin at two holes common to the rear spar in the same area. Subsequent inspections revealed that the right rear spar upper chord was almost completely severed and the left rear spar chord was completely severed. Rear spar web cracks were also noted on both wings. The affected airplane had accumulated 51,548 total flight cycles.

    After the initial report of the inspar upper skin crack, additional reports of inspar upper skin cracking were found in the same area. Inspar upper skin cracking at this location is the subject of AD 2015-21-08, which correlates with Boeing Alert Service Bulletin 737-57A1326, dated September 22, 2015; and Boeing Alert Service Bulletin 737-57A1328, dated July 22, 2016. Although skin cracking is addressed outside of Boeing Special Attention Service Bulletin 737-57-1318, dated May 15, 2013, analysis shows that rear spar upper chord cracking can negatively influence the inspar upper skin cracking condition. In addition to influencing skin cracking, rear spar upper chord cracking can also influence cracking at other mating structures.

    In addition, since Boeing Alert Service Bulletin 737-57A1318, dated May 15, 2013, has been issued, multiple operators have also reported cracking in the MLG beam forward support fitting, which was found while doing repairs to address cracked chords. Therefore, the MLG beam forward support fitting has been added to the inspection area, and the inspection threshold and intervals have been shortened, as specified in Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016.

    Related Service Information Under 1 CFR Part 51

    We reviewed Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016. The service information describes procedures for repetitive high frequency eddy current (HFEC) open hole inspections for any cracking in the forward support fitting, the aft support fitting, the rear spar upper chord, and the rear spar web at the 12 fastener holes (locations 1-12). The service information also describes the option of HFEC open hole inspections for any cracking in the forward support fitting and the aft support fitting, and HFEC surface inspections for any cracking in the rear spar upper chord and rear spar upper web, as applicable, and related investigative and corrective actions.

    We also reviewed Boeing Alert Service Bulletin 737-57A1328, dated July 22, 2016. The service information describes procedures for repetitive eddy current inspections of the left and right wing for any cracking in the inspar upper skin and the repair parts if applicable, 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.

    FAA's Determination

    We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

    Proposed AD Requirements

    Although this proposed AD does not explicitly restate the requirements of AD 2014-12-13, this proposed AD would retain all of the requirements of AD 2014-12-13. Those requirements are referenced in the service information identified previously, which, in turn, is referenced in paragraphs (g) and (h) of this proposed AD. This proposed AD would also require accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between this Proposed AD and the Service Information.” For information on the procedures and compliance times, see this service information at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9523.

    The phrase “related investigative actions” is used in this proposed AD. Related investigative actions are follow-on actions that (1) are related to the primary action, and (2) further investigate the nature of any condition found. Related investigative actions in an AD could include, for example, inspections.

    The phrase “corrective actions” is used in this proposed AD. Corrective actions correct or address any condition found. Corrective actions in an AD could include, for example, repairs.

    Differences Between This Proposed AD and the Service Information

    Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016; and Boeing Alert Service Bulletin 737-57A1328, dated July 22, 2016; specify to contact the manufacturer for certain instructions, but this proposed AD would require accomplishment of repair methods, modification deviations, and alteration deviations in one of the following ways:

    • In accordance with a method that we approve; or

    • Using data that meet the certification basis of the airplane, and that have been approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) whom we have authorized to make those findings.

    Costs of Compliance

    We estimate that this proposed AD affects 471 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:

    Estimated Costs Action Labor cost Parts cost Cost per product Cost on U.S. operators HFEC open hole inspections 82 work-hours × $85 per hour = $6,970 per inspection cycle $0 $6,970 per inspection cycle $3,282,870 per inspection cycle. Eddy current inspection 14 work-hours × $85 per hour = $1,190 per inspection cycle 0 $1,190 per inspection cycle $560,490 per inspection cycle. Estimated Costs for Optional Actions Action Labor cost Parts cost Cost per product Inspection Up to 41 work-hours × $85 per hour = $3,485 per inspection cycle $0 Up to $1,641,435 per inspection cycle.

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

    Authority for This Rulemaking

    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.

    Regulatory Findings

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

    For the reasons discussed above, I certify that the proposed regulation:

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

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

    (3) Will not affect intrastate aviation in Alaska, and

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by removing Airworthiness Directive (AD) 2014-12-13, Amendment 39-17874 (79 FR 39300, July 10, 2014), and adding the following new AD: The Boeing Company: Docket No. FAA-2016-9523; Directorate Identifier 2016-NM-134-AD. (a) Comments Due Date

    The FAA must receive comments on this AD action by February 21, 2017.

    (b) Affected ADs

    This AD replaces AD 2014-12-13, Amendment 39-17874 (79 FR 39300, July 10, 2014). This AD affects AD 2015-21-08, Amendment 39-18301 (80 FR 65921, October 28, 2015).

    (c) Applicability

    This AD applies to all The Boeing Company Model 737-100, -200, -200C, -300, -400, and -500 series airplanes, certificated in any category.

    (d) Subject

    Air Transport Association (ATA) of America Code 57, Wings.

    (e) Unsafe Condition

    This AD was prompted by reports of additional cracking in the inspar upper skin at Wing Buttock Line (WBL) 157 and in the skin at two holes common to the rear spar in the same area, and rear spar web cracks were also noted on both wings. Subsequent inspections revealed that the right rear spar upper chord was almost completely severed and the left rear spar upper chord was completely severed. We are issuing this AD to detect and correct cracking of the forward and aft support fittings for the main landing gear (MLG) beam, the rear spar upper chord and rear spar web in the area of rear spar station (RSS) 224.14, which could grow and result in a fuel leak and possible fire.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Required Actions for Group 1 Airplanes

    For airplanes identified as Group 1 in Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016: At the applicable time specified in table 1 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016, except as required by paragraph (j)(3) of this AD, do applicable inspections and corrective actions using a method approved in accordance with the procedures specified in paragraph (m) of this AD.

    (h) Required Actions for Groups 2-7 Airplanes

    For airplanes identified as Groups 2-7 in Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016: At the applicable time specified in table 2 through table 9 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016, except as required by paragraph (j)(3) of this AD: Do high frequency eddy current (HFEC) open hole inspections for any cracking in the forward support fitting, the aft support fitting, the rear spar upper chord, and the rear spar web at the 12 fastener holes (locations 1-12); or HFEC open hole inspections for any cracking in the forward support fitting and the aft support fitting, and HFEC surface inspection for any cracking in the rear spar upper chord and rear spar upper web; as applicable, and do all applicable related investigative and corrective actions, in accordance with the Accomplishment Instructions of Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016. Do all applicable related investigative and corrective actions before further flight. Thereafter, repeat the HFEC inspection at the applicable time specified in table 2 through table 9 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016. Options provided in Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016, for accomplishing the inspection are acceptable for the corresponding requirements of this paragraph provided that the inspections are done at the applicable times in paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016.

    (i) Eddy Current Inspection

    For airplanes identified in Boeing Alert Service Bulletin 737-57A1328, dated July 22, 2016: At the applicable time specified in table 1 and table 2 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 737-57A1328, dated July 22, 2016, except as required by paragraph (j)(2) of this AD, do an eddy current inspection of the left and right wings for any cracking in the inspar upper skin, and at the repair parts if applicable, and do all applicable related investigative and corrective actions, in accordance with the Accomplishment Instructions of Boeing Alert Service Bulletin 737-57A1328, dated July 22, 2016. Do all related investigative and corrective actions before further flight. Thereafter, repeat the eddy current inspection at the applicable time specified in table 1 and table 2 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 737-57A1328, dated July 22, 2016.

    (j) Exceptions to the Service Information

    (1) If any cracking is found during any inspection required by this AD, and Boeing Alert Service Bulletin 737-57A1328, dated July 22, 2016, specifies to contact Boeing for appropriate action: Before further flight, repair using a method approved in accordance with the procedures specified in paragraph (m) of this AD.

    (2) Where Boeing Alert Service Bulletin 737-57A1328, dated July 22, 2016, specifies a compliance time “after the Original Issue date of this service bulletin,” paragraph (i) of this AD requires compliance within the specified compliance time after the effective date of this AD.

    (3) Where Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016, specifies a compliance time “after the Revision 1 date of this service bulletin, whichever occurs later,” paragraphs (g) and (h) of this AD require compliance within the specified compliance time after the effective date of this AD.

    (k) Terminating Action

    Accomplishing the initial inspections and applicable related investigative and corrective actions required by paragraphs (g), (h), and (i) of this AD, as applicable, in accordance with the Accomplishment Instructions of Boeing Alert Service Bulletin 737-57A1318, Revision 1, dated July 22, 2016; and Boeing Alert Service Bulletin 737-57A1328, dated July 22, 2016, terminates all requirements of AD 2015-21-08.

    (l) Credit for Previous Actions

    This paragraph provides credit for the actions specified in paragraphs (g) and (h) of this AD, if those actions were performed before the effective date of this AD using Boeing Alert Service Bulletin 737-57A1318, May 15, 2013, which was incorporated by reference in AD 2014-03-06, Amendment 39-17743 (79 FR 39300, July 10, 2014).

    (m) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Los Angeles Aircraft Certification Office (ACO), ANM-120L, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ACO, send it to the attention of the person identified in paragraph (n)(1) of this AD. Information may be emailed to: [email protected]

    (2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.

    (3) An AMOC that provides an acceptable level of safety may be used for any repair, modification, or alteration required by this AD if it is approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) that has been authorized by the Manager, Los Angeles ACO, to make those findings. To be approved, the repair method, modification deviation, or alteration deviation must meet the certification basis of the airplane, and the approval must specifically refer to this AD.

    (4) Except as required by paragraph (j) of this AD: For service information that contains steps that are labeled as Required for Compliance (RC), the provisions of paragraphs (m)(4)(i) and (m)(4)(ii) of this AD apply.

    (i) The steps labeled as RC, including substeps under an RC step and any figures identified in an RC step, must be done to comply with the AD. If a step or sub-step is labeled “RC Exempt,” then the RC requirement is removed from that step or sub-step. An AMOC is required for any deviations to RC steps, including substeps and identified figures.

    (ii) Steps not labeled as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the RC steps, including substeps and identified figures, can still be done as specified, and the airplane can be put back in an airworthy condition.

    (n) Related Information

    (1) For more information about this AD, contact Payman Soltani, Aerospace Engineer, Airframe Branch, ANM-120L, FAA, Los Angeles ACO, 3960 Paramount Boulevard, Lakewood, CA 90712-4137; phone: 562-627-5313; fax: 562-627-5210; email: [email protected]

    (2) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Contractual & Data Services (C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740; telephone 562-797-1717; Internet https://www.myboeingfleet.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, Washington, on December 16, 2016. Ross Landes, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-31367 Filed 1-4-17; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-9380; Directorate Identifier 2016-NE-21-AD] RIN 2120-AA64 Airworthiness Directives; CFE Company Turbofan Engines AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for certain CFE Company (CFE) turbofan engines. This proposed AD was prompted by a quality escape for high-pressure compressor (HPC) impellers made from forgings with nonconforming material grain size. This proposed AD would require removal of the HPC impeller. We are proposing this AD to correct the unsafe condition on these products.

    DATES:

    We must receive comments on this proposed AD by February 21, 2017.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: 202-493-2251.

    Mail: U.S. Department of Transportation, Docket Operations,M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this NPRM, contact CFE Company, 111 S. 34th Street, Phoenix, Arizona 85034-2802; phone: 800-601-3099; Internet: https://www.myaerospace.com. You may view this referenced service information at the FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA. For information on the availability of this material at the FAA, call 781-238-7125.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9380; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (phone: 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Martin Adler, Aerospace Engineer, Engine Certification Office, FAA, 1200 District Avenue, Burlington, MA 01803; phone: 781-238-7157; fax: 781-238-7199; email: [email protected]

    SUPPLEMENTARY INFORMATION:

    Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2016-9380; Directorate Identifier 2016-NE-21-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

    Discussion

    We propose to adopt an AD for certain CFE CFE738-1-1B model turbofan engines with HPC impeller, part number (P/N) 6079T77P07 or P/N 6079T77P09 installed. This proposed AD was prompted by a quality escape for HPC impellers made from forgings with nonconforming material grain size. This condition, if not corrected, could result in failure of the HPC impeller, damage to the engine, and damage to the airplane.

    Related Service Information Under 1 CFR Part 51

    We reviewed CFE Service Bulletin (SB) CFE738-72-8080, Revision 0, dated August 18, 2016. The SB describes procedures for replacing specific serial numbered HPC impellers, P/N 6079T77P07 or P/N 6079T77P09. 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.

    FAA's Determination

    We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

    Proposed AD Requirements

    This proposed AD would require removal of affected HPC impellers from service and replacement with a part eligible for installation.

    Costs of Compliance

    We estimate that this proposed AD affects 176 engines installed on airplanes of U.S. registry.

    We estimate the following costs to comply with this proposed AD:

    Estimated Costs Action Labor cost Parts cost Cost per
  • product
  • Cost on U.S.
  • operators
  • Pro-rated HPC impeller $0.00 $42,240 $42,240 $7,434,240
    Authority for This Rulemaking

    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.

    Regulatory Findings

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

    For the reasons discussed above, I certify this proposed regulation:

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

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

    (3) Will not affect intrastate aviation in Alaska, and

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): CFE Company: Docket No. FAA-2016-9380; Directorate Identifier 2016-NE-21-AD. (a) Comments Due Date

    We must receive comments by February 21, 2017.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to CFE Company (CFE) CFE738-1-1B model turbofan engines with a high-pressure compressor (HPC) impeller, part number (P/N) 6079T77P07 or P/N 6079T77P09, with a serial number listed in CFE Service Bulletin (SB) CFE738-72-8080, Revision 0, dated August 18, 2016, installed.

    (d) Subject

    Joint Aircraft System Component (JASC) of America Code 7230, Turbine Engine Compressor Section.

    (e) Unsafe Condition

    This AD was prompted by a quality escape for HPC impellers made from forgings with nonconforming material grain size. We are issuing this AD to prevent uncontained failure of the HPC impeller, damage to the engine, and damage to the airplane.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Required Action

    Remove all affected HPC impellers from service at the next piece-part exposure and replace with a part eligible for installation.

    (h) Definition

    For the purposes of this AD, “piece-part exposure” is defined as separation of the impeller from the compressor rotor assembly.

    (i) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Engine Certification Office, FAA, may approve AMOCs for this AD. Use the procedures found in 14 CFR 39.19 to make your request. You may email your request to: [email protected]

    (2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.

    (j) Related Information

    (1) For more information about this AD, contact Martin Adler, Aerospace Engineer, Engine Certification Office, FAA, 1200 District Avenue, Burlington, MA 01803; phone: 781-238-7157; fax: 781-238-7199; email: [email protected]

    (2) For service information identified in this proposed AD, contact CFE Company, 111 S. 34th Street, Phoenix, Arizona 85034-2802; phone: 800-601-3099; Internet: https://www.myaerospace.com.

    (3) You may view this service information at FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA. For information on the availability of this material at the FAA, call 781-238-7125.

    Issued in Burlington, Massachusetts, on December 22, 2016. Carlos A. Pestana, Acting Manager, Engine & Propeller Directorate, Aircraft Certification Service.
    [FR Doc. 2016-31780 Filed 1-4-17; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-6693; Directorate Identifier 2015-SW-033-AD] RIN 2120-AA64 Airworthiness Directives; Airbus Helicopters AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for Airbus Helicopters Model AS332C, AS332C1, AS332L, AS332L1, AS332L2, and EC225LP helicopters. This proposed AD would require repetitive inspections of the intermediate gear box (IGB) fairing. This proposed AD is prompted by separation of the IGB fairing from the fairing gutter and subsequent interference with the drive shaft. The actions of this proposed AD are intended to prevent the unsafe condition on these products.

    DATES:

    We must receive comments on this proposed AD by March 6, 2017.

    ADDRESSES:

    You may send comments by any of the following methods:

    Federal eRulemaking Docket: Go to http://www.regulations.gov. Follow the online instructions for sending your comments electronically.

    Fax: 202-493-2251.

    Mail: Send comments to the U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590-0001.

    Hand Delivery: Deliver to the “Mail” address between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-6693; or in person at the Docket Operations Office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the economic evaluation, any comments received, the European Aviation Safety Agency (EASA) AD, and other information. The street address for the Docket Operations Office (telephone 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    For service information identified in this proposed rule, contact Airbus Helicopters, 2701 N. Forum Drive, Grand Prairie, TX 75052; telephone (972) 641-0000 or (800) 232-0323; fax (972) 641-3775; or at http://www.airbushelicopters.com/techpub. You may review the referenced service information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy, Room 6N-321, Fort Worth, TX 76177.

    FOR FURTHER INFORMATION CONTACT:

    David Hatfield, Aviation Safety Engineer, Safety Management Group, Rotorcraft Directorate, FAA, 10101 Hillwood Pkwy, Fort Worth, TX 76177; telephone (817) 222-5116; email [email protected]

    SUPPLEMENTARY INFORMATION:

    Comments Invited

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

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

    Discussion

    EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD No. 2015-0092, dated May 26, 2015, to correct an unsafe condition for Airbus Model AS332C, AS332C1, AS332L, AS332L1, AS332L2, and EC225LP helicopters with certain part-numbered IGB fairings installed. EASA advises of occurrences involving separation of the angle section of the IGB fairing from the IGB fairing gutter, which caused interference with the tail rotor (T/R) inclined drive shaft. EASA states that this condition, if not detected and corrected, could lead to failure of the T/R drive shaft, loss of the T/R drive, and consequent reduced control of the helicopter. To address this condition, EASA issued a series of ADs to require repetitive inspections of the IGB fairing and its attachment supports and other corrective actions. According to EASA, reports of cracks and separation of the gutter continued to occur. EASA superseded its previous ADs and issued AD No. 2011-0189-E, dated September 29, 2011, to require additional inspections of the IGB fairing and attachment supports.

    After EASA issued AD No. 2011-0189-E, Airbus Helicopters developed a new IGB fairing, part number (P/N) 332A24-0322-00, which is a one-piece full composite part that integrates a gutter. EASA then superseded AD No. 2011-0189-E and issued AD No. 2015-0092, retaining the inspection requirements but requiring installation of the new composite IGB fairing as terminating action for the inspections.

    FAA's Determination

    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 proposing this AD because we evaluated all known relevant information and determined that an unsafe condition is likely to exist or develop on other products of the same type design.

    Related Service Information Under 1 CFR part 51

    We reviewed Airbus Helicopters Emergency Alert Service Bulletin (EASB), Revision 5, dated March 9, 2015, which is one document with three different identification numbers. EASB No. 53.01.47 is for Model AS332C, C1, L, L1, L2, and military model B, B1, M, M1, and F1 helicopters. EASB No. 53.00.48 is for military Model AS532-series helicopters. EASB No. 53A001 is for Model EC225 LP and the military Model EC725AP helicopter. EASB Nos. 53.01.47 and 53A001 are proposed for incorporation by reference in this proposed AD. EASB No. 53.00.48 is not proposed for incorporation by reference in this proposed AD.

    This service information specifies repetitive inspections of the IGB fairing, attachment supports, and fairing gutter. This service information also advises that IGB fairing P/Ns 332A24-0303-05XX, 332A24-0303-06XX, 332A08-1391-00, and 332A08-1391-01 are unfit for flight beginning December 1, 2017, and that these fairings should be replaced with a new composite fairing P/N 332A24-0322-00.

    We also reviewed Airbus Helicopters Service Bulletin No. AS332-53.01.78, Revision 0, dated March 9, 2015, for FAA type-certificated Model AS332C, C1, L, L1, and L2 helicopters and military Model AS332B, B1, F1, M, and M1 helicopters, and Airbus Helicopter Service Bulletin No. EC225-53-041, Revision 0, dated March 9, 2015, for the Model EC225LP helicopter. The service information specifies replacing each IGB fairing with a newly designed fairing. Airbus Helicopters identifies replacement of the IGB fairing under these service instructions as Modification 0726819.

    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.

    Proposed AD Requirements

    This proposed AD would require repetitively inspecting the IGB fairing and attachment supports for a crack. If there is a crack in an attachment support, this proposed AD would require replacing the attachment support. If there is a crack in the fairing, this proposed AD would require replacing the IGB fairing with a composite fairing P/N 332A24-0322-00.

    For helicopters with IGB fairing P/N 332A24-0303-05XX or P/N 332A24-0303-06XX, this proposed AD would also require repetitively inspecting the fairing gutter for a crack. If there is a crack in the fairing gutter, this proposed AD would require inspecting for interference and separation.

    This proposed AD would also require replacing the IGB fairing with IGB fairing P/N 332A24-0322-00 within 150 hours TIS, if not previously replaced as the result of the repetitive inspections. Replacing the IGB fairing with IGB fairing P/N 332A24-0322-00 would be terminating action for the repetitive inspections.

    Lastly, this proposed AD would prohibit installing an IGB fairing P/N 332A24-0303-05XX, P/N 332A24-0303-06XX, P/N 332A08-1391-00, or P/N 332A08-1391-01 on any helicopter.

    Differences Between This Proposed AD and the EASA AD

    The EASA AD requires replacing the IGB fairing with the composite fairing within 31 months. This proposed AD would require this replacement within 150 hours TIS.

    Costs of Compliance

    We estimate that this proposed AD would affect 11 helicopters of U.S. Registry and that labor costs average $85 per work-hour. Based on these estimates, we expect the following costs:

    • Visually inspecting each IGB fairing and the left- and right-hand attachment supports for a crack would require a 0.5 work-hour for a total cost of $43 per helicopter and $473 for the U.S. fleet, per inspection cycle.

    • Replacing the IGB fairing would require 2 work hours and parts would cost $2,600, for a total cost of $2,770 per helicopter and $30,470 for the U.S. fleet.

    • Replacing the attachment supports would require 2 work hours and parts would cost $1,100 for a total cost of $1,270 per helicopter.

    • Visually inspecting for a crack in the fairing gutter would require 0.5 work hour for a total cost of about $43 per helicopter.

    • Inspecting for interference and separation of the fairing gutter would require 0.5 work hour for a total cost of $43 per helicopter.

    • Replacing the inclined drive shaft tube would require 2 work hours and parts would cost $18,399, for a total cost of $18,569 per helicopter.

    • Replacing a hydraulic pipe would require 2 work hours and parts would cost $1,322, for a total cost of $1,492 per helicopter.

    • Repairing the flight control assembly would require 2 work hours and parts would cost $484, for a total cost of $654 per helicopter.

    Authority for This Rulemaking

    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.

    Regulatory Findings

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

    For the reasons discussed, I certify this proposed regulation:

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

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

    3. Will not affect intrastate aviation in Alaska 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 proposed AD and placed it in the AD docket.

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Airbus Helicopters: Docket No. FAA-2016-6693; Directorate Identifier 2015-SW-033-AD. (a) Applicability

    This AD applies to Model AS332C, AS332C1, AS332L, AS332L1, AS332L2, and EC225LP helicopters with an intermediate gear box (IGB) fairing part number (P/N) 332A24-0303-05XX, 332A24-0303-06XX, 332A08-1391-00, or 332A08-1391-01 installed, where “XX” is any two alphanumeric characters, certificated in any category.

    (b) Unsafe Condition

    This AD defines the unsafe condition as detachment of the angle section of an IGB and subsequent interference between an IGB fairing and tail rotor inclined drive shaft. This condition could result in failure of a tail rotor drive shaft, loss of the tail rotor drive, and subsequent loss of control of the helicopter.

    (c) Comments Due Date

    We must receive comments by March 6, 2017.

    (d) Compliance

    You are responsible for performing each action required by this AD within the specified compliance time unless it has already been accomplished prior to that time.

    (e) Required Actions

    (1) Within 15 hours time-in-service (TIS) and thereafter at intervals not to exceed 15 hours TIS, visually inspect the IGB fairing and the left- and right-hand attachment supports for a crack as shown in Figure 2 of Airbus Helicopters Emergency Alert Service Bulletin (EASB) No. 53.01.47, Revision 5, dated March 5, 2015 (EASB No. 53.01.47) or EASB No. 53A001, Revision 5, dated March 5, 2015 (EASB No. 53A001), as appropriate for your model helicopter.

    (i) If there is a crack in an attachment support, replace the attachment support.

    (ii) If there is a crack in the fairing, replace the IGB fairing with IBG fairing P/N 332A24-0322-00 in accordance with the Accomplishment Instructions, paragraph 3.B.2, of Airbus Helicopters Service Bulletin No. AS332-53.01.78, Revision 0, dated March 9, 2015 (SB No. AS332-53.01.78) or Service Bulletin No. EC225-53-041, Revision 0, dated March 9, 2015 (SB No. EC225-53-041), as appropriate for your model helicopter.

    (2) For helicopters with IGB fairing P/N 332A24-0303-05XX or P/N 332A24-0303-06XX, within 15 hours TIS and thereafter at intervals not to exceed 15 hours TIS, visually inspect for a crack in the fairing gutter as shown in Figure 1 of EASB No. 53.01.47 or EASB No. 53A001. If there is a crack in the fairing gutter:

    (i) Inspect for interference and separation of the fairing gutter. If there is any interference between the gutter and the tail rotor inclined drive shaft tube, replace the tail rotor inclined drive shaft tube. If there is any interference between the gutter and a hydraulic pipe, repair or replace the hydraulic pipe. If there is any interference between the gutter and the flight controls, repair the flight controls in accordance with FAA-approved procedures. If there is any separation of the gutter, remove the gutter.

    (ii) Replace the IGB fairing with IBG fairing P/N 332A24-0322-00 in accordance with the Accomplishment Instructions, paragraph 3.B.2, of SB No. AS332-53.01.78 or SB No. EC225-53-041.

    (3) Within 150 hours TIS, replace the IGB fairing P/N 332A24-0303-05XX, 332A24-0303-06XX, 332A08-1391-00, or 332A08-1391-01 with IGB fairing P/N 332A24-0322-00 in accordance with the Accomplishment Instructions, paragraph 3.B.2, of SB No. AS332-53.01.78 or SB No. EC225-53-041.

    (4) Replacing the IGB fairing with IGB fairing P/N 332A24-0322-00 is terminating action for the repetitive inspections required by this AD.

    (5) Do not install an IGB fairing P/N 332A24-0303-05XX, P/N 332A24-0303-06XX, P/N 332A08-1391-00, or P/N 332A08-1391-01 on any helicopter.

    (f) Credit for Actions Previously Completed

    Compliance with Airbus Helicopters Emergency Alert Service Bulletin No. 53.01.47, Revision 4, dated September 27, 2011, before the effective date of this AD is considered acceptable for compliance with the initial inspections specified in paragraphs (e)(1) and (e)(2) of this AD, but does not constitute terminating action for the repetitive inspections required by this AD.

    (g) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Safety Management Group, FAA, may approve AMOCs for this AD. Send your proposal to: David Hatfield, Aviation Safety Engineer, Safety Management Group, Rotorcraft Directorate, FAA, 10101 Hillwood Pkwy, Fort Worth, TX 76177; telephone (817) 222-5116; email [email protected]

    (2) For operations conducted under a 14 CFR part 119 operating certificate or under 14 CFR part 91, subpart K, we suggest that you notify your principal inspector, or lacking a principal inspector, the manager of the local flight standards district office or certificate holding district office before operating any aircraft complying with this AD through an AMOC.

    (h) Additional Information

    The subject of this AD is addressed in European Aviation Safety Agency (EASA) AD No. 2015-0092, dated May 26, 2015. You may view the EASA AD on the Internet at http://www.regulations.gov in the AD Docket.

    (i) Subject

    Joint Aircraft Service Component (JASC) Code: 5350 Aerodynamic Fairings.

    Issued in Fort Worth, Texas, on December 21, 2016. Lance T. Gant, Manager, Rotorcraft Directorate, Aircraft Certification Service.
    [FR Doc. 2016-31866 Filed 1-4-17; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-9566; Directorate Identifier 2016-NM-191-AD] RIN 2120-AA64 Airworthiness Directives; The Boeing Company Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for all The Boeing Company Model 757-200, -200PF, and -200CB series airplanes. This proposed AD was prompted by an evaluation by the design approval holder (DAH) indicating that certain fuselage circumferential splice plates are subject to widespread fatigue damage (WFD). This proposed AD would require repetitive low frequency eddy current (LFEC) inspections for cracks of certain circumferential splice plates, and repairs if necessary. We are proposing this AD to address the unsafe condition on these products.

    DATES:

    We must receive comments on this proposed AD by February 21, 2017.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: 202-493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this NPRM, contact Boeing Commercial Airplanes, Attention: Contractual & Data Services (C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740-5600; telephone 562-797-1717; Internet https://www.myboeingfleet.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221. It is also available on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9566.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9566; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (phone: 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Eric Schrieber, Aerospace Engineer, Airframe Branch, ANM-120L, FAA, Los Angeles Aircraft Certification Office (ACO), 3960 Paramount Boulevard, Lakewood, CA 90712-4137; phone: 562-627-5348; fax: 562-627-5210; email: [email protected]

    SUPPLEMENTARY INFORMATION: Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2016-9566; Directorate Identifier 2016-NM-191-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

    Discussion

    Fatigue damage can occur locally, in small areas or structural design details, or globally, in widespread areas. Multiple-site damage is widespread damage that occurs in a large structural element such as a single rivet line of a lap splice joining two large skin panels. Widespread damage can also occur in multiple elements such as adjacent frames or stringers. Multiple-site damage and multiple-element damage cracks are typically too small initially to be reliably detected with normal inspection methods. Without intervention, these cracks will grow, and eventually compromise the structural integrity of the airplane. This condition is known as widespread fatigue damage. It is associated with general degradation of large areas of structure with similar structural details and stress levels. As an airplane ages, WFD will likely occur, and will certainly occur if the airplane is operated long enough without any intervention.

    The FAA's WFD final rule (75 FR 69746, November 15, 2010) became effective on January 14, 2011. The WFD rule requires certain actions to prevent structural failure due to WFD throughout the operational life of certain existing transport category airplanes and all of these airplanes that will be certificated in the future. For existing and future airplanes subject to the WFD rule, the rule requires that DAHs establish a limit of validity (LOV) of the engineering data that support the structural maintenance program. Operators affected by the WFD rule may not fly an airplane beyond its LOV, unless an extended LOV is approved.

    The WFD rule (75 FR 69746, November 15, 2010) does not require identifying and developing maintenance actions if the DAHs can show that such actions are not necessary to prevent WFD before the airplane reaches the LOV. Many LOVs, however, do depend on accomplishment of future maintenance actions. As stated in the WFD rule, any maintenance actions necessary to reach the LOV will be mandated by airworthiness directives through separate rulemaking actions.

    In the context of WFD, this action is necessary to enable DAHs to propose LOVs that allow operators the longest operational lives for their airplanes, and still ensure that WFD will not occur. This approach allows for an implementation strategy that provides flexibility to DAHs in determining the timing of service information development (with FAA approval), while providing operators with certainty regarding the LOV applicable to their airplanes.

    We have received a report indicating that the fuselage circumferential splice plates along the center fastener rows, forward and aft of station 900 and station 1180 splice centerlines, are susceptible to WFD. There have been no reports of cracking on airplanes in service. Inspections will mitigate a safety issue, allowing continued operation to the limit of validity. This condition, if not corrected, could result in failure of a principle structural element, which could adversely impact the structural integrity of the airplane.

    Related Service Information Under 1 CFR Part 51

    We reviewed Boeing Alert Service Bulletin 757-53A0105, dated June 10, 2016. The service information describes procedures for repetitive LFEC inspections and repairs of the circumferential splice plates at station 900 and station 1180, from stringer S-6L to stringer S-6R, for any cracks. 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.

    FAA's Determination

    We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

    Proposed AD Requirements

    This proposed AD would require accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between this Proposed AD and the Service Information.” For information on the procedures and compliance times, see this service information at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9566.

    The phrase “corrective actions” is used in this proposed AD. Corrective actions correct or address any condition found. Corrective actions in an AD could include, for example, repairs.

    Differences Between This Proposed AD and the Service Information

    Boeing Alert Service Bulletin 757-53A0105, dated June 10, 2016, specifies to contact the manufacturer for certain instructions, but this proposed AD would require using repair methods, modification deviations, and alteration deviations in one of the following ways:

    • In accordance with a method that we approve; or

    • Using data that meet the certification basis of the airplane, and that have been approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) whom we have authorized to make those findings.

    Costs of Compliance

    We estimate that this proposed AD affects 634 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:

    Estimated Costs Action Labor cost Parts cost Cost per product Cost on U.S. operators LFEC inspection 6 work-hours × $85 per hour = $510 per inspection cycle $0 $510 per inspection cycle $323,340 per inspection cycle.

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

    Authority for This Rulemaking

    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.

    Regulatory Findings

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

    For the reasons discussed above, I certify this proposed regulation:

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

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

    (3) Will not affect intrastate aviation in Alaska, and

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): The Boeing Company: Docket No. FAA-2016-9566; Directorate Identifier 2016-NM-191-AD. (a) Comments Due Date

    We must receive comments by February 21, 2017.

    (b) Affected ADs

    This AD affects AD 2006-11-11, Amendment 39-14615 (71 FR 30278, May 26, 2006) (“AD 2006-11-11”).

    (c) Applicability

    This AD applies to all The Boeing Company Model 757-200, -200PF, and -200CB series airplanes, certificated in any category.

    (d) Subject

    Air Transport Association (ATA) of America Code 53, Fuselage.

    (e) Unsafe Condition

    This AD was prompted by an evaluation by the design approval holder (DAH) indicating that the fuselage circumferential splice plates along the center fastener rows, forward and aft of station 900 and station 1180 splice centerlines, are subject to widespread fatigue damage (WFD). We are issuing this AD to detect and correct any such cracks, which could lead to the failure of a principal structural element and consequently adversely affect the structural integrity of the airplane.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Repetitive Low Frequency Eddy Current (LFEC) Inspections and Corrective Actions

    At the applicable time specified in paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 757-53A0105, dated June 10, 2016, except as required by paragraph (h)(1) of this AD: Do an LFEC inspection for cracking of the circumferential splice plates at station 900 and station 1180, from stringer S-6L to stringer S-6R, and do all applicable corrective actions, in accordance with the Accomplishment Instructions of Boeing Alert Service Bulletin 757-53A0105, dated June 10, 2016, except as required by paragraph (h)(2) of this AD. Do all applicable corrective actions before further flight. Repeat the inspections thereafter at the applicable times specified in paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 757-53A0105, dated June 10, 2016. Accomplishing these inspections terminates the requirements of paragraph (h) of AD 2006-11-11 for the inspections of structurally significant item (SSI) 53-40-05, circumferential skin splice body station BS900 stringer S-6L to stringer S-6R and circumferential skin splice body station BS1180 stringer S-6L to stringer S-6R, as specified in Section 9 of Boeing Maintenance Planning Data (MPD) Document D622N001-9, May 2003 or June 2005 revisions. All other provisions of AD 2006-11-11 remain fully applicable and must be complied with.

    (h) Service Information Exceptions

    (1) Where Boeing Alert Service Bulletin 757-53A0105, dated June 10, 2016, specifies a compliance time “after the original issue date of this service bulletin,” this AD requires compliance within the specified compliance time after the effective date of this AD.

    (2) Where Boeing Alert Service Bulletin 757-53A0105, dated June 10, 2016, specifies to contact Boeing for repair instructions, and specifies that action as Required for Compliance (RC), this AD requires repair using a method approved in accordance with the procedures specified in paragraph (i) of this AD.

    (i) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Los Angeles Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ACO, send it to the attention of the person identified in paragraph (j)(1) of this AD. Information may be emailed to: [email protected]

    (2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.

    (3) An AMOC that provides an acceptable level of safety may be used for any repair, modification, or alteration required by this AD if it is approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) that has been authorized by the Manager, Los Angeles ACO, to make those findings. To be approved, the repair method, modification deviation, or alteration deviation must meet the certification basis of the airplane, and the approval must specifically refer to this AD.

    (4) Except as required by paragraph (h) of this AD: For service information that contains steps that are labeled as RC, the provisions of paragraphs (i)(4)(i) and (i)(4)(ii) of this AD apply.

    (i) The steps labeled as RC, including substeps under an RC step and any figures identified in an RC step, must be done to comply with the AD. If a step or substep is labeled “RC Exempt,” then the RC requirement is removed from that step or substep. An AMOC is required for any deviations to RC steps, including substeps and identified figures.

    (ii) Steps not labeled as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the RC steps, including substeps and identified figures, can still be done as specified, and the airplane can be put back in an airworthy condition.

    (j) Related Information

    (1) For more information about this AD, contact Eric Schrieber, Aerospace Engineer, Airframe Branch, ANM-120L, FAA, Los Angeles ACO, 3960 Paramount Boulevard, Lakewood, CA 90712-4137; phone: 562-627-5348; fax: 562-627-5210; email: [email protected]

    (2) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Contractual & Data Services (C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740-5600; telephone 562-797-1717; Internet https://www.myboeingfleet.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, Washington, on December 22, 2016. Robert D. Breneman, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-31619 Filed 1-4-17; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-9405; Directorate Identifier 2016-NE-22-AD] RIN 2120-AA64 Airworthiness Directives; Pratt & Whitney Division Turbofan Engines AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for certain Pratt & Whitney Division (PW) PW2037, PW2037M, and PW2040 turbofan engines. This proposed AD was prompted by an unrecoverable engine in-flight shutdown (IFSD) after an ice crystal icing event. This proposed AD would require installing a software standard eligible for installation and preclude the use of electronic engine control (EEC) software standards earlier than SCN 5B/I. We are proposing this AD to correct the unsafe condition on these products.

    DATES:

    We must receive comments on this proposed AD by February 21, 2017.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: 202-493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this NPRM, contact Pratt & Whitney Division, 400 Main St., East Hartford, CT 06118; phone: 800-565-0140; fax: 860-565-5442. You may view this service information at the FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA. For information on the availability of this material at the FAA, call 781-238-7125.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9405; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (phone: 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Kevin Clark, Aerospace Engineer, Engine Certification Office, FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA 01803; phone: 781-238-7088; fax: 781-238-7199; email: [email protected]

    SUPPLEMENTARY INFORMATION:

    Comments Invited

    We invite you to send any written relevant data, views, or arguments about this NPRM. Send your comments to an address listed under the section. Include “Docket No. FAA-2016-9405; Directorate Identifier 2016-NE-22-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this NPRM. We will consider all comments received by the closing date and may amend this NPRM because of those comments.

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

    Discussion

    We propose to adopt an AD for certain PW PW2037, PW2037M, and PW2040 turbofan engines with EEC, model number EEC104-40 or EEC104-60, installed with an EEC software standard earlier than SCN 5B/I. This proposed AD was prompted by a report of an unrecoverable engine IFSD after an ice crystal icing event. The root cause of the event is ice crystal icing causing the engine to flameout. An attempt to restart the engine was made while the active clearance control was on, which caused damage to the HPT and rotor seizure. This condition, if not corrected, could result in failure of the HPT, rotor seizure, failure of one or more engines, loss of thrust control, and loss of the airplane.

    Related Service Information Under 1 CFR Part 51

    We reviewed PW Alert Service Bulletin (ASB) PW2000 A73-170, dated July 14, 2016. The ASB describes procedures for modifying or replacing the EEC. 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.

    FAA's Determination

    We are proposing this NPRM because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

    Proposed AD Requirements

    This proposed AD would require modifying or replacing the EEC.

    Differences Between This Proposed AD and the Service Information

    PW ASB PW2000 A73-170, dated July 14, 2016, specifies compliance for any engine flown, or expected to be flown, in the Asian Pacific latitudes and longitudes, while this proposed AD specifically lists the serial numbers (S/Ns) of certain affected engines. Also, PW ASB PW2000 A73-170, dated July 14, 2016, provides until 2026 to comply, while this proposed AD provides until July 2024 to comply.

    Costs of Compliance

    We estimate that this NPRM affects 713 engines, installed on airplanes of U.S. registry.

    We estimate the following costs to comply with this proposed AD:

    Estimated Costs Action Labor cost Parts cost Cost per
  • product
  • Cost on U.S. operators
    EEC software installation 1.8 work-hours × $85 per hour = $153.00 0.00 $153.00 $109,089.00
    Authority for This Rulemaking

    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.

    Regulatory Findings

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

    For the reasons discussed above, I certify this proposed regulation:

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

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

    (3) Will not affect intrastate aviation in Alaska, and

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Pratt & Whitney Division: Docket No. FAA-2016-9405; Directorate Identifier 2016-NE-22-AD. (a) Comments Due Date

    We must receive comments by February 21, 2017.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to all Pratt & Whitney Division (PW) PW2037, PW2037M, and PW2040 turbofan engines with electronic engine control (EEC), model number EEC104-40 or EEC104-60, installed, with an EEC software standard earlier than SCN 5B/I.

    (d) Subject

    Joint Aircraft System Component (JASC) of America Code 7321, Fuel Control Turbine Engines.

    (e) Unsafe Condition

    This AD was prompted by unrecoverable engine in-flight shutdown (IFSD) after an ice crystal icing event. We are issuing this AD to prevent failure of the high-pressure turbine (HPT), rotor seizure, failure of one or more engines, loss of thrust control, and loss of the airplane.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Required Action

    Remove EEC software standards earlier than SCN 5B/I and install EEC software eligible for installation as follows:

    (1) For engines with serial numbers listed in Figure 1, remove the software at next shop visit, or prior to December 2018, whichever occurs first.

    (2) For engines with serial numbers not listed in Figure 1, remove the software at next shop visit, or prior to July 2024, whichever occurs first.

    Figure 1 to Paragraph (g)—Engine S/Ns 716402 727272 728741 727103 727280 728743 727134 727281 728748 727152 727282 728779 727158 727286 728785 727189 727287 728795 727202 727288 728806 727204 728709 728811 727231 728715 728812 727239 728716 728820 727240 728719 728824 727251 728720 728826 727252 728725 728827 727253 728726 728840 727257 728729 728864 727269 728730 728870 (h) Installation Prohibition

    After the effective date of this AD, do not install any software standard earlier than SCN 5B/I into any EEC.

    (i) Definition

    For the purpose of this AD, an “engine shop visit” is the induction of an engine into the shop for maintenance involving the separation of any major mating flange, except that the separation of engine flanges solely for the purposes of transportation without subsequent maintenance does not constitute an engine shop visit.

    (j) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Engine Certification Office, FAA, may approve AMOCs for this AD. Use the procedures found in 14 CFR 39.19 to make your request. You may email your request to: [email protected]

    (2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.

    (k) Related Information

    (1) For more information about this AD, contact Kevin Clark, Aerospace Engineer, Engine Certification Office, FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA 01803; phone: 781-238-7088; fax: 781-238-7199; email: [email protected]

    (2) PW Alert Service Bulletin PW2000 A73-170, dated July 14, 2016, can be obtained from PW using the contact information in paragraph (k)(3) of this AD.

    (3) For service information identified in this AD, contact Pratt & Whitney Division, 400 Main St., East Hartford, CT 06118; phone: 800-565-0140; fax: 860-565-5442.

    (4) You may view this referenced service information at the FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA. For information on the availability of this material at the FAA, call 781-238-7125.

    Issued in Burlington, Massachusetts, on December 28, 2016. Colleen M. D'Alessandro, Manager, Engine & Propeller Directorate, Aircraft Certification Service.
    [FR Doc. 2016-31870 Filed 1-4-17; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-6968; Directorate Identifier 2015-SW-020-AD] RIN 2120-AA64 Airworthiness Directives; Sikorsky Aircraft Corporation Helicopters (Type Certificate Previously Held by Schweizer Aircraft Corporation) AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to supersede airworthiness directive (AD) 93-17-13 for Schweizer Aircraft Corporation and Hughes Helicopters, Inc. (now Sikorsky Aircraft Corporation) (Sikorsky) Model TH55A, 269A, 269A-1, 269B, and 269C helicopters. AD 93-17-13 requires installing tachometer markings and inspecting the driveshaft. This proposed AD would require recurring inspections of the driveshaft and would expand the applicability to include Model 269C-1 helicopters. This proposed AD is prompted by reports of accidents because of driveshaft failures. The actions of this proposed AD are intended to prevent the unsafe condition on these products.

    DATES:

    We must receive comments on this proposed AD by March 6, 2017.

    ADDRESSES:

    You may send comments by any of the following methods:

    Federal eRulemaking Docket: Go to http://www.regulations.gov. Follow the online instructions for sending your comments electronically.

    Fax: 202-493-2251.

    Mail: Send comments to the U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590-0001.

    Hand Delivery: Deliver to the “Mail” address between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov or in person at the Docket Operations Office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the economic evaluation, any comments received, and other information. The street address for the Docket Operations Office (telephone 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    For service information identified in this proposed AD, contact Sikorsky Aircraft Corporation, Customer Service Engineering, 124 Quarry Road, Trumbull, CT 06611; telephone 1-800-Winged-S or 203-416-4299; email [email protected] You may review the referenced service information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy., Room 6N-321, Fort Worth, TX 76177.

    FOR FURTHER INFORMATION CONTACT:

    Blaine Williams, Aerospace Engineer, Boston Aircraft Certification Office, Engine & Propeller Directorate, 1200 District Avenue, Burlington, Massachusetts 01803; telephone (781) 238-7161; email [email protected]

    SUPPLEMENTARY INFORMATION: Comments Invited

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

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

    Discussion

    On August 31, 1993, we issued AD 93-17-13, Amendment 39-8684 (58 FR 51770, October 5, 1993), for Schweizer Aircraft Corporation and Hughes Helicopters, Inc., Model 269A, 269A-1, 269B, 269C, and TH55A helicopters. AD 93-17-13 requires within 30 days or 100 hours time-in-service (TIS), whichever occurs first, and thereafter every 300 hours TIS, visually inspecting for cracks, machining steps, manufacturing tool marks, surface defects, and lack of cleanup during the production grinding operation. AD 93-17-13 also requires installing engine and rotor tachomometer markings and replacing any unairworthy lower coupling driveshaft (driveshaft) before further flight. The actions in AD 93-17-13 are intended to prevent failure of the driveshaft, loss of power to the rotor system, and subsequent loss of helicopter control.

    Actions Since AD 93-17-13 Was Issued

    Since we issued AD 93-17-13, Sikorsky became the type certificate holder of the Model 269A, 269A-1, 269B, 269C, and TH55A. Sikorsky performed a safety analysis and determined that the initial and recurrent inspection intervals and inspection method were not adequate to detect all corrosion, pits, nicks, scratches, dents, and cracks. Since 1992, 10 accidents, 2 of them fatal, occurred because of driveshaft failures due to static overload or torsional fatigue. Five of the accidents occurred after AD 93-17-13 was issued.

    We propose reducing the initial and recurring inspection intervals, changing the type of damage to be detected by the visual inspection, and adding a magnetic particle inspection.

    We propose including specific part-numbered driveshafts to the applicability because Sikorsky is developing a new driveshaft that we do not expect to be subject to this AD.

    We propose expanding the applicability to include Model 269C-1 helicopters. These helicopters were not manufactured when AD 93-17-13 was issued but have applicable driveshafts installed.

    We propose to retain the requirement to install engine and tachometer markings. AD 93-17-13 requires these markings because of reports of driveshaft damage as a result of engine overspeeds during start-up.

    Finally, we would require a visual inspection for “corrosion, a pit, a nick, a scratch, a dent, or a crack” instead of “cracks, machining steps, manufacturing tool marks, surface defects and lack of cleanup during the production grinding operation” contained in AD 93-17-13. Since AD 93-17-13 was issued, we have seen no evidence that the driveshaft failures were caused by production errors.

    The proposed actions are intended to prevent failure of the driveshaft, loss of power to the rotor system, and subsequent loss of helicopter control.

    FAA's Determination

    We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition exists and is likely to exist or develop on other products of these same type designs.

    Related Service Information Under 1 CFR Part 51

    We reviewed Sikorsky 269C Helicopter Alert Service Bulletin B-307, Basic Issue, dated December 18, 2014, and Sikorsky 269C-1 Helicopter Alert Service Bulletin C1B-043, Basic Issue, dated December 18, 2014 (ASBs). The ASBs call for a one-time visual and magnetic particle inspection of the driveshaft and driveshaft assembly for damage. The ASBs advise that the driveshaft be sent to Sikorsky and replaced if damaged. The inspection is to be accomplished within 25 hours TIS or within 180 days from the ASBs' issue date, whichever comes first. Sikorsky has since revised its maintenance manual to incorporate these inspections every 150 hours TIS.

    We also reviewed Schweizer Aircraft Service Bulletin B-257.1, dated May 21, 1993 (ASB B-257.1). ASB B-257.1 calls for a one-time inspection to look for drive-shaft defects; installing declutched limit markings on the engine/rotor tachometer to reinforce operating limits; and prohibiting engine declutched operations above 1,600 RPM.

    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.

    Proposed AD Requirements

    This proposed AD would require within 25 hours TIS and thereafter at intervals not to exceed 150 hours TIS, visual inspections of the driveshaft. If there are no cracks, corrosion, or other damage, this proposed AD would require performing a magnetic particle inspection. If there is a crack or other damage, this proposed AD would require replacing the driveshaft before further flight. This proposed AD would also require adding tachometer markings if not previously performed.

    Differences Between This Proposed AD and the Service Information

    The Sikorsky service information calls for the initial inspection to be completed within 180 days or 25 hours time-in-service (TIS). This proposed AD would require the initial inspection to be completed within 25 hours TIS only. The service information requires contacting Sikorsky if a certain part-numbered driveshaft is installed, emailing information to Sikorsky, and returning damaged parts to Sikorsky; this proposed AD would not.

    Interim Action

    We consider this proposed AD to be an interim action. The design approval holder is developing a replacement driveshaft that will address the unsafe condition identified in this proposed AD. Once the replacement driveshaft is developed, approved and available, we might consider additional rulemaking.

    Costs of Compliance

    We estimate that this proposed AD would affect 619 helicopters of U.S. Registry and that labor costs average $85 per work hour. Based on these estimates, we expect the following costs:

    • We estimate that the visual and magnetic particle inspections of the driveshaft would require 11 work hours for a cost of $935 per helicopter and $578,765 for the U.S. fleet per inspection cycle.

    • Replacing the driveshaft, if needed, would cost about $4,574 for parts. No additional labor costs would be necessary.

    • Installing engine and rotor tachometer markings would require 0.5 work-hour for a labor cost of about $43. The cost of parts would be minimal.

    Authority for This Rulemaking

    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.

    Regulatory Findings

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

    For the reasons discussed, I certify this proposed regulation:

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

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

    3. Will not affect intrastate aviation in Alaska 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 proposed AD and placed it in the AD docket.

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by Reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by removing Airworthiness Directive (AD) AD 93-17-13, Amendment 39-8684 (58 FR 51770, October 5, 1993) and adding the following new airworthiness directive (AD): Sikorsky Aircraft Corporation (Type Certificate Previously Held By Schweizer Aircraft Corporation): Docket No. FAA-2016-6968; Directorate Identifier 2015-SW-020-AD. (a) Applicability

    This AD applies to Model TH55A, 269A, 269A-1, 269B, 269C and 269C-1 helicopters, with a lower coupling driveshaft (driveshaft) part number (P/N) 269-5412, 269A5504, 269A5504-003, 269A5504-005, 269A5559, or 269A5559-003 installed, certificated in any category.

    (b) Unsafe Condition

    This AD defines the unsafe condition as failure of a driveshaft. This condition could result in loss of power to the rotor system and subsequent loss of helicopter control.

    (c) Affected ADs

    This AD supersedes AD 93-17-13, Amendment 39-8684 (58 FR 51770, October 5, 1993).

    (d) Comments Due Date

    We must receive comments by March 6, 2017.

    (e) Compliance

    You are responsible for performing each action required by this AD within the specified compliance time unless it has already been accomplished prior to that time.

    (f) Required Actions

    (1) Within 25 hours time-in-service (TIS), install engine and rotor tachometer markings in accordance with Part II of Schweizer Aircraft Service Bulletin B-257.1, dated May 21, 1993.

    (2) Within 25 hours TIS and thereafter at intervals not to exceed 150 hours TIS:

    (i) Visually inspect the driveshaft for corrosion, a pit, a nick, a scratch, a dent, and a crack in accordance with the Accomplishment Instructions, paragraph 3.B.(1) through 3.B.(6) of Sikorsky 269C Helicopter Alert Service Bulletin B-307, Basic Issue, dated December 18, 2014 (269C ASB), or Sikorsky 269C-1 Helicopter Alert Service Bulletin C1B-043, Basic Issue, dated December 18, 2014 (269C-1 ASB), whichever is applicable for your model helicopter, except we do not require that you use a Sikorsky recommended vendor list. If there is any corrosion, a pit, a nick, a scratch, a dent, or a crack, replace the driveshaft before further flight.

    (ii) If there is no corrosion and no pits, nicks, scratches, dents, and cracks, magnetic particle inspect the driveshaft for a crack in accordance with paragraph 3.C.(1) of the 269C ASB or 269C-1 ASB, whichever is applicable for your model helicopter. This magnetic particle inspection must be performed by a Level II or higher technician with the National Aerospace Standard 410 or equivalent certification who has performed a magnetic particle inspection within the last 12 months. If there is a crack, replace the driveshaft before further flight.

    (g) Credit for Actions Previously Completed

    Compliance with paragraph (a)(1) of AD 93-17-13, Amendment 39-8684 (58 FR 51770, October 5, 1993) before the effective date of this AD is considered acceptable for compliance with the actions specified in paragraph (f)(1) of this AD.

    (h) Alternative Methods of Compliance (AMOC)

    (1) The Manager, Boston Aircraft Certification Office, FAA, may approve AMOCs for this AD. Send your proposal to: Blaine Williams, Aerospace Engineer, Boston Aircraft Certification Office, Engine & Propeller Directorate, 12 New England Executive Park, Burlington, Massachusetts 01803; telephone (781) 238-7161; email [email protected]

    (2) For operations conducted under a 14 CFR part 119 operating certificate or under 14 CFR part 91, subpart K, we suggest that you notify your principal inspector, or lacking a principal inspector, the manager of the local flight standards district office or certificate holding district office before operating any aircraft complying with this AD through an AMOC.

    (i) Additional Information

    For service information identified in this AD, contact Sikorsky Aircraft Corporation, Customer Service Engineering, 124 Quarry Road, Trumbull, CT 06611; telephone 1-800-Winged-S or 203-416-4299; email [email protected] You may review a copy of information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy, Room 6N-321, Fort Worth, TX 76177.

    (j) Subject

    Joint Aircraft Service Component (JASC) Code: 6300, Main Rotor Drive System.

    Issued in Fort Worth, Texas, on December 21, 2016. Lance T. Gant, Manager, Rotorcraft Directorate, Aircraft Certification Service.
    [FR Doc. 2016-31622 Filed 1-4-17; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-9521; Directorate Identifier 2016-NM-061-AD] RIN 2120-AA64 Airworthiness Directives; Airbus Defense and Space S.A. (Formerly Known as Construcciones Aeronauticas, S.A.) Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for all Airbus Defense and Space S.A. Model CN-235, CN-235-100, CN-235-200, CN-235-300, and C-295 airplanes. This proposed AD was prompted by reports of excessive play between bushings and their respective fitting housings at certain elevator fittings. This proposed AD would require a one-time detailed inspection and repetitive eddy current inspections of the elevator hinge fitting and bracket assembly, and corrective actions if necessary. We are proposing this AD to address the unsafe condition on these products.

    DATES:

    We must receive comments on this proposed AD by February 21, 2017.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: 202-493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this NPRM, contact Airbus Defense and Space, Services/Engineering Support, Avenida de Aragón 404, 28022 Madrid, Spain; fax +34 91 585 31 27; email [email protected] You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9521; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone: 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Shahram Daneshmandi, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone: 425-227-1112; fax: 425-227-1149.

    SUPPLEMENTARY INFORMATION: Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2016-9521; Directorate Identifier 2016-NM-061-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments.

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

    Discussion

    The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EADS AD 2016-0075, dated April 19, 2016 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus Defense and Space S.A. Model CN-235, CN-235-100, CN-235-200, CN-235-300, and C-295 airplanes. The MCAI states:

    Excessive play between bushings and their respective fitting housing was reported at Stabilizer Station (STA) 4850, affecting the outboard and inboard elevator hinge fittings and attachment fittings; and the horizontal stabilizer elevator linkage. Additionally, excessive misalignment was detected between the elevator hinge fittings and the elevator brackets during further analysis of the reported cases. Furthermore, an occurrence of an elevator hinge fitting crack was reported.

    This condition, if not detected and corrected, could lead to failure or detachment of any of the affected structural parts, possibly resulting in reduced control of the aeroplane.

    To address this potentially unsafe condition, Airbus Defence & Space (D&S) issued Alert Operator Transmissions (AOT) AOT-CN235-55-0001 Revision 2 and AOT-C295-55-0001 Revision 2 to provide inspection instructions to detect misalignment between the elevator hinge fittings and the elevator brackets. Additionally, Airbus D&S issued AOT-CN235-55-0003 and AOT-C295-55-0003 to provide inspection instructions to detect cracking of elevator hinge fitting and attachment fitting.

    For the reasons described above, this [EASA] AD requires a one-time [detailed] inspection of the elevator hinge fittings and the elevator brackets, repetitive [eddy current] inspections of elevator hinge fittings and attachment fittings, and depending on findings, accomplishment of applicable corrective action(s) [e.g. repair(s)].

    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-2016-9521.

    Related Service Information Under 1 CFR Part 51

    Airbus Defense and Space S.A. has issued the following Alert Operators Transmissions (AOT).

    • Airbus Defense and Space S.A. AOT AOT-CN235-55-0001, Revision 2, dated March 10, 2015. The service information describes procedures for a detailed visual inspection of the elevator hinge fitting and bracket assembly to detect excessive play between bushings and their respective fitting housings, and to detect cracks; and corrective actions if necessary.

    • Airbus Defense and Space S.A. AOT AOT-CN235-55-0003, dated December 22, 2015. The service information describes procedures for repetitive eddy current inspections to detect cracks in the elevator hinge fitting and bracket assembly, and corrective actions if necessary.

    • Airbus Defense and Space S.A. AOT AOT-C295-55-0001, Revision 2, dated April 09, 2015. The service information describes procedures for a detailed visual inspection of the elevator hinge fitting and bracket assembly to detect excessive play between bushings and their respective fitting housings, and to detect cracks; and corrective actions if necessary.

    • Airbus Defense and Space S.A. AOT AOT-C295-55-0003, dated December 22, 2015. The service information describes procedures for repetitive eddy current inspections to detect cracks in the elevator hinge fitting and bracket assembly, and corrective actions if necessary.

    These documents are distinct since they apply to different airplane models in different configurations. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

    FAA's Determination and Requirements of This Proposed AD

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

    Differences Between This Proposed AD and the MCAI or Service Information

    The MCAI allows credit for an inspection done in accordance with the following Airbus Defense and Space S.A. AOTs, as applicable:

    • AOT-CN235-55-0001, dated December 16, 2014, or

    • AOT-C295-55-0001, dated December 16, 2014.

    This proposed AD does not give credit for accomplishing those initial issues of the service information because the inspection requirements are different from the initial issues of the service information in both Revision 1 and Revision 2 of Airbus Defense and Space AOT AOT-CN235-55-0001, and AOT AOT-C295-55-0001.

    Also, the MCAI identifies a date for Revision 1 of Airbus Defense and Space S.A. AOT AOT-C295-55-0001, which was corrected by Revision 2 of the same service information. Paragraph (m), “Credit for Previous Actions,” of this proposed AD shows the correct date.

    Costs of Compliance

    We estimate that this proposed AD affects 14 airplanes of U.S. registry.

    We estimate the following costs to comply with this proposed AD:

    Estimated Costs Action Labor cost Parts cost Cost per product Cost on U.S. operators Inspection 2 work-hours × $85 per hour = $170 per inspection cycle $0 $170 per inspection cycle $2,380 per inspection cycle.

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

    On-Condition Costs Action Labor cost Parts cost Cost per product Repair 45 work-hours × $85 per hour = $3,825 $10,000 $13,825 Authority for This Rulemaking

    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.

    Regulatory Findings

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

    For the reasons discussed above, I certify this proposed regulation:

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

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

    3. Will not affect intrastate aviation in Alaska; and

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Airbus Defense and Space S.A. (Formerly Known as Construcciones Aeronauticas, S.A.): Docket No. FAA-2016-9521; Directorate Identifier 2016-NM-061-AD. (a) Comments Due Date

    We must receive comments by February 21, 2017.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to Airbus Defense and Space S.A. (formerly known as Construcciones Aeronauticas, S.A.) Model CN-235, CN-235-100, CN-235-200, CN-235-300, and C-295 airplanes, certificated in any category, all manufacturer serial numbers.

    (d) Subject

    Air Transport Association (ATA) of America Code 55, Stabilizers.

    (e) Reason

    This AD was prompted by reports of excessive play between bushings and their respective fitting housings at certain elevator fittings. We are issuing this AD to prevent excessive play between bushings and their respective fitting housings, which could lead to failure or detachment of any of the affected structural parts, with a possible result of reduced control of the airplane.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) One-Time Detailed Visual Inspection

    Before exceeding 600 flight hours since first flight of the airplane, or within 300 flight hours after the effective date of this AD, whichever occurs later, but not before exceeding 300 flight hours since first flight of the airplane: Do a detailed visual inspection of the elevator hinge fitting and bracket assembly to detect excessive play between bushings and their respective fitting housings, and to detect cracks, in accordance with the instructions of Airbus Defense and Space S.A. Alert Operators Transmission (AOT) AOT-CN235-55-0001, Revision 2, dated March 10, 2015; or AOT AOT-C295-55-0001, Revision 2, dated April 9, 2015; as applicable.

    (h) Corrective Action for Discrepancies Found During Detailed Visual Inspection

    If, during the inspection required by paragraph (g) of this AD, any discrepancy is detected, as defined in the instructions of Airbus Defense and Space S.A. AOT AOT-CN235-55-0001, Revision 2, dated March 10, 2015; or AOT AOT-C295-55-0001 Revision 2, dated April 9, 2015; as applicable: Before further flight, accomplish applicable corrective actions, in accordance with the instructions of Airbus Defense and Space S.A. AOT AOT-CN235-55-0001, Revision 2, dated March 10, 2015; or AOT AOT-C295-55-0001, Revision 2, dated April 9, 2015; as applicable. Where Airbus Defense and Space S.A. AOT AOT-CN235-55-0001, Revision 2, dated March 10, 2015; or AOT AOT-C295-55-0001 Revision 2, dated April 9, 2015; specifies to contact Airbus Defense and Space S.A. for corrective actions, before further flight, accomplish corrective actions in accordance with the procedures specified in paragraph (n)(2) of this AD.

    (i) Repetitive Eddy Current Inspections—Model CN-235, CN-235-100, CN-235-200, and CN-235-300 Airplanes

    For Model CN-235, CN-235-100, CN-235-200, and CN-235-300 airplanes: Do the actions required by paragraphs (i)(1) and (i)(2) of this AD.

    (1) Within the applicable compliance time specified in table 1 to paragraph (i)(1) of this AD: Do an eddy current inspection to detect cracks in the elevator hinge fitting and bracket assembly, in accordance with the instructions of Airbus Defense and Space S.A. AOT AOT-CN235-55-0003, dated December 22, 2015.

    Table 1 to Paragraph (i)(1) of This AD—Initial Compliance Times for Model CN-235, CN-235-100, CN-235-200, and CN-235-300 Airplanes Manufacturer's Serial Number (MSN) Elevator  hinge fitting  (part  No.) Compliance time for initial eddy current inspection (whichever  occurs  later) MSN001 through MSN154 inclusive 35-31193-0201
  • 35-31193-0202
  • Before exceeding 8,800 flight cycles since first flight of the airplane; or before exceeding the applicable flight hours since first flight of the airplane as calculated in table 2 to paragraph (i)(1) of this AD; whichever occurs first Within 300 flight cycles after the effective date of this AD.
    MSN155 through MSN241 inclusive 35-31193-0501
  • 35-31193-0502
  • Before exceeding 3,600 flight cycles since first flight of the airplane; or before exceeding the applicable flight hours since first flight of the airplane as calculated in table 2 to paragraph (i)(1) of this AD; whichever occurs first Within 300 flight cycles after the effective date of this AD.
    MSN242 through MSN999 inclusive 35-31193-0503
  • 35-31193-0504
  • Before exceeding 1,000 flight cycles since first flight of the airplane; or before exceeding the applicable flight hours since first flight of the airplane as calculated in table 2 to paragraph (i)(1) of this AD; whichever occurs first Within 50 flight cycles after the effective date of this AD.
    Table 2 to Paragraph (i)(1) of This AD—Flight Cycles to Flight Hours Conversion Since First Flight of the Airplane CN-235 model/version Civilian or military type certificate Flight cycles to flight hours conversion CN-235 (Commercial Identification S10) Civilian Flight hours since first flight of the airplane = the applicable flight cycles from table 1 to paragraph (i)(1) of this AD × 0.861. CN-235-100 Civilian Flight hours since first flight of the airplane = the applicable flight cycles from table 1 to paragraph (i)(1) of this AD × 0.861. CN-235-200 Civilian Flight hours since first flight of the airplane = the applicable flight cycles from table 1 to paragraph (i)(1) of this AD × 0.806. CN-235-300 Civilian Flight hours since first flight of the airplane = the applicable flight cycles from table 1 to paragraph (i)(1) of this AD × 0.861. CN-235 (Commercial Identification S10M) Military Flight hours since first flight of the airplane = the applicable flight cycles from table 1 to paragraph (i)(1) of this AD × 0.861. CN-235-100M Military Flight hours since first flight of the airplane = the applicable flight cycles from table 1 to paragraph (i)(1) of this AD × 2.222. CN-235-200M Military Flight hours since first flight of the airplane = the applicable flight cycles from table 1 to paragraph (i)(1) of this AD × 2.222. CN-235-300M Military Flight hours since first flight of the airplane = the applicable flight cycles from table 1 to paragraph (i)(1) of this AD × 2.167. CN-235-100M/IR01 Military Flight hours since first flight of the airplane = the applicable flight cycles from table 1 to paragraph (i)(1) of this AD × 1.389. CN-235-100M/EA02V Military Flight hours since first flight of the airplane = the applicable flight cycles from table 1 to paragraph (i)(1) of this AD × 1.389. CN-235-200M/CL02 Military Flight hours since first flight of the airplane = the applicable flight cycles from table 1 to paragraph (i)(1) of this AD × 1.389. CN-235/EA01F (Commercial Identification S10M) Military Flight hours since first flight of the airplane = the applicable flight cycles from table 1 to paragraph (i)(1) of this AD × 0.861. CN-235-300/SM01 Civilian Flight hours since first flight of the airplane = the applicable flight cycles from table 1 to paragraph (i)(1) of this AD × 3.125. CN-235-300M/CG01, -300M/GC01, -300/MM01, -300/CL04 Military Flight hours since first flight of the airplane = the applicable flight cycles from table 1 to paragraph (i)(1) of this AD × 3.125.

    (2) Repeat the eddy current inspection specified in paragraph (i)(1) of this AD thereafter within the applicable interval specified in table 3 to paragraph (i)(2) of this AD.

    Table 3 to Paragraph (i)(2) of This AD—Repetitive Inspection Intervals Manufacturer's serial No. Elevator
  • attachment
  • fitting
  • (P/N)
  • Compliance time for repetitive eddy current inspections
    MSN001 through MSN154 inclusive 35-31193-0201
  • 35-31193-0202
  • Before exceeding 1,300 flight cycles since the most recent inspection; or before exceeding the applicable flight hours since the most recent inspection as calculated in table 4 to paragraph (i)(2) of this AD; whichever occurs first.
    MSN155 through MSN241 inclusive 35-31193-0501
  • 35-31193-0502
  • Before exceeding 1,000 flight cycles since the most recent inspection; or before exceeding the applicable flight hours since the most recent inspection as calculated in table 4 to paragraph (i)(2) of this AD; whichever occurs first.
    MSN242 through MSN999 inclusive 35-31193-0503
  • 35-31193-0504
  • Before exceeding 1,000 flight cycles since the most recent inspection; or before exceeding the applicable flight hours since the most recent inspection as calculated in table 4 to paragraph (i)(2) of this AD; whichever occurs first.
    Table 4 to Paragraph (i)(2) of This AD—Flight Cycles to Flight Hours Conversion for Repetitive Inspections CN-235 model/version Civilian or military type certificate Flight cycles to flight hours conversion CN-235 (Commercial Identification S10) Civilian Flight hours since most recent inspection = the applicable flight cycles from table 3 to paragraph (i)(2) of this AD × 0.861. CN-235-100 Civilian Flight hours since most recent inspection = the applicable flight cycles from table 3 to paragraph (i)(2) of this AD × 0.861. CN-235-200 Civilian Flight hours since most recent inspection = the applicable flight cycles from table 3 to paragraph (i)(2) of this AD × 0.806. CN-235-300 Civilian Flight hours since first flight of the airplane = the applicable flight cycles from table 3 to paragraph (i)(2) of this AD × 0.861. CN-235 (Commercial Identification S10M) Military Flight hours since most recent inspection = the applicable flight cycles from table 3 to paragraph (i)(2) of this AD × 0.861. CN-235-100M Military Flight hours since most recent inspection = the applicable flight cycles from table 3 to paragraph (i)(2) of this AD × 2.222. CN-235-200M Military Flight hours since most recent inspection = the applicable flight cycles from table 3 to paragraph (i)(2) of this AD × 2.222. CN-235-300M Military Flight hours since most recent inspection = the applicable flight cycles from table 3 to paragraph (i)(2) of this AD × 2.167. CN-235-100M/IR01 Military Flight hours since most recent inspection = the applicable flight cycles from table 3 to paragraph (i)(2) of this AD × 1.389. CN-235-100M/EA02V Military Flight hours since most recent inspection = the applicable flight cycles from table 3 to paragraph (i)(2) of this AD × 1.389. CN-235-200M/CL02 Military Flight hours since most recent inspection = the applicable flight cycles from table 3 to paragraph (i)(2) of this AD × 1.389. CN-235/EA01F (Commercial Identification S10M) Military Flight hours since most recent inspection = the applicable flight cycles from table 3 to paragraph (i)(2) of this AD × 0.861. CN-235-300/SM01 Civilian Flight hours since most recent inspection = the applicable flight cycles from table 3 to paragraph (i)(2) of this AD × 3.125. CN-235-300M/CG01, -300M/GC01, -300/MM01, -300/CL04 Military Flight hours since most recent inspection = the applicable flight cycles from table 3 to paragraph (i)(2) of this AD × 3.125. (j) Repetitive Eddy Current Inspections—Model C-295 Airplanes

    For Model C-295 airplanes: Do the actions required by paragraphs (j)(1) and (j)(2) of this AD.

    (1) At the later of the times specified in table 5 to paragraph (j)(1) of this AD: Do an eddy current inspection of the elevator hinge fitting and attachment fitting to detect cracks, in accordance with the instructions of Airbus Defense and Space S.A. AOT AOT-C295-55-0003, dated December 22, 2015.

    Table 5 to Paragraph (j)(1) of This AD—Initial Compliance Times for Model C-295 Airplanes C-295 model/version Manufacturer's Serial
  • Number (MSN)
  • Elevator hinge fitting (part no.) Compliance time for initial eddy current inspection (whichever occurs later)
    C-295M/EA03(01-10), RJ01 (01-02), PO01(01-08), AG01(01-06), BR01(01-03) MSN001 through MSN030 inclusive 95-31193-0501
  • 95-31193-0502
  • Since first flight of the airplane: Before exceeding 3,600 flight cycles; or before exceeding 5,040 flight hours; whichever occurs first Within 300 flight cycles after the effective date of this AD.
    C-295M (from MSN 031) MSN031 through MSN999 inclusive 95-31193-0503
  • 95-31193-0504
  • Since first flight of the airplane: Before exceeding 1,000 flight cycles; or before exceeding 1,400 flight hours; whichever occurs first Within 50 flight cycles after the effective date of this AD.
    C-295M/FI01, FI02 MSN031 through MSN999 inclusive 95-31193-0503
  • 95-31193-0504
  • Since first flight of the airplane: Before exceeding 1,000 flight cycles; or before exceeding 1,000 flight hours; whichever occurs first Within 50 flight cycles after the effective date of this AD.
    C-295M/PG01 MSN031 through MSN999 inclusive 95-31193-0503
  • 95-31193-0504
  • Since first flight of the airplane: Before exceeding 1,000 flight cycles; or before exceeding 1,400 flight hours; whichever occurs first Within 50 flight cycles after the effective date of this AD.
    C-295M/PG02, PG03 MSN031 through MSN999 inclusive 95-31193-0503
  • 95-31193-0504
  • Since first flight of the airplane: Before exceeding 1,000 flight cycles; or before exceeding 1,900 flight hours; whichever occurs first Within 50 flight cycles after the effective date of this AD.
    C-295M/CH01 MSN031 through MSN999 inclusive 95-31193-0503
  • 95-31193-0504
  • Since first flight of the airplane: Before exceeding 1,000 flight cycles; or before exceeding 1,200 flight hours; whichever occurs first Within 50 flight cycles after the effective date of this AD.
    C-295M/CH02, OM03 MSN031 through MSN999 inclusive 95-31193-0503
  • 95-31193-0504
  • Since first flight of the airplane: Before exceeding 1,000 flight cycles; or before exceeding 1,500 flight hours; whichever occurs first Within 50 flight cycles after the effective date of this AD.
    C-295MW MSN031 through MSN999 inclusive 95-31193-0503
  • 95-31193-0504
  • Since first flight of the airplane: Before exceeding 1,000 flight cycles; or before exceeding 1,400 flight hours; whichever occurs first Within 50 flight cycles after the effective date of this AD.

    (2) Repeat the eddy current inspection specified in paragraph (j)(1) of this AD thereafter within the applicable interval specified in table 6 to paragraph (j)(2) of this AD.

    Table 6 to Paragraph (j)(2) of This AD—Repetitive Inspection Intervals for Model C-295 Airplanes C-295 model/version Manufacturer's Serial Number (MSN) Elevator hinge fitting (part no.) Compliance time for repetitive eddy current inspections C-295M/EA03(01-10), RJ01 (01-02), PO01(01-08), AG01(01-06), BR01(01-03) MSN001 through MSN030 inclusive 95-31193-0501
  • 95-31193-0502
  • Before exceeding 1,000 flight cycles since the most recent inspection; or before exceeding 1,400 flight hours since the most recent inspection; whichever occurs first.
    C-295M (from MSN 031) MSN031 through MSN999 inclusive 95-31193-0503
  • 95-31193-0504
  • Before exceeding 1,000 flight cycles since the most recent inspection; or before exceeding 1,400 flight hours since the most recent inspection; whichever occurs first.
    C-295M/FI01, FI02 MSN031 through MSN999 inclusive 95-31193-0503
  • 95-31193-0504
  • Before exceeding 1,000 flight cycles since the most recent inspection; or before exceeding 1,000 flight hours since the most recent inspection; whichever occurs first.
    C-295M/PG01 MSN031 through MSN999 inclusive 95-31193-0503
  • 95-31193-0504
  • Before exceeding 1,000 flight cycles since the most recent inspection; or before exceeding 1,400 flight hours since the most recent inspection; whichever occurs first.
    C-295M/PG02, PG03 MSN031 through MSN999 inclusive 95-31193-0503
  • 95-31193-0504
  • Before exceeding 1,000 flight cycles since the most recent inspection; or before exceeding 1,900 flight hours since the most recent inspection; whichever occurs first.
    C-295M/CH01 MSN031 through MSN999 inclusive 95-31193-0503
  • 95-31193-0504
  • Before exceeding 1,000 flight cycles since the most recent inspection; or before exceeding 1,200 flight hours since the most recent inspection; whichever occurs first.
    C-295M/CH02, OM03 MSN031 through MSN999 inclusive 95-31193-0503
  • 95-31193-0504
  • Before exceeding 1,000 flight cycles since the most recent inspection; or before exceeding 1,500 flight hours since the most recent inspection; whichever occurs first.
    C-295MW MSN031 through MSN999 inclusive 95-31193-0503
  • 95-31193-0504
  • Before exceeding 1,000 flight cycles since the most recent inspection; or before exceeding 1,400 flight hours since the most recent inspection; whichever occurs first.
    (k) Corrective Action for Discrepancies Found During Eddy Current Inspection

    If, during any inspection required by paragraph (i)(1), (i)(2), (j)(1), or (j)(2) of this AD, any crack is detected, as defined in Airbus Defense and Space S.A. AOT AOT-CN235-55-0003, dated December 22, 2015; or AOT AOT-C295-55-0003, dated December 22, 2015; as applicable: Before further flight, accomplish applicable corrective actions in accordance with the instructions of Airbus Defense and Space S.A. AOT AOT-CN235-55-0003, dated December 22, 2015; or AOT AOT-C295-55-0003, dated December 22, 2015; as applicable. Where Airbus Defense and Space S.A. AOT AOT-CN235-55-0003, dated December 22, 2015; or AOT AOT-C295-55-0003, dated December 22, 2015; specifies to contact Airbus Defense and Space S.A. for corrective actions, before further flight, accomplish corrective actions in accordance with the procedures specified in paragraph (n)(2) of this AD.

    (l) Provision Regarding Terminating Action

    Accomplishing corrective actions, as required by paragraph (k) of this AD, does not constitute terminating action for the repetitive inspections required by paragraphs (i)(2) and (j)(2) of this AD, unless explicitly stated in the approved method of compliance for the corrective action.

    (m) Credit for Previous Actions

    This paragraph provides credit for the actions required by paragraph (g) of this AD, if those actions were performed before the effective date of this AD using Airbus Defense and Space S.A. AOT AOT-CN235-55-0001, Revision 1, dated March 6, 2015; or AOT AOT-C295-55-0001, Revision 1, dated May 29, 2014.

    (n) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the International Branch, send it to ATTN: Shahram Daneshmandi, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone: 425-227-1112; fax: 425-227-1149. Information may be emailed to: [email protected] Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.

    (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or EASA; or Airbus Defense and Space S.A.'s EASA DOA. If approved by the DOA, the approval must include the DOA-authorized signature.

    (o) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA AD 2016-0075, dated April 19, 2016, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9521.

    (2) For service information identified in this AD, contact Airbus Defense and Space, Services/Engineering Support, Avenida de Aragón 404, 28022 Madrid, Spain; fax +34 91 585 31 27; email [email protected] You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, Washington, on December 16, 2016. Ross Landes, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-31365 Filed 1-4-17; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 71 [Docket No. FAA-2016-9556; Airspace Docket No. 16-AEA-2] RIN 2120-AA66 Proposed Establishment and Modification of Area Navigation Routes, Atlantic Coast Route Project; Northeastern United States. AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    This action proposes to establish 12 high altitude area navigation (RNAV) routes (Q-routes), and modify one existing Q-route, in support of the Atlantic Coast Route Project (ACRP). The ACRP goal is to implement a Performance Based Navigation (PBN) route structure within the heavily traveled and constricted airspace along the Atlantic coast of the United States (U.S.)

    DATES:

    Comments must be received on or before February 21, 2017.

    ADDRESSES:

    Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE., West Building Ground Floor, Room W12-140, Washington, DC 20590; telephone: 1(800) 647-5527 or (202) 366-9826. You must identify FAA Docket No. FAA-2016-9556 and Airspace Docket No. 16-AEA-2 at the beginning of your comments. You may also submit comments through the Internet at http://www.regulations.gov. You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office between 9:00 a.m. and 5:00 p.m., Monday through Friday, except Federal holidays. The Docket Office (telephone: 1(800) 647-5527), is on the ground floor of the building at the above address.

    FAA Order 7400.11A, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at http://www.faa.gov/air_traffic/publications/. For further information, you can contact the Airspace Policy Group, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591; telephone: (202) 267-8783. The Order is also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of FAA Order 7400.11A at NARA, call (202) 741-6030, or go to http://www.archives.gov/federal_register/code_of_federal-regulations/ibr_locations.html.

    FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.

    FOR FURTHER INFORMATION CONTACT:

    Paul Gallant, Airspace Policy Group, Office of Airspace Services, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591; telephone: (202) 267-8783.

    SUPPLEMENTARY INFORMATION: 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 expands the availability of area navigation routes in the northeastern United States to enhance the efficient flow of air traffic.

    Comments Invited

    Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.

    Communications should identify both docket numbers (FAA Docket No. FAA-2016-9556 and Airspace Docket No. 16-AEA-2) and be submitted in triplicate to the Docket Management Facility (see ADDRESSES section for address and phone number). You may also submit comments through the Internet at http://www.regulations.gov.

    Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2016-9556 and Airspace Docket No. 16-AEA-2.” The postcard will be date/time stamped and returned to the commenter.

    All communications received on or before the specified comment closing date will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the comment closing date. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

    Availability of NPRM's

    An electronic copy of this document may be downloaded through the Internet at http://www.regulations.gov. Recently published rulemaking documents can also accessed through the FAA's Web page at http://www.faa.gov/air_Traffic/publications/airspace_amendments.

    You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Office (see ADDRESSES section for address and phone number) between 9:00 a.m. and 5:00 p.m., Monday through Friday, except Federal holidays. An informal docket may also be examined during normal business hours at the office of the Eastern Service Center, Federal Aviation Administration, Room 210, 1701 Columbia Ave., College Park, GA 30337.

    Availability and Summary of Documents for Incorporation by Reference

    This document proposes to amend 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 proposed rule. FAA Order 7400.11A lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

    Background

    The Atlantic Coast Route Project (ACRP) is the first phase of FAA's plan to implement a PBN route structure across the U.S. It would consist primarily of North/South oriented, high-altitude RNAV routes (Q routes) extending from New England to Southern Florida and linking to the Caribbean. The eastern seaboard is an area containing heavily traveled and constricted airspace.

    ACRP aims to couple the stakeholder desire for route flexibility with the route structure needed to support higher air traffic demand levels. As a continuation of FAA's commitment to streamline the National Airspace System (NAS) and realize the benefits of PBN advancements, ARCP seeks to establish a framework for the effective transition away from the less efficient jet route system that is constricted by the current ground-based navigation infrastructure.

    The ACRP, itself, would be implemented in two phases. The first phase would establish routes primarily in airspace in the northeastern U.S. that is controlled by Boston Air Route Traffic Control Center (ARTCC) and New York ARTCC. Phase 2 would implement new routes from south of New York ARTCC's airspace to the Caribbean area through separate rulemaking action.

    Key guidelines driving the scope of the ACRP effort include:

    Reduce the overall route structure;

    Reduce ATC facility sector complexity and controller workload;

    Reduce flying miles; and

    Maintain or improve ATC facility sector throughput.

    The Proposal

    The FAA is proposing an amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 to establish 12 new Q-routes along the Atlantic Coast, in the northeastern U.S. The new routes, designated Q-75, Q-97, Q-167, Q-220, Q-411, Q-419, Q-430, Q-437, Q-439, Q-445, Q-450 and Q-479, would improve NAS efficiency and facilitate the transition from the current jet route system along the Atlantic Coast of the U.S. The proposed routes' end points are listed below. Full route descriptions are in “The Proposed Amendment” section of this notice.

    Q-75: The route would extend between Greensboro, NC, and the Boston, MA, area.

    Q-97: The route would extend between the HEADI, NJ WP, and the Qubis Canada WP just north of the Maine border.

    Q-167: The route would extend between the YAZUU fix (off the coast of New Jersey) and the SSOXS fix south of Boston, MA.

    Q-220: The route would extend between the RIFLE fix (south of Long Island, NY) and the LARIE WP over Cape Cod, MA.

    Q-411: The route would extend between the Robbinsville, NJ, VORTAC and the FOXWD WP, CT.

    Q-419: The route would extend between the Robbinsville, NJ, VORTAC and the Deer Park, NY VOR/DME.

    Q-430: The route would extend between the COPES, PA, fix and the Nantucket, MA, VOR/DME.

    Q-437: The route would extend between the VILLS, NJ, fix and the KOSPE, VT, fix.

    Q-439: The route would extend between the BRIGS, NJ, fix and the Presque Isle, ME, VOR/DME.

    Q-445: The route would extend between the BRIGS, NJ, fix and the KYSKY, NY, fix (south of Long Island, NY).

    Q-450: The route would extend between the HNNAH, NJ, fix and the Deer Park, NY, VOR/DME.

    Q-479: The route would extend between the LEEAH, NJ, fix and the PONCT, NY, WP.

    In addition to adding the 12 new Q-Routes, the FAA proposes to amend existing route Q-480 by adding two new waypoints (WP), KYLOH, NH and BEEKN, ME, along the current route between the Barnes, MA, VORTAC and the Kennebunk, ME, VOR/DME. This would provide connectivity and facilitate transitions between Q-480 and the new routes Q-97 and Q-439.

    RNAV routes are published in paragraph 2006 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 RNAV routes listed in this document will be subsequently published in the Order.

    Regulatory Notices and Analyses

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

    Environmental Review

    This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.

    List of Subjects in 14 CFR Part 71

    Airspace, Incorporation by reference, Navigation (air).

    The Proposed Amendment

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

    PART 71—DESIGNATION OF CLASS A, B, C, D, AND E AIRSPACE AREAS; AIR TRAFFIC SERVICE ROUTES; AND REPORTING POINTS 1. The authority citation for part 71 continues to read as follows: Authority:

    49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

    § 71.1 [Amended]
    2. The incorporation by reference in 14 CFR 71.1 of FAA Order 7400.11A, Airspace Designations and Reporting Points, dated August 3, 2016, and effective September 15, 2016, is amended as follows: Paragraph 2006 United States Area Navigation Routes. Q-75 Greensboro, NC (GSO) to COPLY, MA [New] Greensboro, NC (GSO) VORTAC (Lat. 36°02′44.49″ N., long. 79°58′34.95″ W.) DRAIK, VA FIX (Lat. 37°08′02.15″ N., long. 78°58′58.56″ W.) Gordonsville, VA (GVE) VORTAC (Lat. 38°00′48.96″ N., long. 78°09′10.89″ W.) BINKS, MD FIX (Lat. 39°03′07.04″ N., long. 77°01′47.57″ W.) MURPH, MD FIX (Lat. 39°27′51.22″ N., long. 76°23′07.24″ W.) SACRI, MD FIX (Lat. 39°36′07.34″ N., long. 76°10′24.70″ W.) STOEN, PA FIX (Lat. 39°50′17.54″ N., long. 75°47′54.92″ W.) Modena, PA (MXE) VORTAC (Lat. 39°55′05.00″ N., long. 75°40′14.91″ W.) COPES, PA FIX (Lat. 40°07′50.58″ N., long. 75°22′36.37″ W.) BIGGY, NJ FIX (Lat. 40°25′10.76″ N., long. 74°58′21.57″ W.) Solberg, NJ (SBJ) VOR/DME (Lat. 40°34′58.96″ N., long. 74°44′30.46″ W.) JERSY, NJ FIX (Lat. 40°47′28.99″ N., long. 74°23′58.00″ W.) DUEYS, NY FIX (Lat. 41°09′09.46″ N., long. 73°47′48.52″ W.) BIZEX, NY WP (Lat. 41°17′02.86″ N., long. 73°34′50.20″ W.) GREKI, CT FIX (Lat. 41°28′48.03″ N., long. 73°18′50.98″ W.) NELIE, CT FIX (Lat. 41°56′27.64″ N., long. 72°41′18.88″ W.) SWALO, MA FIX (Lat. 42°03′55.75″ N., long. 72°11′37.10″ W.) Boston, MA VOR/DME (Lat. 42°21′26.82″ N., long. 70°59′22.37″ W.) COPLY, MA WP (Lat. 42°29′52.21″ N., long. 70°33′28.57″ W.) Q-97 HEADI, NJ to QUIBIS, Canada [New] HEADI, NJ WP (Lat. 39°57′49.56″ N., long. 73°43′28.85″ W.) SAILN, OA WP (Lat. 40°15′15.92″ N., long. 73°27′01.93″ W.) Calverton, NY (CCC) VOR/DME (Lat. 40°55′46.63″ N., long. 72°47′55.89″ W.) NTMEG, CT WP (Lat. 41°16′30.75″ N., long. 72°28′52.08″ W.) VENTE, MA WP (Lat. 42°08′24.33″ N., long. 71°53′38.08″ W.) MANCH, NH WP (Lat. 42°52′12.03″ N., long. 71°22′06.54″ W.) KYLOH, NH WP (Lat. 43°03′53.11″ N., long. 71°13′45.49″ W.) SERPA, ME FIX (Lat. 43°50′23.48″ N., long. 70°39′56.87″ W.) ANSYN, ME FIX (Lat. 44°44′46.04″ N., long. 70°00′09.03″ W.) QUBIS, Canada WP (Lat. 47°32′00.15″ N., long. 67°45′58.09″ W.) Excluding the airspace in Canada. Q-167 YAZUU, OA to SSOXS, MA [New] YAZUU, OA FIX (Lat. 39°24′44.82″ N., long. 74°01′01.55″ W.) TOPRR, OA WP (Lat. 39°50′49.13″ N., long. 73°32′12.02″ W.) EMJAY, OA FIX (Lat. 40°05′34.89″ N., long. 73°15′42.31″ W.) RIFLE, NY FIX (Lat. 40°41′24.18″ N., long. 72°34′54.89″ W.) ORCHA, NY WP (Lat. 40°55′08.37″ N., long. 72°19′00.15″ W.) ALBOW, NY WP (Lat. 41°02′04.04″ N., long. 71°58′30.69″ W.) WIKKD, NY WP (Lat. 41°08′42.80″ N., long. 71°45′27.74″ W.) NESTT, RI WP (Lat. 41°21′35.84″ N., long. 71°20′05.38″ W.) BUZRD, MA WP (Lat. 41°32′45.88″ N., long. 70°57′50.69″ W.) SSOXS, MA FIX (Lat. 41°50′12.62″ N., long. 70°44′46.26″ W.) Q-220 RIFLE, NY to LARIE, MA [New] RIFLE, NY FIX (Lat. 40°41′24.18″ N., long. 72°34′54.89″ W.) ORCHA, NY WP (Lat. 40°55′08.37″ N., long. 72°19′00.15″ W.) ALBOW, NY WP (Lat. 41°02′04.04″ N., long. 71°58′30.69″ W.) Sandy Point, RI (SEY) VOR/DME (Lat. 41°10′02.77″ N., long. 71°34′33.91″ W.) SKOWL, RI WP (Lat. 41°15′47.18″ N., long. 71°16′44.35″ W.) JAWZZ, MA WP (Lat. 41°24′08.08″ N., long. 70°50′33.25″ W.) LARIE, MA WP (Lat. 41°49′23.46″ N., long. 69°58′41.96″ W.) Q-411 Robbinsville, NJ (RBV) to FOXWD, CT [New] Robbinsville, NJ (RBV) VORTAC (Lat. 40°12′08.65″ N., long. 74°29′42.09″ W.) LAURN, NY WP (Lat. 40°33′00.81″ N., long. 74°07′07.15″ W.) LLUND, NY FIX (Lat. 40°51′45.04″ N., long. 73°46′57.30″ W.) BAYYS, CT FIX (Lat. 41°17′21.27″ N., long. 72°58′16.73″ W,) FOXWD, CT WP (Lat. 41°48′21.66″ N., long. 71°48′07.03″ W.) Q-419 Robbinsville, NJ (RBV) to Deer Park, NY (DPK) [New] Robbinsville, NJ (RBV) VORTAC (Lat. 40°12′08.65″ N., long. 74°29′42.09″ W.) LAURN, NY WP (Lat. 40°33′00.81″ N., long. 74°07′07.15″ W.) Kennedy, NY (JFK) VOR/DME (Lat. 40°37′58.40″ N., long. 73°46′17.00″ W.) Deer Park, NY (DPK) VOR/DME (Lat. 40°47′30.30″ N., long. 73°18′13.17″ W.) Q-430 COPES, PA to Nantucket, MA (ACK) [New] COPES, PA FIX (Lat. 40°07′50.58″ N., long. 75°22′36.37″ W.) Robbinsville, NJ (RBV) VORTAC (Lat. 40°12′08.65″ N., long. 74°29′42.09″ W.) MYRCA, NJ WP (Lat. 40°20′42.97″ N., long. 73°56′58.07″ W.) CREEL, NY FIX (Lat. 40°26′50.51″ N., long. 73°33′10.68″ W.) RIFLE, NY FIX (Lat. 40°41′24.18″ N., long. 72°34′54.89″ W.) KYSKY, NY FIX (Lat. 40°46′52.75″ N., long. 72°12′21.45″ W.) LIBBE, NY FIX (Lat. 41°00′15.86″ N., long. 71°21′20.34″ W.) FLAPE, MA FIX (Lat. 41°03′56.30″ N., long. 71°04′10.55″ W.) DEEPO, MA FIX (Lat. 41°06′53.96″ N., long. 70°50′09.85″ W.) Nantucket, MA (ACK) VOR/DME (Lat. 41°16′54.79″ N., long. 70°01′36.16″ W.) Q-437 VILLS, NJ to KOSPE, VT [New] VILLS, NJ FIX (Lat. 39°18′03.87″ N., long. 75°06′37.89″ W.) DITCH, NJ FIX (Lat. 39°47′37.86″ N., long. 74°42′59.88″ W.) LUIGI, NJ FIX (Lat. 40°04′09.65″ N., long. 74°26′40.32″ W.) HNNAH, NJ FIX (Lat. 40°28′12.73″ N., long. 74°02′36.62″ W.) LLUND, NY FIX (Lat. 40°51′45.04″ N., long. 73°46′57.30″ W.) BINGS, CT WP (Lat. 42°00′33.26″ N., long. 73°30′01.81″ W.) KOSPE, VT FIX (Lat. 43°14′24.06″ N., long. 73°11′09.84″ W.) Q-439 BRIGS, NJ to Presque Isle, ME (PQI) [New] BRIGS, NJ FIX (Lat. 39°31′24.72″ N., long. 74°08′19.67″ W.) DRIFT, NJ FIX (Lat. 39°48′53.56″ N., long. 73°40′49.53″ W.) MANTA, NJ FIX (Lat. 39°54′07.01″ N., long. 73°32′31.63″ W.) PLUME, NJ FIX (Lat. 40°07′06.67″ N., long. 73°17′08.03″ W.) DUNEE, NY FIX (Lat. 40°19′24.38″ N., long. 73°02′26.06″ W.) SARDI, NY FIX (Lat. 40°31′26.61″ N., long. 72°47′55.87″ W.) RIFLE, NY FIX (Lat. 40°41′24.18″ N., long. 72°34′54.89″ W.) FOXWD, CT WP (Lat. 41°48′21.66″ N., long. 71°48′07.03″ W.) BOGRT, MA WP (Lat. 42°13′56.08″ N., long. 71°31′07.37″ W.) BLENO, NH WP (Lat. 42°54′55.00″ N., long. 71°04′43.37″ W.) BEEKN, ME WP (Lat. 43°20′51.95″ N., long. 70°44′50.28″ W.) FRIAR, ME FIX (Lat. 44°26′28.93″ N., long. 69°53′04.38″ W.) Presque Isle, ME (PQI) VOR/DME (Lat. 46°46′27.07″ N., long. 68°05′40.37″ W.) Q-445 BRIGS, NJ to KYSKY, NY [New] BRIGS, NJ FIX (Lat. 39°31′24.72″ N., long. 74°08′19.67″ W.) SHAUP, NJ WP (Lat. 39°44′23.91″ N., long. 73°34′33.84″ W.) VALCO, NJ WP (Lat. 40°05′29.86″ N., long. 73°08′22.91″ W.) KYSKY, NY FIX (Lat. 40°46′52.75″ N., long. 72°12′21.45″ W.) Q-450 HNNAH, NJ to Deer Park, NY (DPK) [New] HNNAH, NJ FIX (Lat. 40°28′12.73″ N., long. 74°02′36.62″ W.) Kennedy, NY (JFK) VOR/DME (Lat. 40°37′58.40″ N., long. 73°46′17.00″ W.) Deer Park, NY (DPK) VOR/DME (Lat. 40°47′30.30″ N., long. 73°18′13.17″ W.) Q-479 LEEAH, NJ to PONCT, NY [New] LEEAH, NJ FIX (Lat. 39°15′39.27″ N., long. 74°57′11.01″ W.) MYRCA, NJ WP (Lat. 40°20′42.97″ N., long. 73°56′58.07″ W.) Kennedy, NY (JFK) VOR/DME (Lat. 40°37′58.40″ N., long. 73°46′17.00″ W.) LLUND, NY FIX (Lat. 40°51′45.04″ N., long. 73°46′57.30″ W.) DUEYS, NY FIX (Lat. 41°09′09.46″ N., long. 73°47′48.52″ W.) GANDE, NY FIX (Lat. 41°30′36.66″ N., long. 73°48′52.03″ W.) PONCT, NY WP (Lat. 42°44′48.83″ N., long. 73°48′48.07″ W.) Q-480 ZANDR, OH to Kennebunk, ME (ENE) [Amended] ZANDR, OH FIX (Lat. 40°00′18.75″ N., long. 81°31′58.35″ W,) Bellaire, OH (AIR) VOR/DME (Lat. 40°01′01.29″ N., long. 80°49′02.02″ W.) LEJOY, PA FIX (Lat. 40°00′12.22″ N., long. 79°24′53.61″ W.) VINSE, PA FIX (Lat. 39°58′16.21″ N., long. 77°57′21.20″ W.) BEETS, PA FIX (Lat. 39°57′20.57″ N., long. 77°26′59.55″ W.) HOTEE, PA WP (Lat. 40°20′36.00″ N., long. 76°29′37.00″ W.) MIKYG, PA WP (Lat. 40°36′06.00″ N., long. 75°49′11.00″ W.) SPOTZ, PA WP (Lat. 40°45′55.00″ N., long. 75°22′59.00″ W.) CANDR, NJ FIX (Lat. 40°58′15.55″ N., long. 74°57′35.38″ W.) JEFFF, NJ FIX (Lat. 41°14′46.38″ N., long. 74°27′43.29″ W.) Kingston, NY VOR/DME (Lat. 41°39′55.62″ N., long. 73°49′20.01″ W.) LESWL, CT WP (Lat. 41°53′31.00″ N., long. 73°19′20.00″ W.) Barnes, MA (BAF) VORTAC (Lat. 42°09′43.05″ N., long. 72°42′58.32″ W.) KYLOH, NH WP (Lat. 43°03′53.11″ N., long. 71°13′45.49″ W.) BEEKN, ME WP (Lat. 43°20′51.95″ N., long. 70°44′50.28″ W.) Kennebunk, ME (ENE) VOR/DME (Lat. 43°25′32.42″ N., long. 70°36′48.69″ W.) Issued in Washington, DC, on December 20, 2016. Leslie M. Swann, Acting Manager, Airspace Policy Group.
    [FR Doc. 2016-31911 Filed 1-4-17; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 71 [Docket No. FAA-2016-9264; Airspace Docket No. 16-AWP-1] RIN 2120-AA66 Proposed Establishment, Modification and Revocation of Air Traffic Service (ATS) Routes; Western United States AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    This action proposes to modify three jet routes and four VHF Omnidirectional Range (VOR) Federal airways; remove two VOR Federal Airway routes, and establish four and modify four low altitude Area Navigation (RNAV) routes (T-routes) in the western United States. The FAA is proposing this action due to the scheduled decommissioning of the Manteca, CA, and Maxwell, CA, VOR facilities, which provide navigation guidance for portions of the affected routes. This action would enhance the safety and management of aircraft within these routes in the National Airspace System (NAS).

    DATES:

    Comments must be received on or before February 21, 2017.

    ADDRESSES:

    Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE., West Building Ground Floor, Room W12-140, Washington, DC 20590; telephone: 1(800) 617-5527, or (202) 366-9826. You must identify FAA Docket No. FAA-2016-9264 and Airspace Docket No. 16-AWP-1 at the beginning of your comments. You may also submit comments through the Internet at http://www.regulations.gov.

    FAA Order 7400.11A, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at http://www.faa.gov/air_traffic/publications/. For further information, you can contact the Airspace Policy Group, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC, 20591; telephone: (202) 267-8783. The Order is also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of FAA Order 7400.11A at NARA, call (202) 741-6030, or go to http://www.archives.gov/federal_register/code_of_federal-regulations/ibr_locations.html.

    FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.

    FOR FURTHER INFORMATION CONTACT:

    Kenneth Ready, Airspace Policy Group, Office of Airspace Services, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591; telephone: (202) 267-8783.

    SUPPLEMENTARY INFORMATION:

    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 route structure as necessary to preserve the safe and efficient flow of air traffic within the NAS.

    Comments Invited

    Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.

    Communications should identify both docket numbers (FAA Docket No. FAA-2016-9264 and Airspace Docket No. 16-AWP-1) and be submitted in triplicate to the Docket Management Facility (see ADDRESSES section for address and phone number). You may also submit comments through the Internet at http://www.regulations.gov.

    Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2016-9264, and Airspace Docket No. 16-AWP-1.” The postcard will be date/time stamped and returned to the commenter.

    All communications received on or before the specified comment closing date will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the comment closing date. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

    Availability of NPRM's

    An electronic copy of this document may be downloaded through the Internet at http://www.regulations.gov. Recently published rulemaking documents can also be accessed through the FAA's Web page at http://www.faa.gov/air_traffic/publications/airspace_amendments/.

    You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Office (see ADDRESSES section for address and phone number) between 9:00 a.m. and 5:00 p.m., Monday through Friday, except Federal holidays. An informal docket may also be examined during normal business hours at the office of the Western Service Center, Operations Support Group, Federal Aviation Administration, 1601 Lind Ave. SW., Renton, WA 98057.

    Availability and Summary of Documents for Incorporation by Reference

    This document proposes to amend 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.

    Background

    The Manteca, CA VOR (ECA) is being decommissioned due to encroachment of obstructions causing radials to become unreliable and/or unusable. The Maxwell, CA VOR (MXW) is being decommissioned due to the owner requesting the FAA vacate the land so he can develop it. A determination has been made to permanently decommission both facilities as they already are on the list of VORs planned for discontinuance based on the Notice Of Policy “Provision of Navigation Services for the Next Generation Air Transportation System (NextGen) Transition to Performance-Based Navigation (PBN) Plan for Establishing a VOR Minimum Operational Network”, published July 26, 2016 (81 FR 48694). As a result, the ATS routes that utilize the ECA and MXW VOR facilities must be amended. The affected routes are: Jet route J-58, J-80, J-94; VOR Federal airways V-87, V-109, V-113, V-195, V-244, V-585; and RNAV T-routes T-257, T-259, T-261, T-263. Additionally, the FAA would establish four new RNAV T-routes: T-298, T-329, T-331, and T-333. With the decommissioning of the ECA and MXW VOR facilities, ground-based navigation aid (NAVAID) coverage would be insufficient to enable the continuity of all the airways. Therefore, the proposed modifications to Jet routes J-58, J-80, J-94; and VOR Federal airways V-87, V-109, V-113, V-195, V-244, V-585 would result in a gap in the route structures. To overcome the gaps created in the route structures, air traffic control would either provide radar vectoring or reroute affected aircraft to the new RNAV T-routes established in this proposal.

    The Proposal

    The FAA is proposing an amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 to amend Jet routes J-58, J-80, J-94; VOR Federal airways V-87, V-113, V-195, V-244; and RNAV T-routes T-257, T-259, T-261, T-263. Additionally, the FAA will establish 4 new Area Navigation T-routes T-298, T-329, T-331, and T-333. The FAA also proposes to remove VOR Federal airway V-109, V-585. The scheduled decommissioning of the ECA and MXW VOR facilities has made this proposed action necessary.

    The proposed route changes are outlined below.

    J-58: J-58 currently extends between Oakland, CA (OAK) and Harvey, LA (HRV). The FAA proposes to eliminate the segment of the route west of Coaldale, NV (OAL) from Oakland to Coaldale via Manteca. The unaffected portion of the existing route will remain as charted.

    J-80: J-80 currently extends between Oakland, CA (OAK) and Bellaire, OH (AIR). The FAA proposes to eliminate the segment of the route west of Coaldale, NV (OAL) from Oakland to Coaldale via Manteca. The unaffected portion of the existing route will remain as charted.

    J-94: J-94 currently extends between Oakland, CA (OAK) and Flint, MI (FNT). The FAA proposes to eliminate the segment of the route west of Mustang, NV (FMG) from Oakland to Mustang. The unaffected portion of the existing route will remain as charted.;

    V-87: V-87 currently extends between Panoche, CA (PXN) and Red Bluff, CA (RBL). The FAA proposes to end the route at Scaggs Island, CA (SGD) thereby eliminating the segment north of Scaggs Island, CA (SGD) to Red Bluff, CA. The unaffected portion of the existing route will remain as charted.

    V-109: V-109 currently extends from Panoche, CA to Oakland CA. The FAA proposes to remove this route.

    V-113: V-113 currently extends between Morro Bay, CA (MQO) and Lewistown, MT (LWT). The FAA proposes to eliminate the Manteca, CA segment between Panoche, CA (PXN) and Linden, CA (LIN). The unaffected portions of the existing route will remain as charted in the two remaining segments.

    V-195: V-195 currently extends between Manteca, CA (ECA) and Fortuna, CA, (FOT). The FAA proposes to eliminate the part of the route east of Oakland, CA (OAK) from Manteca to Oakland. The unaffected portion of the existing route will remain as charted.

    V-244: V-244 currently extends between the intersection of the Oakland, CA (OAK) 077° and Manteca, CA (ECA) 267° radials to Salina, KS (SLN). The beginning portion of the route that was west of Coaldale, NV (OAL) would now be charted from Linden, CA (LIN) to Coaldale, NV (OAL). The unaffected portion of the existing route will remain as charted.

    V-585: V-585 currently extends from Clovis, CA to Sacramento, CA. The FAA proposes to remove this route.

    T-257: T-257 currently extends between Big Sur, CA (BSR) to Point Reyes, CA (PYE). The FAA proposes to reroute the route from Ventura, CA (VTU) to Tatoosh, WA (TOU). This route would provide separation from the SERFR arrival, a new optimized profile descent into San Francisco, CA (SFO). The current T-257 route also crosses the SFO and Oakland, CA (OAK) departure corridor and aircraft are not allowed to navigate via this route. Currently, aircraft that file for route T-257 are taken off the route upon talking with Northern California Approach Control to separate both the SFO arrivals and SFO/OAK departures. Northern California TRACON (NCT) has received multiple requests to amend this route so pilots will be allowed to fly from points south to the wine country airports. Added utility to this route was gained by extending the route south and north. To the south, the route splits the Special Activity Areas by routing the airway off the coastline, then extending inland over Morro Bay, CA (MQO) terminating at Ventura CA (VTU). To the north, the airway would be extended along the Oregon and Washington coast to Tatoosh CA (TOU) providing easy jump off points into airports with Standard Instrument Approach procedures.

    T-259: T-259 currently extends between San Jose, CA (SJC) to Sacramento, CA (SAC). The FAA proposes to reroute the route from Lake Hughes, CA (LHS) to Ely, NV (ELY). This T-route would overlay the vector routes Northern California TRACON (NCT) utilizes to get aircraft in and out of south bay airports [San Jose, CA (SJC), Ried-Hillview, CA (RHV), Pala Alto, CA (PAO), Moffett Federal Airfield, CA (NUQ)] that are destined for or arriving from the northeast. The route would also extend to the TRUCK instrument approach fix for Tahoe airports, which are common destinations during the winter months. The existing location of T-259 is not utilized as it conflicts with East Bay arrivals.

    T-261: T-261 currently extends between Woodside, CA (OSI) and the ALTAM waypoint. The FAA proposes to amend the route from Santa Catalina, CA (SXC) to JSTEN waypoint. This route would avoid ORRCA, a highly congested intersection. Aircraft routed via route T-261 today are taken off the airway to avoid conflicts over ORRCA. The route was also extended to the north of Northern California TRACON (NCT) airspace to separate from the TUDOR arrival into Sacramento International Airport, CA (SMF). Added utility was added by extending the route north through eastern Oregon and Washington State east of the Cascade mountain range.

    T-263: T-263 currently extends between the SUNOL waypoint and Scaggs Island, CA (SGD). The FAA proposes a new route to begin at Fillmore, CA (FIM) to ELWHA waypoint. This proposed route was developed to the south beginning at Fillmore, CA (FIM) so it can tie into T-329 and other VOR federal airways to continue IFR to airports south or into the Fresno, CA, complex. This would provide a route clear of the SFO Class Bravo while servicing the central valley and wine country airports.

    T-298: The FAA proposes to establish T-298 between Oakland, CA (OAK) and Crazy Woman, WY (CZI).

    T-329: The FAA proposes to establish T-329 between Morro Bay, CA (MQO) and NACKI, CA waypoint.

    T-331: The FAA proposes to establish T-331 between NTELL, CA waypoint and FONIA, ND FIX.

    T-333: The FAA proposes to establish T-333 between KLIDE, CA fix and TIPRE, CA waypoint.

    The navigation aid radials cited in the proposed route descriptions, below, are unchanged from the existing routes and stated relative to True north.

    Jet routes are published in paragraph 2004, VOR Federal airways are published in paragraph 6010(a), United States Area Navigation Routes (T-Routes) are published in paragraph 6011, respectively, 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 Jet routes, VOR Federal airways and United States Area Navigation Routes (T-Routes) listed in this document will be subsequently published in the Order.

    Regulatory Notices and Analyses

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

    Environmental Review

    This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.

    List of Subjects in 14 CFR Part 71

    Airspace, Incorporation by reference, Navigation (air).

    The Proposed Amendment

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

    PART 71—DESIGNATION OF CLASS A, B, C, D, AND E AIRSPACE AREAS; AIR TRAFFIC SERVICE ROUTES; AND REPORTING POINTS 1. The authority citation for part 71 continues to read as follows: Authority:

    49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

    § 71.1 [Amended]
    2. The incorporation by reference in 14 CFR 71.1 of FAA Order 7400.11A, Airspace Designations and Reporting Points, dated August 3, 2016 and effective September 15, 2016, is amended as follows: Paragraph 2004 Jet Routes. J-58 [Amended]

    From Coaldale, NV; Wilson Creek, NV; Milford, UT; Rattlesnake, NM; Fort Union, NM; Panhandle, TX; Wichita Falls, TX; Ranger, TX; Alexandria, LA; to Harvey, LA.

    J-80 [Amended]

    From Coaldale, NV; Wilson Creek, NV; Milford, UT; Grand Junction, CO; Red Table, CO; Falcon, CO; Goodland, KS; Hill City, KS; Kansa City, MO; Spinner, IL; Brickyard, IN; to Bellaire, OH.

    J-94 [Amended]

    From Mustang, NV; Lovelock, NV; Battle Mountain, NV; Lucin, UT; Rock Springs, WY; Scottsbluff, NE; O'Neill, NE; Fort Dodge, IA; Dubuque, IA; Northbrook, IL; Pullman, MI; to Flint, MI.

    Paragraph 6010 Domestic VOR Federal Airways. V-87 [Amended]

    From Panoche, CA; INT Panoche 245° and Salinas, CA, 100° radials; Salinas; INT Salinas 310° and Woodside, CA, 158° radials; Woodside; San Francisco, CA; INT San Francisco 359° and Scaggs Island, CA, 182° radials; to Scaggs Island, CA.

    V-109 [Removed] V-113 [Amended]

    From Morro Bay, CA; Paso Robles, CA; Priest, CA; to Panoche, CA. From Linden, CA; INT Linden 046 °and Mustang, NV, 208° radials; Mustang; 42 miles, 24 miles, 115 MSL, 95 MSL, Sod House, NV; 67 miles, 95 MSL, 85 MSL, Rome, OR; 61 miles, 85 MSL, Boise, ID; Salmon, ID; Coppertown, MT; Helena, MT; to Lewistown, MT.

    V-195 [Amended]

    From Oakland, CA; INT Oakland 004° and Williams, CA, 191° radials; Williams; INT Williams 002° and Red Bluff, CA, 158° radials; Red Bluff; to Fortuna, CA.

    V-244 [Amended]

    From Linden, CA; Coaldale, NV; Tonopah, NV; 40 miles, 115 MSL, Wilson Creek, NV; 28 miles, 115 MSL, Milford, UT; Hanksville, UT; 63 miles, 13 miles, 140 MSL, 36 miles, 115 MSL, Montrose, CO; Blue Mesa, CO; 33 miles, 122 MSL, 27 miles, 155 MSL, Pueblo, CO; 18 miles, 48 miles, 60 MSL, Lamar, CO; 20 miles, 116 miles, 65 MSL, Hays, KS; to Salina, KS.

    V-585 [Removed] Paragraph 6011 United States Area Navigation Routes. T-257 Ventura, CA (VTU) to Tatoosh, WA (TOU) [Amended] Ventura, CA (VTU) VOR/DME (Lat. 34°06′54.21″ N., long. 119°02′58.17″ W.) San Marcus, CA (RZS) VORTAC (Lat. 34°30′34.32″ N., long. 119°46′15.57″ W.) Morro Bay, CA (MQO) VORTAC (Lat. 35°15′08.12″ N., long. 120°45′34.44″ W.) BLANC, CA FIX (Lat. 35°37′53.19″ N., long. 121°21′23.04″ W.) CAATE, CA WP (Lat. 36°46′32.29″ N., long. 122°04′09.57″ W.) CHAWZ, CA WP (Lat. 37°06′48.59″ N., long. 122°21′09.58″ W.) PORTE, CA FIX (Lat. 37°29′23.23″ N., long. 122°28′28.48″ W.) THHEO, CA WP (Lat. 37°44′54.55″ N., long. 122°36′54.79″ W.) JAMIN, CA WP (Lat. 37°51′16.99″ N., long. 122°40′12.05″ W.) Point Reyes, CA (PYE) VORTAC (Lat. 38°04′47.12″ N., long. 122°52′04.18″ W.) FREES, CA FIX (Lat. 38°23′38.47″ N., long. 122°55′33.24″ W.) NACKI, CA WP (Lat. 38°43′47.73″ N., long. 123°05′52.93″ W.) Mendocino, CA (ENI) VORTAC (Lat. 39°03′11.58″ N., long. 123°16′27.58″ W.) FLUEN, CA FIX (Lat. 39°32′47.92″ N., long. 123°33′42.75″ W.) PLYAT, CA FIX (Lat. 40°20′20.90″ N., long. 123°41′35.88″ W.) CCHUK, CA WP (Lat. 40°31′42.18″ N., long. 124°04′16.08″ W.) SCUPY, CA WP (Lat. 40°55′23.94″ N., long. 124°18′09.85″ W.) OLJEK, CA FIX (Lat. 41°28′30.66″ N., long. 124°14′20.68″ W.) CIGCA, CA WP (Lat. 41°36′39.60″ N., long. 124°17′27.58″ W.) FURNS, CA WP (Lat. 41°55′15.86″ N., long. 124°26′09.40″ W.) MITUE, OR FIX (Lat. 43°18′49.00″ N., long. 124°30′22.74″ W.) JANAS, OR FIX (Lat. 44°17′33.63″ N., long. 124°05′14.25″ W.) Newport, OR (ONP) VORTAC (Lat. 44°34′31.26″ N., long. 124°03′38.14″ W.) CUTEL, OR FIX (Lat. 44°54′27.50″ N., long. 124°01′25.30″ W.) ILWAC, WA FIX (Lat. 46°19′46.62″ N., long. 124°10′49.49″ W.) ZEDAT, WA FIX (Lat. 46°35′50.64″ N., long. 124°10′01.14″ W.) WAVLU, WA FIX (Lat. 46°50′00.90″ N., long. 124°06′35.70″ W.) Hoquiam, WA (HQM) VORTAC (Lat. 46°56′49.35″ N., long. 124°08′57.37″ W.) COPLS, WA WP (Lat. 47°06′46.78″ N., long. 124°07′40.80″ W.) WAPTO, WA FIX (Lat. 47°28′19.54″ N., long. 124°13′50.38″ W.) OZETT, WA WP (Lat. 48°03′07.00″ N., long. 124°35′54.42″ W.) Tatoosh, WA (TOU) VORTAC (Lat. 48°17′59.64″ N., long. 124°37′37.36″ W.) *         *         *         *         *         * T-259 Lake Hughes, CA (LHS) to Ely, NV (ELY) [Amended] Lake Hughes, CA (LHS) VORTAC (Lat. 34°40′58.70″ N., long. 118°34′36.98″ W.) Shafter, CA (EHF) VORTAC (Lat. 35°29′04.40″ N., long. 119°05′50.27″ W.) Avenal, CA (AVE) VOR/DME (Lat. 35°38′49.11″ N., long. 119°58′42.98″ W.) MBARI, CA WP (Lat. 36°01′37.09″ N., long. 120°34′38.27″ W.) LKHRN, CA WP (Lat. 36°05′59.82″ N., long. 120°45′22.53″ W.) Salinas, CA (SNS) VORTAC (Lat. 36°39′49.81″ N., long. 121°36′11.47″ W.) CAATE, CA WP (Lat. 36°46′32.29″ N., long. 122°04′09.57″ W.) SANTY, CA FIX (Lat. 36°58′45.26″ N., long. 122°04′23.07″ W.) SAPID, CA FIX (Lat. 37°11′28.73″ N., long. 122°10′47.00″ W.) CRTER, CA WP (Lat. 37°27′09.35″ N., long. 121°50′28.62″ W.) MOVDD, CA FIX (Lat. 37°39′40.88″ N., long. 121°26′53.53″ W.) OXJEF, CA WP (Lat. 37°46′11.40″ N., long. 121°02′03.31″ W.) SAAGO, CA WP (Lat. 37°51′19.01″ N., long. 120°05′09.54″ W.) BNAKI, CA WP (Lat. 37°53′25.61″ N., long. 119°40′02.43″ W.) WEXIM, CA WP (Lat. 37°59′12.54″ N., long. 119°14′15.57″ W.) NIKOL, CA FIX (Lat. 37°58′02.88″ N., long. 118°40′57.19″ W.) DAYMN, NV WP (Lat. 38°59′19.00″ N., long. 115°51′00.00″ W.) Ely, NV (ELY) VOR/DME (Lat. 39°17′53.25″ N., long. 114°50′53.90″ W.) *         *         *         *         *         * T-261 Santa Catalina, CA (SXC), to JSTEN, WA [Amended] Santa Catalina, CA (SXC) VORTAC (Lat. 33°22′30.20″ N., long. 118°25′11.68″ W.) Gaviota, CA (GVO) VORTAC (Lat. 34°31′52.75″ N., long. 120°05′27.92″ W.) Morro Bay, CA (MQO) VORTAC (Lat. 35°15′08.12″ N., long. 120°45′34.44″ W.) CLMNS, CA FIX (Lat. 35°24′45.26″ N., long. 121°09′45.91″ W.) HRRNG, CA WP (Lat. 35°37′39.24″ N., long. 121°25′19.36″ W.) HMPBK, CA WP (Lat. 36°03′16.11″ N., long. 121°45′05.32″ W.) WOZZZ, CA WP (Lat. 36°13′59.12″ N., long. 121°48′24.46″ W.) Salinas, CA (SNS) VORTAC (Lat. 36°39′49.81″ N., long. 121°36′11.47″ W.) WINDY, CA FIX (Lat. 37°17′36.96″ N., long. 121°11′00.75″ W.) MOVDD, CA FIX (Lat. 37°39′40.88″ N., long. 121°26′53.53″ W.) GIFME, CA WP (Lat. 38°12′02.39″ N., long. 121°35′11.42″ W.) GRIDD, CA FIX (Lat. 39°19′38.69″ N., long. 121°50′07.50″ W.) GONGS, CA FIX (Lat. 39°44′36.22″ N., long. 122°03′01.33″ W.) HOMAN, CA FIX (Lat. 40°24′17.88″ N., long. 122°07′44.68″ W.) GARSA, CA FIX (Lat. 40°42′05.61″ N., long. 122°01′26.87″ W.) CCAPS, CA WP (Lat. 41°28′40.20″ N., long. 121°48′51.96″ W.) MUREX, CA FIX (Lat. 41°52′11.03″ N., long. 121°44′02.93″ W.) MIXUP, OR FIX (Lat. 42°31′07.79″ N., long. 121°59′49.66″ W.) Deschutes, OR (DSD) VORTAC (Lat. 44°15′09.95″ N., long. 121°18′12.69″ W.) CUPRI, OR FIX (Lat. 44°37′03.76″ N., long. 121°15′13.89″ W.) SUPOC, OR WP (Lat. 44°54′05.94″ N., long. 120°58′53.25″ W.) KUKTE, OR FIX (Lat. 45°19′55.95″ N., long. 121°09′17.29″ W.) SUNSN, WA WP (Lat. 45°57′09.59″ N., long. 120°38′38.03″ W.) MUDLE, WA FIX (Lat. 46°23′38.69″ N., long. 120°34′53.38″ W.) Yakima, WA (YKM) VORTAC (Lat. 46°34′12.87″ N., long. 120°26′40.69″ W.) SELAH, WA FIX (Lat. 46°42′03.01″ N., long. 120°32′59.48″ W.) GEBTE, WA FIX (Lat. 46°51′39.01″ N., long. 120°30′17.18″ W.) QUINT, WA FIX (Lat. 47°12′50.29″ N., long. 119°54′31.59″ W.) PAWYO, WA WP (Lat. 48°10′04.08″ N., long. 119°29′30.00″ W.) HVARD, WA WP (Lat. 48°17′32.75″ N., long. 119°30′16.09″ W.) SOFFE, WA WP (Lat. 48°41′41.31″ N., long. 119°29′21.93″ W.) JSTEN, WA WP (Lat. 48°57′50.34″ N., long. 119°26′15.47″ W.) *         *         *         *         *         * T-263 Fillmore, CA (FIM) to ELWHA, WA [Amended] Fillmore, CA (FIM) VORTAC (Lat. 34°21′24.10″ N., long. 118°52′52.65″ W.) Avenal, CA (AVE) VOR/DME (Lat. 35°38′49.11″ N., long. 119°58′42.98″ W.) Panoche, CA (PXN) VORTAC (Lat. 36°42′55.65″ N., long. 120°46′43.26″ W.) WINDY, CA FIX (Lat. 37°17′36.96″ N., long. 121°11′00.75″ W.) MOVDD, CA FIX (Lat. 37°39′40.88″ N., long. 121°26′53.53″ W.) RBLEW, CA WP (Lat. 37°53′49.80″ N., long. 121°30′30.31″ W.) PITTS, CA FIX (Lat. 38°02′59.59″ N., long. 121°53′28.90″ W.) Scaggs Island, CA (SGD) VORTAC (Lat. 38°10′45.70″ N., long. 122°22′23.35″ W.) POPES, CA FIX (Lat. 38°29′09.41″ N., long. 122°20′45.16″ W.) DIBLE, CA FIX (Lat. 40°13′22.13″ N., long. 122°17′43.51″ W.) KENDL, CA FIX (Lat. 40°27′20.50″ N., long. 122°23′04.50″ W.) FOLDS, CA FIX (Lat. 40°44′16.56″ N., long. 122°30′10.69″ W.) HOMEG, CA WP (Lat. 41°20′09.00″ N., long. 122°51′05.00″ W.) ZUNAS, CA FIX (Lat. 41°51′34.17″ N., long. 122°50′54.37″ W.) TALEM, OR FIX (Lat. 42°08′49.70″ N., long. 122°52′41.50″ W.) OREGN, OR WP (Lat. 42°50′22.63″ N., long. 123°31′55.53″ W.) EROWY, OR WP (Lat. 43°03′20.67″ N., long. 123°30′02.52″ W.) NOTTI, OR FIX (Lat. 44°03′23.13″ N., long. 123°27′29.76″ W.) Corvallis, OR (CVO) VOR/DME (Lat. 44°29′58.45″ N., long. 123°17′37.21″ W.) ARTTY, OR FIX (Lat. 45°00′00.00″ N., long. 123°04′28.96″ W.) Newberg, OR (UBG) VOR/DME (Lat. 45°21′11.62″ N., long. 122°58′41.37″ W.) LOATH, OR FIX (Lat. 46°00′41.95″ N., long. 123°03′39.04″ W.) WINLO, WA FIX (Lat. 46°27′27.26″ N., long. 123°06′03.90″ W.) ULESS, WA FIX (Lat. 47°07′54.58″ N., long. 123°28′12.15″ W.) ARRIE, WA FIX (Lat. 47°52′47.61″ N., long. 123°28′33.00″ W.) ELWHA, WA WP (Lat. 48°08′55.11″ N., long. 123°40′15.06″ W.) *         *         *         *         *         * T-298 Oakland, CA (OAK) to Crazy Woman, WY (CZI) [New] Oakland, CA (OAK) VORTAC (Lat. 37°43′33.32″ N., long. 122°13′24.91″ W.) ALTAM, CA FIX (Lat. 37°48′43.82″ N., long. 121°44′49.54″ W.) ORANG, CA FIX (Lat. 37°59′00.43″ N., long. 121°15′50.95″ W.) ELKHN, CA WP (Lat. 38°09′24.47″ N., long. 120°22′23.46″ W.) NIKOL, CA FIX (Lat. 37°58′02.88″ N., long. 118°40′57.19″ W.) Coaldale, NV (OAL) VORTAC (Lat. 38°00′11.74″ N., long. 117°46′13.61″ W.) KATTS, NV WP (Lat. 38°20′00.00″ N., long. 116°20′00.00″ W.) KITTN, NV WP (Lat. 38°19′44.23″ N., long. 114°57′41.27″ W.) Wilson Creek, NV (ILC) VORTAC (Lat. 38°15′00.69″ N., long. 114°23′39.22″ W.) Milford, UT, (MLF) VORTAC (Lat. 38°21′37.28″ N., long. 113°00′47.64″ W.) DETAN, UT FIX (Lat. 38°22′22.30″ N., long. 112°37′46.69″ W.) EBOVE, UT WP (Lat. 39°02′44.32″ N., long. 111°46′24.18″ W.) Carbon, UT (PUC) VOR/DME (Lat. 39°36′11.49″ N., long. 110°45′12.70″ W.) Myton, UT (MTU) VOR/DME (Lat. 40°08′56.74″ N., long. 110°07′37.30″ W.) Rock Springs, WY (OCS) VOR/DME (Lat. 41°35′24.76″ N., long. 109°00′55.18″ W.) DORTN, WY WP (Lat. 43°02′36.63″ N., long. 107°13′03.27″ W.) Crazy Woman, WY (CZI) VOR/DME (Lat. 43°59′59.02″ N., long. 106°26′08.63″ W.) *         *         *         *         *         * T-329 Morro Bay, CA (MQO) to NACKI, CA [New] Morro Bay, CA (MQO) VORTAC (Lat. 35°15′08.12″ N., long. 120°45′34.44″ W.) Paso Robles, CA (PRB) VORTAC (Lat. 35°40′20.87″ N., long. 120°37′37.59″ W.) LKHRN, CA WP (Lat. 36°05′59.82″ N., long. 120°45′22.53″ W.) Panoche, CA (PXN) VORTAC (Lat. 36°42′55.65″ N., long. 120°46′43.26″ W.) MKNNA, CA WP (Lat. 37°04′23.41″ N., long. 120°50′22.26″ W.) OXJEF, CA WP (Lat. 37°46′11.40″ N., long. 121°02′03.31″ W.) TIPRE, CA WP (Lat. 38°12′21.00″ N., long. 121°02′09.00″ W.) HNNRY, CA WP (Lat. 38°23′27.61″ N., long. 121°37′43.50″ W.) ROWWN, CA WP (Lat. 38°24′55.86″ N., long. 121°47′00.05″ W.) RAGGS, CA FIX (Lat. 38°28′34.94″ N., long. 122°09′24.65″ W.) POPES, CA FIX (Lat. 38°29′09.41″ N., long. 122°20′45.16″ W.) NACKI, CA WP (Lat. 38°43′47.73″ N., long. 123°05′52.93″ W.) *         *         *         *         *         * T-331 NTELL, CA to FONIA, ND [New] NTELL, CA WP (Lat. 36°53′58.99″ N., long. 119°53′22.21″ W.) KARNN, CA FIX (Lat. 37°09′03.79″ N., long. 121°16′45.22″ W.) VINCO, CA FIX (Lat. 37°22′35.11″ N., long. 121°42′59.52″ W.) NORCL, CA WP (Lat. 37°31′02.66″ N., long. 121°43′10.60″ W.) MOVDD, CA FIX (Lat. 37°39′40.88″ N., long. 121°26′53.53″ W.) EVETT, CA WP (Lat. 38°00′36.11″ N., long. 121°07′48.14″ W.) TIPRE, CA WP (Lat. 38°12′21.00″ N., long. 121°02′09.00″ W.) ESSOH, CA WP (Lat. 38°43′11.37″ N., long. 120°38′10.87″ W.) Squaw Valley, CA (SWR) VOR/DME (Lat. 39°10′49.16″ N., long. 120°16′10.60″ W.) TRUCK, CA FIX (Lat. 39°26′15.67″ N., long. 120°09′42.48″ W.) Mustang, NV (FMG) VORTAC (Lat. 39°31′52.55″ N., long. 119°39′21.86″ W.) HIXUP, NV WP (Lat. 39°58′08.32″ N., long. 118°51′52.25″ W.) Lovelock, NV (LLC) VORTAC (Lat. 40°07′30.95″ N., long. 118°34′39.34″ W.) CUTVA, NV FIX (Lat. 40°23′27.16″ N., long. 117°35′59.79″ W.) Battle Mountain, NV (BAM) VORTAC (Lat. 40°34′08.69″ N., long. 116°55′20.12″ W.) PARZZ, NV WP (Lat. 41°36′14.64″ N., long. 115°02′09.69″ W.) TULIE, ID WP (Lat. 42°37′58.49″ N., long. 113°06′44.54″ W.) AMFAL, ID WP (Lat. 42°45′56.67″ N., long. 112°50′04.64″ W.) Pocatello, ID (PIH) VOR/DME (Lat. 42°52′13.38″ N., long. 112°39′08.05″ W.) VIPUC, ID WP (Lat. 43°21′09.64″ N., long. 112°14′44.08″ W.) Idaho Falls, ID (IDA) VOR/DME (Lat. 43°31′08.42″ N., long. 112°03′50.10″ W.) SABAT, ID FIX (Lat. 44°00′59.71″ N., long. 111°39′55.04″ W.) WAHNZ, ID WP (Lat. 44°17′15.61″ N., long. 111°13′32.75″ W.) SPECT, MT WP (Lat. 45°20′00.37″ N., long. 109°27′47.95″ W.) Billings, MT (BIL) VORTAC (Lat. 45°48′30.81″ N., long. 108°37′28.73″ W.) TRUED, MT WP (Lat. 46°08′27.38″ N., long. 107°54′36.55″ W.) EXADE, MT FIX (Lat. 47°35′56.78″ N., long. 104°32′40.61″ W.) JEKOK, MT WP (Lat. 47°59′31.05″ N., long. 103°27′17.51″ W.) FONIA, ND FIX (Lat. 48°15′35.07″ N., long. 103°10′37.54″ W.) *         *         *         *         *         * T-333 KLIDE, CA to TIPRE, CA [New] KLIDE, CA FIX (Lat. 37°09′51.03″ N., long. 121°42′46.98″ W.) BORED, CA FIX (Lat. 37°18′34.16″ N., long. 121°27′48.06″ W.) SMONE, CA WP (Lat. 37°32′10.45″ N., long. 121°21′30.65″ W.) TIPRE, CA WP (Lat. 38°12′21.00″ N., long. 121°02′09.00″ W.)
    Issued in Washington, DC, on December 28, 2016. M. Randy Willis, Acting Manager, Airspace Policy Group.
    [FR Doc. 2016-31818 Filed 1-4-17; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF THE INTERIOR Bureau of Safety and Environmental Enforcement 30 CFR Part 250 [Docket ID: BSEE-2016-0003; 17XE1700DX EEEE500000 EX1SF0000.DAQ000] RIN 1014-AA31 Oil, Gas, and Sulfur Activities on the Outer Continental Shelf—Adjustments to Cost Recovery Fees AGENCY:

    Bureau of Safety and Environmental Enforcement, Interior.

    ACTION:

    Extension of comment period for notice of proposed rulemaking.

    SUMMARY:

    The Bureau of Safety and Environmental Enforcement (BSEE) is extending the public comment period on the proposed rule regarding adjustments to cost recovery fees, which was published in the Federal Register on November 17, 2016 (81 FR 81033). The original public comment period would have ended on January 17, 2017. However, BSEE has received multiple requests from various stakeholders to extend the comment period. BSEE has reviewed the extension requests and determined that a 30-day comment period extension—to February 16, 2017—is appropriate.

    DATES:

    Written comments must be received by the extended due date of February 16, 2017. BSEE may not fully consider comments received after this date.

    ADDRESSES:

    You may submit comments on the rulemaking by any of the following methods. Please use the Regulation Identifier Number (RIN) 1014-AA31 as an identifier in your comments. See also Public Availability of Comments under Procedural Matters.

    Federal eRulemaking Portal: http://www.regulations.gov. In the entry titled Enter Keyword or ID, enter BSEE-2016-0003 then click search. Follow the instructions to submit public comments and view supporting and related materials available for this rulemaking. BSEE may post all submitted comments.

    • Mail or hand-carry comments to the Department of the Interior (DOI); Bureau of Safety and Environmental Enforcement; Attention: Regulations and Standards Branch; Mail Code VAE ORP; 45600 Woodland Road, Sterling, VA 20166. Please reference Proposed Adjustment of Service Fees Relating to the Regulation of Oil, Gas, and Sulfur Activities on the Outer Continental Shelf, AA31, in your comments and include your name and return address.

    • Comments on the information collection contained in this proposed rule are separate from those on the substance of the proposed rule. Send comments on the information collection burden in this rule to: OMB, Interior Desk Officer, 202-395-5806 (fax); email [email protected] Please also send a copy to BSEE at [email protected], fax number (703) 787-1546, or by the address listed above.

    Public Availability of Comments—Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.

    FOR FURTHER INFORMATION CONTACT:

    Kimberly Monaco, Budget Analyst, Office of Budget at (703) 787-1658, [email protected]

    SUPPLEMENTARY INFORMATION:

    BSEE published a proposed rulemaking to adjust its cost recovery fees on November 17, 2016 (81 FR 81033). The proposed rule would adjust 31 existing cost recovery fees and pre-production site visits for services BSEE provides when it receives a plan, application, permit, or other request from non-Federal recipients, including the acceptable payment type for each service. The proposed rule also proposed new fees for certain pre-production site visits to support the review and approval of production safety system facilities offshore and in shipyards. The proposed rule identified when credit cards or electronic checks for payment of fees would be acceptable.

    Upon publication of the proposed rule, BSEE received several written requests from oil and gas companies and industry groups asking BSEE to extend the comment period on the proposed rule by an additional 30 days. BSEE has considered those requests and the reason provided and has determined that an additional 30 days is reasonable and appropriate. Accordingly, BSEE is extending its original 60-day comment period by an additional 30 days, from January 17, 2017, to February 16, 2017.

    Dated: December 27, 2016. Brian Salerno, Director, Bureau of Safety and Environmental Enforcement.
    [FR Doc. 2016-31999 Filed 1-4-17; 8:45 am] BILLING CODE 4310-VH-P
    DEPARTMENT OF TRANSPORTATION Saint Lawrence Seaway Development Corporation 33 CFR Part 401 [Docket No. SLSDC-2016-0006] RIN 2135-AA42 Seaway Regulations and Rules: Periodic Update, Various Categories AGENCY:

    Saint Lawrence Seaway Development Corporation, DOT.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    The Saint Lawrence Seaway Development Corporation (SLSDC) and the St. Lawrence Seaway Management Corporation (SLSMC) of Canada, under international agreement, jointly publish and presently administer the St. Lawrence Seaway Regulations and Rules (Practices and Procedures in Canada) in their respective jurisdictions. Under agreement with the SLSMC, the SLSDC is amending the joint regulations by updating the Seaway Regulations and Rules in various categories. The changes will update the following sections of the Regulations and Rules: Condition of Vessels; Seaway Navigation; Radio Communications; General; and, Vessels Transiting U.S. Waters. These amendments are necessary to take account of updated procedures and will enhance the safety of transits through the Seaway. Several of the amendments are merely editorial or for clarification of existing requirements.

    DATES:

    Comments are due February 6, 2017.

    ADDRESSES:

    Docket: For access to the docket to read background documents or comments received, go to http://www.Regulations.gov; or in person at the Docket Management Facility; U.S. Department of Transportation, 1200 New Jersey Avenue SE., West Building Ground Floor, Room W12-140, Washington, DC 20590-001, between 9 a.m. and 5 p.m., Monday through Friday, except Federal Holidays.

    FOR FURTHER INFORMATION CONTACT:

    Carrie Mann Lavigne, Chief Counsel, Saint Lawrence Seaway Development Corporation, 180 Andrews Street, Massena, New York 13662; 315/764-3200.

    SUPPLEMENTARY INFORMATION:

    The Saint Lawrence Seaway Development Corporation (SLSDC) and the St. Lawrence Seaway Management Corporation (SLSMC) of Canada, under international agreement, jointly publish and presently administer the St. Lawrence Seaway Regulations and Rules (Practices and Procedures in Canada) in their respective jurisdictions. Under agreement with the SLSMC, the SLSDC is amending the joint regulations by updating the Regulations and Rules in various categories. The changes will update the following sections of the Regulations and Rules: Condition of Vessels; Seaway Navigation; Radio Communications; General; and, Vessels Transiting U.S. Waters. These updates are necessary to take account of updated procedures which will enhance the safety of transits through the Seaway. Many of these changes are to clarify existing requirements in the regulations. Where new requirements or regulations are made, an explanation for such a change is provided below.

    Regulatory Notices: Privacy Act: Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit http://www.Regulations.gov.

    The SLSDC is amending two sections of the Condition of Vessels portion of the joint Seaway regulations. In section 401.08, “Landing booms”, the two Corporations are proposing to require vessels with freeboard greater than 2 m and not equipped with landing booms to use the Seaway tie-up service at approach walls. Under the current rules, crew members on vessels with freeboard greater than 2 m and no landing booms jump approximately 4-6 feet from the vessel to the approach wall. This proposed rule would eliminate the safety risks associated with this practice.

    In 401.9, “Radio telephone and navigation equipment”, the SLSDC and SLSMC are proposing to require that vessels maintain radio transmitters on board that are fitted to communicate on additional VHF channels to reduce possible interference from channels transmitting lock operation instructions to vessels via specially designated VHF channels.

    In the Seaway Navigation portion of the regulations, a change to Section 401.44, “Mooring in locks”, is being proposed that would require one crew member to be present on deck during lockage to assist the Bridge team. A change to 401.89, “Transit refused” of the General section of the regulations would clarify that vessels need to be in compliance with Transport Canada's Marine Safety and Security regulations in order to transit the Seaway.

    The other changes to the joint regulations are merely editorial or to clarify existing requirements.

    Regulatory Evaluation

    This proposed regulation involves a foreign affairs function of the United States and therefore, Executive Order 12866 does not apply and evaluation under the Department of Transportation's Regulatory Policies and Procedures is not required.

    Regulatory Flexibility Act Determination

    I certify that this proposed regulation will not have a significant economic impact on a substantial number of small entities. The St. Lawrence Seaway Regulations and Rules primarily relate to commercial users of the Seaway, the vast majority of who are foreign vessel operators. Therefore, any resulting costs will be borne mostly by foreign vessels.

    Environmental Impact

    This proposed regulation does not require an environmental impact statement under the National Environmental Policy Act (49 U.S.C. 4321, et seq.) because it is not a major federal action significantly affecting the quality of the human environment.

    Federalism

    The Corporation has analyzed this proposed rule under the principles and criteria in Executive Order 13132, dated August 4, 1999, and have determined that this proposal does not have sufficient federalism implications to warrant a Federalism Assessment.

    Unfunded Mandates

    The Corporation has analyzed this proposed rule under Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 48) and determined that it does not impose unfunded mandates on State, local, and tribal governments and the private sector requiring a written statement of economic and regulatory alternatives.

    Paperwork Reduction Act

    This proposed regulation has been analyzed under the Paperwork Reduction Act of 1995 and does not contain new or modified information collection requirements subject to the Office of Management and Budget review.

    List of Subjects in 33 CFR Part 401

    Hazardous materials transportation, Navigation (water), Penalties, Radio, Reporting and recordkeeping requirements, Vessels, Waterways.

    Accordingly, the Saint Lawrence Seaway Development Corporation is proposing to amend 33 CFR part 401, Regulations and Rules, as follows:

    PART 401—SEAWAY REGULATIONS AND RULES Subpart A—Regulations 1. The authority citation for subpart A of part 401 continues to read as follows: Authority:

    33 U.S.C. 983(a) and 984(a) (4), as amended; 49 CFR 1.52, unless otherwise noted.

    2. In § 401.8, redesignate paragraph (c) as paragraph (d) and add new paragraph (c) to read as follows:
    § 401.8 Landing booms.

    (c) Vessels with freeboard greater than 2 m and not equipped with landing booms shall utilize the Seaway tie-up service at approach walls.

    3. In § 401.9, revise paragraph (b)(2) to read as follows:
    § 401.9 Radio telephone and navigation equipment.

    (b) * * *

    (2) Be fitted to operate from the conning position in the wheelhouse and to communicate on channels 11, 12, 13, 14, 15, 16, 17, 66a, 75, 76 and 77.

    4. In § 401.29, revise paragraph (c)(2)(iii), redesignate paragraph (c)(2)(iv) as paragraph (c)(2)(v) and add a new paragraph 2(c)(iv) to read as follows:
    § 401.29 Maximum draft.

    (c) * * *

    (2) * * *

    (iii) Any vessel intending to use the DIS for the first time must notify the Manager of the Corporation in writing at least 24 hours prior to the commencement of its initial transit in the System with the DIS.

    (iv) In every navigation season a vessel intending to use an approved DIS to transit the System must fax a completed confirmation checklist found at www.greatlakes-seaway.com to the Manager or the Corporation prior to its initial transit of the season.

    5. In § 401.44, revise paragraph (d) to read as follows:
    § 401.44 Mooring in locks.

    (d) Vessels being moored by a “Hands Free Mooring” (HFM) system shall have a minimum of 1 well rested crew member on deck during the lockage to assist the Bridge team.

    6. In § 401.58, revise paragraph (b) to read as follows:
    § 401.58 Pleasure craft scheduling.

    (b) Every pleasure craft seeking to transit Canadian locks shall stop at a pleasure craft dock and arrange for transit by contacting the lock personnel using the direct-line phone and make the lockage fee payment by purchasing a ticket using the automated ticket dispensers or prior to transiting Seaway locks, purchase a ticket through PayPal on the Seaway Web site.

    7. In § 401.64, revise paragraph (c) to read as follows:
    § 401.64 Calling in.

    (c) A down bound vessel in St. Lambert Lock shall switch to channel 10 (156.5 MHz) for a traffic report from Quebec Vessel Management Center.

    8. In § 401.89, revise paragraph (d) as follows:
    § 401.89 Transit refused.

    (d) The vessel is not in compliance with Transport Canada Marine Safety and Security, flag state and/or classification society regulations.

    9. In Part 401, Schedule I, redesignate paragraphs (c) and (d) as paragraphs (d) and (e), respectively, and add a new paragraph (c) to read as follows: Schedule I to Subpart A of Part 401—Vessels Transiting U.S. Waters

    (c) U.S. Coast Pilot, current edition.

    Issued at Washington, DC, on December 30, 2016. Saint Lawrence Seaway Development Corporation. Carrie Lavigne, Chief Counsel.
    [FR Doc. 2016-32000 Filed 1-4-17; 8:45 am] BILLING CODE 4910-61-P
    DEPARTMENT OF TRANSPORTATION Saint Lawrence Seaway Development Corporation 33 CFR Part 402 [Docket No. SLSDC-2016-0005] RIN 2135-AA41 Tariff of Tolls AGENCY:

    Saint Lawrence Seaway Development Corporation, DOT.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    The Saint Lawrence Seaway Development Corporation (SLSDC) and the St. Lawrence Seaway Management Corporation (SLSMC) of Canada, under international agreement, jointly publish and presently administer the St. Lawrence Seaway Tariff of Tolls in their respective jurisdictions. The Tariff sets forth the level of tolls assessed on all commodities and vessels transiting the facilities operated by the SLSDC and the SLSMC. The SLSDC is revising its regulations to reflect the fees and charges levied by the SLSMC in Canada starting in the 2017 navigation season, which are effective only in Canada. An amendment to increase the minimum charge per lock for those vessels that are not pleasure craft or subject in Canada to tolls under items 1 and 2 of the Tariff for full or partial transit of the Seaway will apply in the U.S. (See SUPPLEMENTARY INFORMATION.)

    DATES:

    Comments are due February 6, 2017.

    ADDRESSES:

    Docket: For access to the docket to read background documents or comments received, go to http://www.Regulations.gov; or in person at the Docket Management Facility; U.S. Department of Transportation, 1200 New Jersey Avenue SE., West Building Ground Floor, Room W12-140, Washington, DC 20590-001, between 9 a.m. and 5 p.m., Monday through Friday, except Federal Holidays.

    FOR FURTHER INFORMATION, CONTACT:

    Carrie Mann Lavigne, Chief Counsel, Saint Lawrence Seaway Development Corporation, 180 Andrews Street, Massena, New York 13662; 315/764-3200.

    SUPPLEMENTARY INFORMATION:

    The Saint Lawrence Seaway Development Corporation (SLSDC) and the St. Lawrence Seaway Management Corporation (SLSMC) of Canada, under international agreement, jointly publish and presently administer the St. Lawrence Seaway Tariff of Tolls (Schedule of Fees and Charges in Canada) in their respective jurisdictions.

    The Tariff sets forth the level of tolls assessed on all commodities and vessels transiting the facilities operated by the SLSDC and the SLSMC. The SLSDC is proposing to revise 33 CFR 402.12, “Schedule of tolls”, to reflect the fees and charges levied by the SLSMC in Canada beginning in the 2017 navigation season. With one exception, the changes affect the tolls for commercial vessels and are applicable only in Canada. The collection of tolls by the SLSDC on commercial vessels transiting the U.S. locks is waived by law (33 U.S.C. 988a(a)). Accordingly, no notice or comment is necessary on these amendments.

    The SLSDC is proposing to amend 33 CFR 402.12, “Schedule of tolls”, to increase the minimum charge per vessel per lock for full or partial transit of the Seaway from $27.46 to $28.01. This charge is for vessels that are not pleasure craft or subject in Canada to the tolls under items 1 and 2 of the Tariff. This increase is due to higher operating costs at the locks.

    Regulatory Notices: Privacy Act: Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit http://dms.dot.gov.

    Regulatory Evaluation

    This proposed regulation involves a foreign affairs function of the United States and therefore, Executive Order 12866 does not apply and evaluation under the Department of Transportation's Regulatory Policies and Procedures is not required.

    Regulatory Flexibility Act Determination

    I certify this proposed regulation will not have a significant economic impact on a substantial number of small entities. The St. Lawrence Seaway Tariff of Tolls primarily relate to commercial users of the Seaway, the vast majority of whom are foreign vessel operators. Therefore, any resulting costs will be borne mostly by foreign vessels.

    Environmental Impact

    This proposed regulation does not require an environmental impact statement under the National Environmental Policy Act (49 U.S.C. 4321, et reg.) because it is not a major federal action significantly affecting the quality of the human environment.

    Federalism

    The Corporation has analyzed this proposed rule under the principles and criteria in Executive Order 13132, dated August 4, 1999, and has determined that this proposal does not have sufficient federalism implications to warrant a Federalism Assessment.

    Unfunded Mandates

    The Corporation has analyzed this proposed rule under Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 48) and determined that it does not impose unfunded mandates on State, local, and tribal governments and the private sector requiring a written statement of economic and regulatory alternatives.

    Paperwork Reduction Act

    This proposed regulation has been analyzed under the Paperwork Reduction Act of 1995 and does not contain new or modified information collection requirements subject to the Office of Management and Budget review.

    List of Subjects in 33 CFR part 402

    Vessels, Waterways.

    Accordingly, the Saint Lawrence Seaway Development Corporation proposes to amend 33 CFR part 402, Tariff of Tolls, as follows:

    PART 402—TARIFF OF TOLLS 1. The authority citation for part 402 continues to read as follows: Authority:

    33 U.S.C. 983(a), 984(a)(4) and 988, as amended; 49 CFR 1.52.

    2. In § 402.12 the table is revised to read as follows:
    § 402.12 Schedule of tolls. Column 1 Item Description of Charges Column 2 Rate ($) Montreal to or from Lake Ontario (5 locks) Column 3 Rate ($) Welland Canal—Lake Ontario to or from Lake Erie (8 locks) 1. Subject to item 3, for complete transit of the Seaway, a composite toll, comprising: (1) a charge per gross registered ton of the ship, applicable whether the ship is wholly or partially laden, or is in ballast, and the gross registered tonnage being calculated according to prescribed rules for measurement or under the International Convention on Tonnage Measurement of Ships, 1969, as amended from time to time 1 0.1082 0.1732. (2) a charge per metric ton of cargo as certified on the ship's manifest or other document, as follows: (a) bulk cargo 1.1217 0.7656. (b) general cargo 2.7028 1.2253. (c) steel slab 2.4461 0.8772. (d) containerized cargo 1.1217 0.7656. (e) government aid cargo n/a n/a. (f) grain 0.6891 0.7656. (g) coal 0.6891 0.7656. (3) a charge per passenger per lock 1.6806 1.6806. (4) a lockage charge per Gross Registered Ton of the vessel, as defined in tem 1(1), applicable whether the ship is wholly or partially laden, or is in ballast, for transit of the Welland Canal in either direction by cargo ships, n/a 0.2884. Up to a maximum charge per vessel n/a 4,034. 2. Subject to item 3, for partial transit of the Seaway 20 per cent per lock of the applicable charge under items 1(1), 1(2) and 1(4) plus the applicable charge under items 1(3) 13 per cent per lock of the applicable charge under items 1(1), 1(2) and 1(4) plus the applicable charge under items 1(3). 3. Minimum charge per vessel per lock transited for full or partial transit of the Seaway 28.01 2 28.01. 4. A charge per pleasure craft per lock transited for full or partial transit of the Seaway, including applicable federal taxes 3 30.00 4 30.00. 5. Under the New Business Initiative Program, for cargo accepted as New Business, a percentage rebate on the applicable cargo charges for the approved period 20% 20%. 6. Under the Volume Rebate Incentive program, a retroactive percentage rebate on cargo tolls on the incremental volume calculated based on the pre-approved maximum volume 10% 10%. 7. Under the New Service Incentive Program, for New Business cargo moving under an approved new service, an additional percentage refund on applicable cargo tolls above the New Business rebate 20% 20%. 1 Or under the U.S. GRT for vessels prescribed prior to 2002. 2 The applicable charged under item 3 at the Saint Lawrence Seaway Development Corporation's locks (Eisenhower, Snell) will be collected in U.S. dollars. The collection of the U.S. portion of tolls for commercial vessels is waived by law (33 U.S.C. 988a(a)). The other charges are in Canadian dollars and are for the Canadian share of tolls. 3 $5.00 discount per lock applicable on ticket purchased for Canadian locks via PayPal. 4 The applicable charge at the Saint Lawrence Seaway Development Corporation's locks (Eisenhower, Snell) for pleasure craft is $30 U.S. or $30 Canadian per lock.
    Issued at Washington, DC, on December 30, 2016. Saint Lawrence Seaway Development Corporation. Carrie Lavigne, Chief Counsel.
    [FR Doc. 2016-32001 Filed 1-4-17; 8:45 am] BILLING CODE 4910-61-P
    DEPARTMENT OF VETERANS AFFAIRS 38 CFR Part 17 RIN 2900-AP83 Ecclesiastical Endorsing Organizations AGENCY:

    Department of Veterans Affairs.

    ACTION:

    Proposed rule.

    SUMMARY:

    The Department of Veterans Affairs (VA) proposes to amend its medical regulations by establishing in regulation the eligibility requirements that ecclesiastical endorsing organizations must meet in order to provide ecclesiastical endorsements of individuals seeking employment as VA chaplains or of individuals who are seeking to be engaged by VA under contract or appointed as on-facility fee basis VA chaplains under 38 U.S.C. 7405. VA considers the veterans' spiritual care an integral part of the veterans' overall health care. As such, VA is committed to providing qualified VA chaplains to address the veterans' spiritual needs by engaging chaplains that are ecclesiastically endorsed. Ecclesiastical endorsement would certify that the individual is qualified to perform all the religious sacraments, rites, rituals, ceremonies and ordinances needed by members of a particular faith.

    DATES:

    Comments must be received by VA on or before March 6, 2017.

    ADDRESSES:

    Written comments may be submitted through http://www.Regulations.gov; by mail or hand-delivery to: Director, Regulation Policy and Management (00REG), Department of Veterans Affairs, 810 Vermont Ave. NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026. (This is not a toll-free telephone number.) Comments should indicate that they are submitted in response to “RIN 2900-AP83-Ecclesiastical Endorsing Organizations.” Copies of comments received will be available for public inspection in the Office of Regulation Policy and Management, Room 1068, between the hours of 8:00 a.m. and 4:30 p.m., Monday through Friday (except holidays). Please call (202) 461-4902 for an appointment. (This is not a toll-free telephone number.) In addition, during the comment period, comments may be viewed online through the Federal Docket Management System (FDMS) at http://www.Regulations.gov.

    FOR FURTHER INFORMATION CONTACT:

    John Batten, Program Analyst, National Chaplain Center, Veterans Health Administration, Department of Veterans Affairs Medical Center, 100 Emancipation Dr., Hampton VA 23667; (757) 728-7062. (This is not a toll-free number.)

    SUPPLEMENTARY INFORMATION:

    Under 38 CFR 17.33, VA shall make available to each patient the opportunity for religious worship. The VA National Chaplain Service was established on August 1, 1945, to provide veterans the opportunity for such worship and other forms of spiritual care. VA employs chaplains in accordance with 5 CFR 213.3102(a) to provide for the spiritual component of health care in accordance to the spiritual needs of veterans. VA may employ chaplains in temporary appointments, on an on-facility fee basis appointment under 38 U.S.C. 7405, and may engage chaplains under contract. By requiring that chaplains be ecclesiastically endorsed, VA ensures that chaplains are qualified to perform the rites, rituals, or ceremonies that are unique to each faith. Before the year 2000, VA did not have a process in place to address endorsement of chaplains and relied on criteria established by the Department of Defense's (DoD) Armed Forces Chaplain Board (AFCB) at DoD Instruction 1304.28. Under these criteria, an individual cannot serve as chaplain unless he or she is endorsed by an ecclesiastical endorsing organization. The purpose is to ensure that the chaplain is recognized as an individual who is authorized by that organization to perform pastoral duties. The ecclesiastical endorsing organization must submit a request to VA to designate an ecclesiastical endorser. This request provides VA with the information on the ecclesiastical endorsing organization and identifies the individual whom the organization designates as the official authorized to sign ecclesiastical endorsements. VA reviews the information provided and approves the request.

    Before the year 2000, VA accepted endorsements from ecclesiastical endorsing organizations recognized by DoD to perform this function as a means of avoiding duplication of effort on VA's part and because such organizations would be better able to address veterans' needs, having provided for the veterans' spiritual care while on active duty. In 1998, VA determined that it needed to establish its own policy on accepting ecclesiastical endorsements. The rationale was that there might be organizations that would endorse members seeking to work for VA, but would not permit their members to work as military chaplains, either for theological or other reasons. There might also be ecclesiastical endorsing organizations that have members who wish to work as VA chaplains and none who wish to become military chaplains. By accepting endorsements only from ecclesiastical endorsing organizations recognized by DoD, VA was unnecessarily limiting the pool of ministers who could serve as VA chaplains. We would, however, use similar definitions of terms defined by DoD in order to maintain consistency between government agencies. VA has been successfully implementing since the year 2000, via internal policy, the eligibility requirements that ecclesiastical endorsing organizations must meet to endorse individuals who are seeking employment as VA chaplains or of individuals who are seeking to be engaged by VA under contract or appointed as on-facility fee basis VA chaplains under 38 U.S.C. 7405.1 However, VA subsequently determined a formal rulemaking would be prudent in order to make the process transparent. VA considers a veteran's spiritual care an integral part of the veteran's health care. By requiring that all VA chaplains be endorsed by an ecclesiastical endorsing organization that meets certain criteria, VA is ensuring that chaplains are providing for the religious needs of veterans. VA does not prefer any religion and respects a veteran's right by only providing religious and spiritual care to those veterans who request it. VA has established in policy a process by which ecclesiastical endorsing organizations designate an individual as authorized to sign ecclesiastical endorsements of its members seeking employment as VA chaplains or be engaged by VA under contract or appointed as on-facility fee basis VA chaplains under 38 U.S.C. 7405. Through this rulemaking, VA would establish this policy in regulation, which would promote transparency in the process as well as safeguard VA from the appearance of favoritism of an ecclesiastical endorsing organization over another. We would establish this process in proposed § 17.655.

    1 Ecclesiastical Endorsing Organizations, VA Handbook 1111.1.

    17.655 Ecclesiastical Endorsing Organizations

    Proposed paragraph (a) would be the purpose paragraph. We would state that proposed § 17.655 “establishes the eligibility requirements that an ecclesiastical endorsing organization must meet in order to provide ecclesiastical endorsements of individuals who are seeking employment as VA chaplains or are seeking to be engaged by VA under contract or appointed as on-facility fee basis VA chaplains under 38 U.S.C. 7405.” VA protects a veteran's right to exercise his or her religion. However, VA does not imply approval of the theology or practices of the religious organization to which the chaplain belongs. VA is also not obligated to employ or engage under VA contract or to appoint under 38 U.S.C. 7405 an individual who is endorsed by an ecclesiastical endorsing organization for the reasons stated in our discussion of proposed paragraph (c). We would state these caveats in proposed paragraph (a).

    Proposed paragraph (b) would provide the definitions of terms used within proposed § 17.655. In order to be considered for and maintain employment as a VA chaplain or be engaged by VA under contract or appointed as on-facility fee basis VA chaplains under 38 U.S.C. 7405, an individual must have ecclesiastical endorsement from an ecclesiastical endorsing organization. This requirement would be needed to make certain that individuals providing ministry to veterans are authorized by their ecclesiastical endorsing organization to provide specific ministries. We would add this requirement to the proposed definition of ecclesiastical endorsement, which would be defined to mean “a written statement addressed to VA and signed by the designated endorsing official of an ecclesiastical endorsing organization certifying that an individual is in good standing with the faith group or denomination and, in the opinion of the endorsing official, is qualified to perform the full range of ministry, including all sacraments, rites, ordinances, rituals, and liturgies required by members of the faith group.”

    Each ecclesiastical endorsing organization designates an ecclesiastical endorsing official or officials, who would endorse individuals as being in good standing within that faith and able to perform the full range of ministries. We propose to define ecclesiastical endorsing official as “an individual who is authorized to provide or withdraw ecclesiastical endorsements on behalf of an ecclesiastical endorsing organization.” This definition would be similar to that of DoD.

    An organization that meets the eligibility requirements of proposed paragraph (c) and has also been designated as an endorsing agent in accordance with proposed paragraph (e) would be termed an ecclesiastical endorsing organization. We would define this term in proposed paragraph (b).

    Proposed paragraph (c) would state that ecclesiastical endorsing organization must “meet the following requirements before the organization can endorse an applicant for VA chaplaincy.” The first requirement is that the ecclesiastical endorsing organization must “Be organized and function exclusively or substantially to provide religious ministries to a lay constituency and possess authority to both grant and withdraw initial and subsequent ecclesiastical endorsement.” Organizations whose only function is to provide social services to the community, health care or education cannot become ecclesiastical endorsing organizations. The organization must designate an individual(s) who can sign an ecclesiastical endorsement of a member of the organization. Maintaining an ecclesiastical endorsement is a requirement to maintain employment as a VA chaplain or be engaged by VA under contract or appointed as on-facility fee basis VA chaplains under 38 U.S.C. 7405. The second requirement is that the organization has “tax-exempt status as a religious organization or church under the Internal Revenue Code, section 501(c)(3).” Generally, section 501(c) of the Internal Revenue Code provides exemption from some federal income taxes for various types of nonprofit organizations. Section 501(c)(3) of the Internal Revenue code addresses religious organizations. In order for a religious organization to be tax-exempt under rules established by the Internal Revenue Service (IRS), the organization must meet the following requirements: be organized and operated exclusively for religious, educational, scientific or other charitable purposes; net earnings may not inure to the benefit of any private individual or shareholder; no substantial part of its activity may be attempting to influence legislation; the organization may not intervene in political campaigns; and the organization's purposes and activities may not be illegal or violate fundamental public policy. The IRS makes a distinction between tax-exempt status of a religious organization and that of a church. Religious organizations that meet the requirements of section 501(c)(3) of the IRC must apply to the IRS for tax-exempt status, unless their gross receipts do not normally exceed $5,000.00 annually.

    Churches are automatically considered tax-exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS. However, although there is no requirement to file for tax-exempt status, many churches seek recognition of tax-exempt status from the IRS because this recognition assures the religious leaders, members, and contributors that the church is recognized as exempt and qualifies for related tax benefits. VA would require that an ecclesiastical endorsing organization, that is seeking to endorse an individual for employment as a VA chaplain or an individual seeking to be engaged by VA under contract or appointed as on-facility fee basis VA chaplains under 38 U.S.C. 7405, obtain the recognition of its status as a tax-exempt religious organization or church under section 501(c)(3) of the Internal Revenue Code.

    The third requirement is that ecclesiastical endorsing organizations would need to agree to abide by “all Federal and VA laws, regulations, policies, and issuances on the qualification and endorsement of persons for service as VA chaplains.” We would add this requirement as a form of commitment by the ecclesiastical endorsing organization to only endorse individuals for service as VA chaplains who are willing to abide by these rules.

    We propose to state that the ecclesiastical endorsing organization must notify VA in writing of any withdrawal of the ecclesiastical endorsement of an endorsed VA chaplain. Such notification must be received by VA within ten days of the withdrawal. VA is committed to provide veterans with spiritual care from the most qualified individuals. If an individual is no longer endorsed by an ecclesiastical endorsing organization, such individual will cease to meet the requirements of a VA chaplain and may lose his or her VA employment, VA contract, or appointment as on-facility fee basis VA chaplains under 38 U.S.C. 7405. We would also state that the ecclesiastical endorsing organization must provide the documents stated in proposed paragraph (d). If an ecclesiastical endorsing organization changes the individual authorized as its endorsing official, the organization must notify VA of the name and address of the new official. VA would need to maintain contact with the ecclesiastical endorsing organization through the ecclesiastical endorsing official to verify the endorsement status of VA chaplains. The ecclesiastical endorsing official of an ecclesiastical endorsing organization is the key point of contact between VA and the organization and also between an individual who seeks employment as a VA chaplain or an individual who is seeking to be engaged under VA contract or appointed as on-facility fee basis VA chaplains under 38 U.S.C. 7405. The name and address of the current official would be maintained by VA for current and future VA chaplains. VA publishes the names and contact information of the endorsing officials in its Web site so that individuals of a particular faith who wish to become VA chaplains know whom they must contact within their religious community to seek endorsement. Lastly, all ecclesiastical endorsing officials of an ecclesiastical endorsing organization must be designated by the same official within such an organization. If an ecclesiastical endorsing organization already has a recognized ecclesiastical endorsing official and is, therefore, accepted as an ecclesiastical endorsing organization, a component of that organization cannot designate its own endorsing official and become a separate endorsing organization. VA would add this requirement to maintain a central point of contact within an organization and to avoid any confusion if, for example, one portion of an ecclesiastical endorsing organization endorses an individual while another portion denies endorsement to that same individual.

    Proposed paragraph (d) would state the documentation that an ecclesiastical endorsing organization would need to submit in order to be recognized by VA as an ecclesiastical endorsing agent. The Department of Defense requires that endorsing organizations submit certain materials, and VA also proposes to require those same materials.2 Further, the ecclesiastical endorsing organization must complete the VA form that requests designation as an ecclesiastical endorsing agent. In order to ensure that the expressed religious needs of the veteran population would be met, VA also proposes that ecclesiastical endorsing organizations submit documentation that states the organization's structure, including copies of the by-laws, constitution, articles of incorporation; membership requirements of the organization; membership requirements for clergy (education, licensure, experience, ordination, etc.); and the organization's beliefs and practices. VA cannot recognize more than one ecclesiastical endorsing organization from a faith, so this information would also help VA to verify whether the ecclesiastical endorsing organization is part of a larger organization that has already designated an ecclesiastical endorsing official. VA would also request the name of the individual who is seeking employment as a VA chaplain or seeking to be engaged by VA under contract or appointed as on-facility fee basis VA chaplains under 38 U.S.C. 7405. VA would not commence the process of considering the request from an ecclesiastical endorsing organization unless an individual from that organization seeks to be an active member of the VA chaplaincy. VA seeks comment on whether any of these requirements would place an undue burden on ecclesiastical organizations, and, if so, whether there are any alternate, less burdensome ways of ensuring that VA is able to meet the expressed religious needs of its veteran population. VA also seeks comment on whether it would be better to seek some of these materials through sub-regulatory rather than regulatory processes.3

    2 The relevant section of Enclosure 3 of the Department of Defense Instruction states:

    E3.1.3. The religious organization shall submit documents verifying the following information with regard to such organization:

    E3.1.3.1. That the religious organization is organized as an entity functioning primarily to perform religious ministries to a non-military lay constituency and currently holds a section 501(c)(3) exempt status (Reference (i)) as a church for Federal tax purposes from the Internal Revenue Service (IRS) (note “church” is used by the IRS not to denote a belief system, but to distinguish “churches” from other types of religious organizations; see IRS Instructions for Form 1023 Schedule A). Such rules stipulate that the particular religious beliefs of the organization are truly and sincerely held and that the practices and rituals associated with the organization's religious belief or creed are not illegal or contrary to clearly defined public policy. In order to determine whether a particular religious organization has properly acquired, and currently maintains, an IRS tax exempt status and does not engage in practices that are illegal or contrary to defined public policy, the USD(PR) shall take appropriate steps to verify with the DoD Components and other Federal Agencies compliance with these requirements.

    E3.1.3.2. That it possesses ecclesiastical authority to grant and withdraw initial and subsequent ecclesiastical endorsement for ministry in the Armed Forces.

    E3.1.3.3. That it verifies the religious organization shall provide chaplains who shall function in a pluralistic environment, as defined in this Instruction, and who shall support directly and indirectly the free exercise of religion by all members of the Military Services, their family members, and other persons authorized to be served by the military chaplaincies.

    E3.1.3.4. That it agrees to abide by all DoD Directives, Instructions, and other guidance and with Military Department regulations and policies on the qualification and endorsement of RMPs for service as military chaplains.

    3 See Ecclesiastical Endorsing Organizations, VA Handbook 1111.1.

    Proposed paragraph (e) would state the notification that VA would provide to an ecclesiastical endorsing organization. If an ecclesiastical endorsing organization meets the requirements of proposed paragraph (c) and has submitted the required documentation stated in proposed paragraph (d), VA will notify the ecclesiastical endorsing organization in writing that the organization has been designated as an ecclesiastical endorsing organization. We would state that the designation of an ecclesiastical endorsing organization is for a period of 3 years from the date of notification. VA would continue to accept ecclesiastical endorsements for 3 years from that organization without requiring further documentation unless VA receives evidence that the ecclesiastical endorsing organization no longer meets the requirements of proposed § 17.655. This would relieve the ecclesiastical endorsing organization's burden of supplying VA the required documentation every time that the organization endorses an individual.

    VA proposes to only consider requests from ecclesiastical endorsing organizations to designate an ecclesiastical endorsing official when an individual of the requesting ecclesiastical endorsing organization who meets the education, training and experience requirements for VA chaplains is actively applying for a VA chaplain vacancy, or applying for engagement as a VA chaplain under VA contract or applying for an appointment as on-facility fee basis VA chaplains under 38 U.S.C. 7405. VA has received requests to designate an ecclesiastical endorsing official in the past without receiving an application from an individual who meets VA chaplain qualification requirements. In such cases, VA has instructed the ecclesiastical endorsing organization that we would not take any action on such request, but VA would keep the request on file for a period of 2 years.

    Proposed paragraph (f) would state the reporting requirements. Because ecclesiastical endorsement is a condition of VA employment for a VA chaplain, VA must verify the endorsement of each VA chaplain. We would state that an ecclesiastical endorsing organization must provide an alphabetical listing of individuals endorsed for VA chaplaincy by the organization by January 1 of every calendar year. This certification would ensure that veterans receive spiritual care from endorsed individuals. As previously stated, VA would designate an organization as an ecclesiastical endorsing organization for a period of 3 years. In order to remain an ecclesiastical endorsing organization the organization must provide written documentation that the organization continues to meet the requirements of proposed § 17.655 every 3 years.

    Proposed paragraph (g) would state the steps VA would take to rescind an organization's status as an ecclesiastical endorsing organization. In most circumstances, a rescission of such status would not be considered permanent. VA would first send the ecclesiastical endorsing organization written notice stating the reasons for the rescission. The ecclesiastical endorsing organization will be given 60 days to provide a written response addressing VA's concerns. Once the ecclesiastical endorsing organization submits the requested evidence or after the 60 day time period has expired, whichever comes first, VA will review the evidence provided and notify, in writing, the organization, and all VA chaplains endorsed by the organization, of its decision. An ecclesiastical endorsing organization must submit all documentation stated in proposed paragraph (d) to be reconsidered as an endorsing organization. As previously stated in this rulemaking, an ecclesiastical endorsing organization must meet the eligibility requirements of proposed paragraph (c) and submit all of the evidence listed in proposed paragraph (d) in order for such organization to ecclesiastically endorse individuals for employment as VA chaplains or be engaged by VA under contract or appointed as on-facility fee basis VA chaplains under 38 U.S.C. 7405. We would, therefore, state “If an ecclesiastical endorsing organization is no longer able to endorse individuals for VA chaplaincy in accordance with this section, all ecclesiastical endorsements issued by that organization are considered to be withdrawn.”

    Effect of Rulemaking

    Title 38 of the Code of Federal Regulations, as proposed to be revised by this rulemaking, would represent the exclusive legal authority on this subject. No contrary rules or procedures would be authorized. All VA guidance would be read to conform with this proposed rulemaking if possible or, if not possible, such guidance would be superseded by this rulemaking.

    Paperwork Reduction Act

    This proposed rule includes a provision constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) that requires approval by the Office of Management and Budget (OMB). Accordingly, under 44 U.S.C. 3507(d), VA has submitted a copy of this rulemaking to OMB for review.

    OMB assigns control numbers to collections of information it approves. VA may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. Proposed § 17.655 contains a collection of information under the Paperwork Reduction Act of 1995. VA was previously collecting this information under OMB control number 2900-0610, which expired on September 2, 2008. If OMB does not approve the collection of information as requested, VA will immediately remove the provision containing a collection of information or take such other action as is directed by OMB.

    Comments on the collection of information contained in this proposed rule should be submitted to the Office of Management and Budget, Attention: Desk Officer for the Department of Veterans Affairs, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies sent by mail or hand delivery to the Director, Regulations Management (02REG), Department of Veterans Affairs, 810 Vermont Avenue NW., Room 1068, Washington, DC 20420; fax to (202) 273-9026; or through www.Regulations.gov. Comments should indicate that they are submitted in response to “RIN 2900-[WP2015-35] Ecclesiastical Endorsing Organizations.”

    OMB is required to make a decision concerning the collections of information contained in this proposed rule between 30 and 60 days after publication of this document in the Federal Register. Therefore, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication. This does not affect the deadline for the public to comment on the proposed rule.

    VA considers comments by the public on proposed collections of information in—

    • Evaluating whether the proposed collections of information are necessary for the proper performance of the functions of VA, including whether the information will have practical utility;

    • Evaluating the accuracy of VA's estimate of the burden of the proposed collections of information, including the validity of the methodology and assumptions used;

    • Enhancing the quality, usefulness, and clarity of the information to be collected; and

    • Minimizing the burden of the collections of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.

    The collections of information contained in § 17.655 are described immediately following this paragraph, under their respective titles.

    Title: Ecclesiastical Endorsing Organizations.

    Summary of collection of information and description of the need for information and proposed use of information: Proposed paragraph (d) in § 17.655 would read that an ecclesiastical endorsing organization would need to submit documentation in order for VA to accept ecclesiastical endorsements of individuals of such organization. The information is needed to establish the eligibility requirements that an ecclesiastical endorsing organization must meet in order to provide ecclesiastical endorsements of an individual who is seeking employment as a VA chaplain or who is seeking to be engaged by VA under contract or appointed as on-facility fee basis VA chaplains under 38 U.S.C. 7405. VA has collected this information in the past through internal policy and guidance.4

    4 Ecclesiastical Endorsing Organizations, VA Handbook 1111.1.

    Description of likely respondents: Ecclesiastical endorsing organizations wishing to endorse applicants for VA Chaplaincy.

    Estimated number of respondents per year: 50.

    Estimated frequency of responses per year: 50 times per year.

    Estimated average burden per response: 45 minutes.

    Estimated total annual reporting and recordkeeping burden: 37.5 hours.

    Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. This proposed rule would directly affect only individuals and would not directly affect small entities. Therefore, pursuant to 5 U.S.C. 605(b), this rulemaking is exempt from the initial and final regulatory flexibility analysis requirements of 5 U.S.C. 603 and 604.

    Executive Orders 12866 and 13563

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

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

    Unfunded Mandates

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

    Catalog of Federal Domestic Assistance

    There are no Catalog of Federal Domestic Assistance numbers and titles for this rule.

    Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Gina S. Farrisee, Deputy Chief of Staff, Department of Veterans Affairs, approved this document on September 15, 2016, for publication.

    List of Subjects in 38 CFR Part 17

    Administrative practice and procedure, Health professions, Veterans.

    Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Gina S. Farrisee, Deputy Chief of Staff, Department of Veterans Affairs, approved this document on September 15, 2016, for publication.

    Janet Coleman, Chief, Regulation Policy & Management, Office of the Secretary, Department of Veterans Affairs.

    For the reasons set out in the preamble, VA proposes to amend 38 CFR part 17 as follows:

    PART 17—MEDICAL 1. The authority citation for part 17 continues to read as follows: Authority:

    38 U.S.C. 501, and as noted in specific sections.Section 17.655 also issued under 38 U.S.C. 501(a), 7304, 7405.

    2. Add a center heading immediately after § 17.647 to read as follows: Chaplain Services 3. Add § 17.655 to read as follows:
    § 17.655 Ecclesiastical endorsing organizations.

    (a) Purpose. This section establishes the eligibility requirements that an ecclesiastical endorsing organization must meet in order to provide ecclesiastical endorsements of individuals who are seeking employment as VA chaplains or seeking to be engaged by VA under contract or appointed as on-facility fee basis VA chaplains under 38 U.S.C. 7405. Acceptance of an ecclesiastical endorsement by VA does not imply any approval by VA of the theology or practices of an ecclesiastical endorsing organization, nor does it obligate VA to employ the endorsed individual or any other member of the organization.

    (b) Definitions: The following definitions apply to this section:

    (1) Ecclesiastical endorsement means a written statement addressed to VA and signed by the designated endorsing official of an ecclesiastical endorsing organization certifying that an individual is in good standing with the faith group or denomination and, in the opinion of the endorsing official, is qualified to perform the full range of ministry, including all sacraments, rites, ordinances, rituals, and liturgies required by members of the faith group. Ecclesiastical endorsement is a condition of employment as a VA chaplain. An individual must obtain and maintain a full and active ecclesiastical endorsement to be employed as a VA chaplain.

    (2) Ecclesiastical endorsing official means an individual who is authorized to provide or withdraw ecclesiastical endorsements on behalf of an ecclesiastical endorsing organization.

    (3) Ecclesiastical endorsing organization means an organization that meets the eligibility requirements of paragraph (c) of this section and has been properly designated as an endorsing organization in accordance with paragraph (e) of this section.

    (c) Eligibility to Serve as an Ecclesiastical Endorsing Organization. An ecclesiastical endorsing organization must meet the following requirements before such organization can endorse an applicant for VA chaplaincy:

    (1) Be organized and function exclusively or substantially to provide religious ministries to a lay constituency and possess authority to both grant and withdraw initial and subsequent ecclesiastical endorsements;

    (2) Have tax-exempt status as a religious organization or church under the Internal Revenue Code, section 501(c)(3);

    (3) Agree to abide by all Federal and VA laws, regulations, policies, and issuances on the qualification and endorsement of persons for service as VA chaplains;

    (4) Agree to notify VA in writing of any withdrawal of an existing ecclesiastical endorsement within ten days after the date of such withdrawal;

    (5) Provide VA the documents stated in paragraph (d) of this section;

    (6) Notify VA in writing within 30 days of any change of the name, address or contact information of the individual that it designates as its ecclesiastical endorsing official; and

    (7) An ecclesiastical endorsing organization that is part of an endorsing organization by which its members can be endorsed cannot become a separate endorsing organization without the written permission of the larger endorsing organization.

    (d) Request to Designate Ecclesiastical Endorser. In order for an ecclesiastical endorsing organization to be recognized by VA such organization must submit the following:

    (1) A complete VA form that requests the designation of an ecclesiastical endorsing official;

    (2) A copy of an Internal Revenue Service document verifying that the organization currently holds a section 501(c)(3) exempt status (Reference (i)) as a church for Federal tax purposes from the Internal Revenue Service (IRS) (note “church” is used by the IRS not to denote a belief system, but to distinguish “churches” from other types of religious organizations; see IRS Instructions for Form 1023 Schedule A). Such rules stipulate that the particular religious beliefs of the organization are truly and sincerely held and that the practices and rituals associated with the organization's religious belief or creed are not illegal or contrary to clearly defined public policy. In order to determine whether a particular religious organization has properly acquired, and currently maintains, an IRS tax exempt status and does not engage in practices that are illegal or contrary to defined public policy, VA shall take appropriate steps to verify compliance with these requirements.

    (3) A document verifying that the organization shall provide chaplains who shall function in a pluralistic environment, and who shall support directly and indirectly the free exercise of religion by all veterans, their family members, and other persons authorized to be served by VA.

    (4) That it agrees to abide by all VA Directives, Instructions, and other guidance, regulations and policies on the qualification and endorsement of ministers for service as VA chaplains.

    (5) Documentation that states the structure of the organization, including copies of the articles of incorporation, by-laws and constitution, membership requirements of the organization, if any, the religious beliefs and practices of the organization, and the organization's requirements to become clergy; and

    (6) The name and address of the individual who is applying to become a VA chaplain. (The Office of Management and Budget has approved the information collection requirements in this section under control number XXXX-XXXX.)

    (e) Approval of Request to Designate an Ecclesiastical Endorsing Official. If an ecclesiastical endorsing organization meets the requirements of paragraph (c) of this section and has submitted the documents stated in paragraph (d) of this section, VA will notify the organization in writing that such organization has been designated as an ecclesiastical endorsing organization. The designation will be for a period of 3 years from the date of notification. Once an organization is designated as an ecclesiastical endorsing organization, VA will accept ecclesiastical endorsements from that organization without requiring any further documentation from the organization during the 3 year period, unless VA receives evidence that an organization no longer meets the requirements of this section. VA will only take action on an initial request to designate an ecclesiastical endorsing official when VA receives an application from an individual who is seeking employment as a VA chaplain or is seeking to be engaged under VA contract or appointed as on-facility fee basis VA chaplains under 38 U.S.C. 7405.

    (f) Reporting requirement. (1) To certify that VA chaplains continue to be endorsed by an ecclesiastical endorsing organization, such organization must provide VA an alphabetical listing of individuals who are endorsed by that endorsing organization and are employed as VA chaplains or are engaged by VA under contract or appointed as on-facility fee basis VA chaplains under 38 U.S.C. 7405 by January 1 of every calendar year.

    (2) In order for VA to continue to recognize an ecclesiastical endorsing organization, such organization must provide written documentation that it continues to meet the requirements of this section every 3 years.

    (g) Rescission of ecclesiastical endorsing organization. VA may rescind an organization's status as an ecclesiastical endorsing organization and refuse to accept ecclesiastical endorsements from such organization if it no longer meets the requirements of paragraph (c) of this section. VA will take the following steps before it rescinds the organization's status:

    (1) VA will give the ecclesiastical endorsing organization written notice stating the reasons for the rescission and give the organization 60 days to provide a written reply addressing VA's concerns.

    (2) VA will notify the ecclesiastical endorsing organization and all VA chaplains endorsed by the organization in writing of its decision after VA reviews the evidence provided by the organization or after the 60 day time period has expired, whichever comes first.

    (3) Ecclesiastical endorsing organizations that are notified that they may no longer endorse individuals for VA chaplaincy because they do not meet the requirements of paragraph (c) of this section must resubmit all of the evidence stated in paragraph (d) of this section in order to be reconsidered as an endorsing organization.

    (4) If an ecclesiastical endorsing organization is no longer able to endorse individuals for VA chaplaincy in accordance with this section, all ecclesiastical endorsements issued by that organization are considered to be withdrawn.

    [FR